UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37702

Amgen Inc.

(Exact name of registrant as specified in its charter)


Delaware						95-3540776
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Amgen Center Drive						91320-1799
Thousand Oaks
California
(Address of principal executive offices)						(Zip Code)

(805) 447-1000

(Registrant’s telephone number, including area code)

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, $0.0001 par value	AMGN	~~The Nasdaq Stock Market LLC~~
~~1.250% Senior Notes due 2022~~	~~AMGN22~~	The Nasdaq Stock Market LLC
2.00% Senior Notes due 2026	AMGN26	The Nasdaq Stock Market LLC

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 such 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, a smaller reporting company, or an emerging growth company. See the definitions 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 ☑

As of ~~October 28, 2021,~~April 22, 2022, the registrant had ~~563,265,902~~534,199,933 shares of common stock, $0.0001 par value, outstanding.

AMGEN INC.

INDEX

Defined Terms and Products

Defined terms

We use several terms in this Form 10-Q—including but not limited to those that are finance, regulation and disease-state related as well as names of other companies, which are given below.

Term

Description

ANDA

Abbreviated New Drug Application

AOCI

accumulated other comprehensive income (loss)

ASR

accelerated share repurchase

BeiGene

BeiGene, Ltd.

BiTE®

bispecific T-cell engager

COVID-19

coronavirus disease 2019

EPS

earnings per share

ESA

erythropoiesis-stimulating agent

European Union

FASB

Financial Accounting Standards Board

FDA

U.S. Food and Drug Administration

Fitch

Fitch Ratings, Inc.

GAAP

U.S. generally accepted accounting principles

HGRAC

Human Genetic Resources Administration of China

IPR&D

in-process research and development

IRS

Internal Revenue Service

LIBOR

London Interbank Offered Rate

mCRPC

metastatic castration-resistant prostate cancer

MD&A

management’s discussion and analysis

Moody’s

Moody’s Investors Service, Inc.

Neumora

Neumora Therapeutics, Inc.

NSCLC

non-small cell lung cancer

OECD

Organization for Economic Co-operation and Development

ORR

objective response rate

PFS

progression-free survival

PTAB

Patent Trial and Appeal Board

R&D

research and development

RAR

Revenue Agent Report

ROW

rest of world

S&P

Standard & Poor’s Financial Services LLC

SEC

U.S. Securities and Exchange Commission

SOFR

Secured Overnight Financing Rate

SG&A

selling, general and administrative

Teneobio

Teneobio, Inc.

U.S. Treasury

U.S. Department of Treasury

UTB

unrecognized tax benefit

Products

The brand names of our products, our delivery devices and certain of our product candidates and their associated generic names are given below.


Term						Description
Aimovig						Aimovig® (erenumab-aooe)
AMGEVITA						AMGEVITA™ (adalimumab)
Aranesp						Aranesp® (darbepoetin alfa)
BLINCYTO						BLINCYTO® (blinatumomab)
ENBREL						Enbrel® (etanercept)
EPOGEN						EPOGEN® (epoetin alfa)
EVENITY						EVENITY® (romosozumab-aqqg)
KANJINTI						KANJINTI® (trastuzumab-anns)
KYPROLIS						KYPROLIS® (carfilzomib)
LUMAKRAS/LUMYKRAS						LUMAKRAS® / LUMYKRAS™ (sotorasib)
MVASI						MVASI® (bevacizumab-awwb)
Neulasta						Neulasta® (pegfilgrastim)
NEUPOGEN						NEUPOGEN® (filgrastim)
Nplate						Nplate® (romiplostim)
Onpro						Onpro®
Otezla						Otezla® (apremilast)
Parsabiv						Parsabiv® (etelcalcetide)
Prolia						Prolia® (denosumab)
Repatha						Repatha® (evolocumab)
Sensipar/Mimpara						Sensipar®/Mimpara™ (cinacalcet)
TEZSPIRE						TEZSPIRE™ (tezepelumab-ekko)
Vectibix						Vectibix® (panitumumab)
XGEVA						XGEVA® (denosumab)

iii

PART I — FINANCIAL INFORMATION


Item 1.			FINANCIAL STATEMENTS

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share data)

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Revenues:	Revenues:									Revenues:
Product sales	Product sales	$	6,320	$	6,104	$	18,026	$	17,906	Product sales	$	5,731	$	5,592
Other revenues	Other revenues	386		319		1,107		884		Other revenues	507		309
Total revenues	Total revenues	6,706		6,423		19,133		18,790		Total revenues	6,238		5,901

Operating expenses:	Operating expenses:									Operating expenses:
Cost of sales	Cost of sales	1,609		1,561		4,736		4,562		Cost of sales	1,561		1,490
Research and development	Research and development	1,422		1,062		3,471		2,978		Research and development	959		967
Acquired in-process research and development		—		—		1,505		—

Selling, general and administrative	Selling, general and administrative	1,305		1,346		3,943		3,957		Selling, general and administrative	1,228		1,254
Other	Other	(8)		1		143		162		Other	(10)		61
Total operating expenses	Total operating expenses	4,328		3,970		13,798		11,659		Total operating expenses	3,738		3,772

Operating income	Operating income	2,378		2,453		5,335		7,131		Operating income	2,500		2,129

Other income (expense):	Other income (expense):									Other income (expense):
Interest expense, net	Interest expense, net	(296)		(302)		(862)		(944)		Interest expense, net	(295)		(285)
Other income, net		73		55		97		69
Other (expense) income, net										Other (expense) income, net	(530)		13

Income before income taxes	Income before income taxes	2,155		2,206		4,570		6,256		Income before income taxes	1,675		1,857

Provision for income taxes	Provision for income taxes	271		185		576		607		Provision for income taxes	199		211

Net income	Net income	$	1,884	$	2,021	$	3,994	$	5,649	Net income	$	1,476	$	1,646

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	3.32	$	3.45	$	6.98	$	9.61	Basic	$	2.69	$	2.85
Diluted	Diluted	$	3.31	$	3.43	$	6.93	$	9.54	Diluted	$	2.68	$	2.83

Shares used in calculation of earnings per share:	Shares used in calculation of earnings per share:									Shares used in calculation of earnings per share:
Basic	Basic	567		585		572		588		Basic	548		577
Diluted	Diluted	570		589		576		592		Diluted	551		581

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
Net income $ 1,884 $ 2,021 $ 3,994 $ 5,649
Other comprehensive income (loss), net of reclassification adjustments and taxes:
(Losses) gains on foreign currency translation (35) 14 (60) (41)
Gains (losses) on cash flow hedges 99 (128) 241 (305)
(Losses) gains on available-for-sale securities (1) 1 (1) (20)
Other (3) (7) (3) (9)
Other comprehensive income (loss), net of taxes 60 (120) 177 (375)
Comprehensive income $ 1,944 $ 1,901 $ 4,171 $ 5,274


	Three months ended March 31,
	2022		2021
Net income	$	1,476	$	1,646
Other comprehensive income, net of reclassification adjustments and taxes:
Foreign currency translation	(51)		(39)
Cash flow hedges	84		190

Other	—		1
Other comprehensive income, net of reclassification adjustments and taxes	33		152
Comprehensive income	$	1,509	$	1,798

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share data)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	11,969	$	6,266	Cash and cash equivalents	$	6,528	$	7,989
Marketable securities	Marketable securities	952		4,381		Marketable securities	16		48
Trade receivables, net	Trade receivables, net	4,765		4,525		Trade receivables, net	5,077		4,895
Inventories	Inventories	4,152		3,893		Inventories	4,411		4,086
Other current assets	Other current assets	2,542		2,079		Other current assets	2,488		2,367
Total current assets	Total current assets	24,380		21,144		Total current assets	18,520		19,385

Property, plant and equipment, net	Property, plant and equipment, net	4,982		4,889		Property, plant and equipment, net	5,142		5,184
Intangible assets, net	Intangible assets, net	14,659		16,587		Intangible assets, net	14,567		15,182
Goodwill	Goodwill	14,665		14,689		Goodwill	14,897		14,890
Other noncurrent assets	Other noncurrent assets	6,307		5,639		Other noncurrent assets	6,070		6,524
Total assets	Total assets	$	64,993	$	62,948	Total assets	$	59,196	$	61,165

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,171	$	1,421	Accounts payable	$	1,403	$	1,366
Accrued liabilities	Accrued liabilities	9,383		10,141		Accrued liabilities	10,639		10,731
Current portion of long-term debt	Current portion of long-term debt	4,288		91		Current portion of long-term debt	844		87
Total current liabilities	Total current liabilities	14,842		11,653		Total current liabilities	12,886		12,184

Long-term debt	Long-term debt	33,291		32,895		Long-term debt	36,010		33,222
Long-term tax liabilities	Long-term tax liabilities	6,483		6,968		Long-term tax liabilities	6,652		6,594
Other noncurrent liabilities	Other noncurrent liabilities	2,160		2,023		Other noncurrent liabilities	2,732		2,465

Contingencies and commitments	Contingencies and commitments	0		0		Contingencies and commitments	0		0

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—565.0 shares in 2021 and 578.3 shares in 2020		31,989		31,802
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—534.2 shares in 2022 and 558.3 shares in 2021						Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—534.2 shares in 2022 and 558.3 shares in 2021	31,247		32,096
Accumulated deficit	Accumulated deficit	(22,964)		(21,408)		Accumulated deficit	(29,568)		(24,600)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(808)		(985)		Accumulated other comprehensive loss	(763)		(796)
Total stockholders’ equity	Total stockholders’ equity	8,217		9,409		Total stockholders’ equity	916		6,700
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	64,993	$	62,948	Total liabilities and stockholders’ equity	$	59,196	$	61,165

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per-share data)

(Unaudited)


		Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total			Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2020		578.3	$	31,802	$	(21,408)	$	(985)	$	9,409
Balance as of December 31, 2021											Balance as of December 31, 2021	558.3	$	32,096	$	(24,600)	$	(796)	$	6,700

Net income	Net income	—	—		1,646		—		1,646		Net income	—	—		1,476		—		1,476
Other comprehensive income, net of taxes	Other comprehensive income, net of taxes	—	—		—		152		152		Other comprehensive income, net of taxes	—	—		—		33		33
Dividends declared on common stock ($1.76 per share)		—	—		(1,012)		—		(1,012)
Dividends declared on common stock ($1.94 per share)											Dividends declared on common stock ($1.94 per share)	—	—		(1,034)		—		(1,034)
Issuance of common stock in connection with the Company’s equity award programs	Issuance of common stock in connection with the Company’s equity award programs	0.7	6		—		—		6		Issuance of common stock in connection with the Company’s equity award programs	0.5	18		—		—		18
Stock-based compensation expense	Stock-based compensation expense	—	57		—		—		57		Stock-based compensation expense	—	78		—		—		78
Tax impact related to employee stock-based compensation expense	Tax impact related to employee stock-based compensation expense	—	(59)		—		—		(59)		Tax impact related to employee stock-based compensation expense	—	(45)		—		—		(45)
Repurchases of common stock		(3.7)	—		(865)		—		(865)
Balance as of March 31, 2021		575.3	31,806		(21,639)		(833)		9,334
Repurchases of common stock (Note 10)											Repurchases of common stock (Note 10)	(24.6)	(900)		(5,410)		—		(6,310)
Balance as of March 31, 2022											Balance as of March 31, 2022	534.2	$	31,247	$	(29,568)	$	(763)	$	916

Net income		—	—		464		—		464
Other comprehensive loss, net of taxes		—	—		—		(35)		(35)
Issuance of common stock in connection with the Company’s equity award programs		0.8	47		—		—		47
Stock-based compensation expense		—	100		—		—		100
Tax impact related to employee stock-based compensation expense		—	(76)		—		—		(76)
Repurchases of common stock		(6.5)	—		(1,592)		—		(1,592)
Other		—	—		5		—		5
Balance as of June 30, 2021		569.6	31,877		(22,762)		(868)		8,247

Net income		—	—		1,884		—		1,884
Other comprehensive income, net of taxes		—	—		—		60		60
Dividends declared on common stock ($1.76 per share)		—	—		(1,017)		—		(1,017)
Issuance of common stock in connection with the Company’s equity award programs		—	9		—		—		9
Stock-based compensation expense		—	111		—		—		111
Tax impact related to employee stock-based compensation expense		—	(8)		—		—		(8)
Repurchases of common stock		(4.6)	—		(1,069)		—		(1,069)

Balance as of September 30, 2021		565.0	$	31,989	$	(22,964)	$	(808)	$	8,217

~~AMGEN INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)~~

~~(In millions, except per-share data)~~

~~(Unaudited)~~


		Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total			Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2019		591.4	$	31,531	$	(21,330)	$	(528)	$	9,673
Cumulative effect of changes in accounting principles, net of taxes		—	—		(2)		—		(2)
Balance as of December 31, 2020											Balance as of December 31, 2020	578.3	$	31,802	$	(21,408)	$	(985)	$	9,409

Net income	Net income	—	—		1,825		—		1,825		Net income	—	—		1,646		—		1,646
Other comprehensive loss, net of taxes		—	—		—		(134)		(134)
Dividends declared on common stock ($1.60 per share)		—	—		(938)		—		(938)
Other comprehensive income, net of taxes											Other comprehensive income, net of taxes	—	—		—		152		152
Dividends declared on common stock ($1.76 per share)											Dividends declared on common stock ($1.76 per share)	—	—		(1,012)		—		(1,012)
Issuance of common stock in connection with the Company’s equity award programs	Issuance of common stock in connection with the Company’s equity award programs	0.9	10		—		—		10		Issuance of common stock in connection with the Company’s equity award programs	0.7	6		—		—		6
Stock-based compensation expense	Stock-based compensation expense	—	52		—		—		52		Stock-based compensation expense	—	57		—		—		57
Tax impact related to employee stock-based compensation expense	Tax impact related to employee stock-based compensation expense	—	(68)		—		—		(68)		Tax impact related to employee stock-based compensation expense	—	(59)		—		—		(59)
Repurchases of common stock	Repurchases of common stock	(4.3)	—		(933)		—		(933)		Repurchases of common stock	(3.7)	—		(865)		—		(865)
Balance as of March 31, 2020		588.0	31,525		(21,378)		(662)		9,485
Balance as of March 31, 2021											Balance as of March 31, 2021	575.3	$	31,806	$	(21,639)	$	(833)	$	9,334

Net income		—	—		1,803		—		1,803
Other comprehensive loss, net of taxes		—	—		—		(121)		(121)

Issuance of common stock in connection with the Company’s equity award programs		1.0	65		—		—		65
Stock-based compensation expense		—	101		—		—		101
Tax impact related to employee stock-based compensation expense		—	(81)		—		—		(81)
Repurchases of common stock		(2.6)	—		(591)		—		(591)
Other		—	—		(2)		—		(2)
Balance as of June 30, 2020		586.4	31,610		(20,168)		(783)		10,659
Net income		—	—		2,021		—		2,021
Other comprehensive loss, net of taxes		—	—		—		(120)		(120)
Dividends declared on common stock ($1.60 per share)		—	—		(952)		—		(952)
Issuance of common stock in connection with the Company’s equity award programs		0.1	5		—		—		5
Stock-based compensation expense		—	109		—		—		109
Tax impact related to employee stock-based compensation expense		—	(11)		—		—		(11)
Repurchases of common stock		(3.0)	—		(752)		—		(752)
Balance as of September 30, 2020		583.5	$	31,713	$	(19,851)	$	(903)	$	10,959

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Nine months ended September 30,					Three months ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	3,994	$	5,649	Net income	$	1,476	$	1,646
Depreciation, amortization and other	Depreciation, amortization and other	2,546		2,728		Depreciation, amortization and other	841		841
Deferred income taxes	Deferred income taxes	(264)		(339)		Deferred income taxes	(251)		(91)
Acquired in-process research and development		1,505		—

Adjustments for equity method investments						Adjustments for equity method investments	305		(85)
Other items, net	Other items, net	187		270		Other items, net	240		164
Changes in operating assets and liabilities, net of acquisitions:	Changes in operating assets and liabilities, net of acquisitions:					Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net	Trade receivables, net	(269)		(31)		Trade receivables, net	(195)		91
Inventories	Inventories	(215)		(316)		Inventories	(230)		(126)
Other assets	Other assets	(373)		64		Other assets	(43)		(146)
Accounts payable	Accounts payable	(260)		(202)		Accounts payable	42		(29)
Accrued income taxes, net	Accrued income taxes, net	(719)		(301)		Accrued income taxes, net	318		52
Long-term tax liabilities	Long-term tax liabilities	102		110		Long-term tax liabilities	57		69
Other liabilities	Other liabilities	219		712		Other liabilities	(396)		(282)
Net cash provided by operating activities	Net cash provided by operating activities	6,453		8,344		Net cash provided by operating activities	2,164		2,104
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired		(1,639)		—

Purchases of marketable securities	Purchases of marketable securities	(8,901)		(5,329)		Purchases of marketable securities	—		(7,597)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	4,403		2,597		Proceeds from sales of marketable securities	—		3,999
Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	7,927		2,338		Proceeds from maturities of marketable securities	32		3,524

Purchases of property, plant and equipment	Purchases of property, plant and equipment	(593)		(435)		Purchases of property, plant and equipment	(190)		(166)
Purchases of equity method investments		(154)		(3,154)

Other	Other	(80)		(34)		Other	47		(79)
Net cash provided by (used in) investing activities		963		(4,017)
Net cash used in investing activities						Net cash used in investing activities	(111)		(319)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net proceeds from issuance of debt	Net proceeds from issuance of debt	4,946		8,914		Net proceeds from issuance of debt	3,952		—
Repayment of debt		—		(5,000)

Repurchases of common stock		(3,532)		(2,281)

Repurchases of common stock (Note 10)						Repurchases of common stock (Note 10)	(6,360)		(871)
Dividends paid	Dividends paid	(3,023)		(2,823)		Dividends paid	(1,080)		(1,016)

Other	Other	(104)		(87)		Other	(26)		(52)
Net cash used in financing activities	Net cash used in financing activities	(1,713)		(1,277)		Net cash used in financing activities	(3,514)		(1,939)
Increase in cash and cash equivalents		5,703		3,050
Decrease in cash and cash equivalents						Decrease in cash and cash equivalents	(1,461)		(154)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	6,266		6,037		Cash and cash equivalents at beginning of period	7,989		6,266
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	11,969	$	9,087	Cash and cash equivalents at end of period	$	6,528	$	6,112

See accompanying notes.

AMGEN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2021~~March 31, 2022

(Unaudited)

1. Summary of significant accounting policies

Business

Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics. We operate in 1 business segment: human therapeutics.

Basis of presentation

The financial information for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ is unaudited but includes all adjustments (consisting of only normal, recurring adjustments unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods. Interim results are not necessarily indicative of results for the full fiscal year.

The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020, and with our condensed consolidated financial statements and the notes thereto contained in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021.

Principles of consolidation

The condensed consolidated financial statements include the accounts of Amgen as well as its majority-owned subsidiaries. In determining whether we are the primary beneficiary of a variable interest entity, we consider whether we have both the power to direct activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses of or the right to receive benefits from the entity that could potentially be significant to that entity. We do not have any significant interests in any variable interest ~~entities.~~entities of which we are the primary beneficiary. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with ~~U.S. generally accepted accounting principles (GAAP)~~GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of ~~$9.2~~$8.9 billion and ~~$9.0~~$8.8 billion as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Recent accounting pronouncements

In March 2020, the ~~Financial Accounting Standards Board (FASB)~~FASB issued a new accounting standard to ease the financial reporting burdens caused by the expected market transition from ~~the London Interbank Offered Rate (LIBOR)~~LIBOR and other interbank offered rates to alternative reference rates, commonly referred to as reference rate reform. The new standard provides temporary optional expedients and exceptions to current GAAP guidance on contract modifications and hedge accounting. Specifically, a modification to transition to an alternative reference rate is treated as an event that does not require contract remeasurement or reassessment of a previous accounting treatment. Moreover, for all types of hedging relationships, an entity is permitted to change the reference rate without having to dedesignate the hedging relationship. The standard is generally effective for all contract modifications made and hedging relationships evaluated through December 31, 2022. In January 2021, the FASB issued a new accounting standard ~~to expand on~~that expanded the scope of the original March 2020 standard to include derivative instruments on discounting transactions. We ~~are currently evaluating the impacts that~~do not expect the two standards ~~will~~to have a material impact on our condensed consolidated financial statements.

In November 2021, the FASB issued a new accounting standard around the recognition and measurement of contract assets and contract liabilities from revenue contracts with customers acquired in a business combination. The new standard clarifies that contract assets and contract liabilities acquired in a business combination from an acquiree should initially be recognized by applying revenue recognition principles and not at fair value. The standard is effective for interim and annual periods beginning on January 1, 2023, and early adoption is permitted. The impact of this standard will depend on the facts and circumstances of future transactions.

~~2. Acquisitions~~

2. Acquisitions

Teneobio, Inc.

On ~~April 16,~~October 19, 2021, ~~Amgen completed its acquisition~~we acquired all of ~~Five Prime Therapeutics, Inc. (Five Prime) for total consideration~~the outstanding stock of ~~$1.6 billion, net~~Teneobio, a privately held, clinical-stage biotechnology company developing a new class of ~~cash acquired.~~biologics called human heavy-chain antibodies, which are single-chain antibodies composed of the human heavy-chain domain. The ~~purchase price was funded with cash on hand. This~~ transaction, which was accounted for as ~~an asset acquisition because substantially all the value of the assets acquired was concentrated~~a business combination, includes Teneobio’s proprietary bispecific and multispecific antibody technologies, which complement Amgen’s existing antibody capabilities and BiTE® platform and will enable significant acceleration and efficiency in the ~~intellectual property rights~~discovery and development of ~~bemarituzumab,~~new molecules to treat diseases across Amgen’s core therapeutic areas. Upon its acquisition, Teneobio became a ~~phase 3 trial-ready, first-in-class program for gastric cancer. Five Prime’s~~wholly owned subsidiary of Amgen, and its operations have been included in our condensed consolidated financial statements commencing ~~after~~on the acquisition date.

Measurement period adjustments for the three months ended March 31, 2022, included changes to the purchase price allocation and total consideration, resulting in a net increase of $22 million to goodwill. The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date. These adjustments did not have a significant impact on Amgen’s results of operations for the three months ended March 31, 2022, and would not have had a significant impact on prior-period results if these adjustments had been made as of the acquisition date. The following table summarizes the total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):


	Amounts
Cash purchase price	$	993
Contingent consideration	299
Total consideration	$	1,292

Cash and cash equivalents	$	100
IPR&D	991
Finite-lived intangible asset – R&D technology rights	115
Finite-lived intangible assets – licensing rights	41
Goodwill	273
Other assets, net	16
Deferred tax liability	(244)
Total assets acquired, net	$	1,292

The consideration for this transaction comprised (i) an upfront cash payment of $993 million, which included a working-capital adjustment, and (ii) future contingent milestone payments to Teneobio’s former equity holders of up to $1.6 billion in cash, based on the achievement of various development and regulatory milestones with regard to the leading asset (AMG 340, formerly TNB-585) and to various development milestones for other drug candidates. The estimated fair values of the contingent consideration obligations aggregated $299 million as of the acquisition date and were determined using a probability-weighted expected return methodology. The assumptions in this method include the probability of achieving the milestones and the expected payment dates, with such amounts discounted to present value based on our pre-tax cost of debt. See Note 11, Fair value measurement, for information regarding the estimated fair value of these obligations as of March 31, 2022.

The estimated fair values of acquired IPR&D assets totaled $991 million, of which $784 million relates to AMG 340, that is in a phase 1 clinical trial for the treatment of mCRPC, and the balance relates to four separate preclinical oncology programs. The R&D technology rights of $115 million relate to Teneobio’s proprietary bispecific and multispecific antibody technologies and will be amortized over 10 years using the straight-line method. Teneobio has also licensed its technology and certain identified targets to various third parties, representing contractual agreements valued at $41 million. The estimated fair values for these intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The projected cash flows were based on certain assumptions attributable to the respective intangible asset, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.

A deferred tax liability of $244 million was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $273 million was recorded as goodwill, which is not deductible for tax purposes. The goodwill value represents expected synergies from both AMG 340 and the technologies acquired.

Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis to determine the acquisition date fair values of certain assets acquired, liabilities assumed and tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.

We allocated the consideration to acquire Five Prime to: the bemarituzumab in-process research and development (IPR&D) program of $1.5 billion, which was expensed immediately in Acquired IPR&D expense in the Condensed Consolidated Statements of Income; deferred tax assets of $177 million; and other net liabilities of $47 million. The acquired IPR&D expense was not tax deductible.

3. Revenues

We operate in 1 business segment: human therapeutics. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. Revenues by product and by geographic area, based on customers’ locations, are presented below. The majority of ~~rest-of-world (ROW)~~ROW revenues relates to products sold in Europe.

Revenues were as follows (in millions):

Three months ended September 30,
2021 2020
U.S. ROW Total U.S. ROW Total
Enbrel® (etanercept)
$ 1,263 $ 26 $ 1,289 $ 1,289 $ 36 $ 1,325
Prolia® (denosumab)
530 273 803 478 223 701
Otezla® (apremilast)
495 114 609 439 99 538
XGEVA® (denosumab)
372 145 517 363 118 481
Neulasta® (pegfilgrastim)
360 55 415 484 71 555
Aranesp® (darbepoetin alfa)
149 247 396 158 226 384
Repatha® (evolocumab)
139 133 272 92 113 205
KYPROLIS® (carfilzomib)
198 95 293 173 87 260
Other products 1,052 674 1,726 1,142 513 1,655
Total product sales(1)
$ 4,558 $ 1,762 6,320 $ 4,618 $ 1,486 6,104
Other revenues 386 319
Total revenues $ 6,706 $ 6,423
Nine months ended September 30,
2021 2020
U.S. ROW Total U.S. ROW Total
ENBREL $ 3,270 $ 87 $ 3,357 $ 3,619 $ 105 $ 3,724
Prolia®
1,569 806 2,375 1,341 673 2,014
Otezla®
1,284 335 1,619 1,280 298 1,578
XGEVA®
1,061 412 1,473 1,036 361 1,397
Neulasta®
1,215 168 1,383 1,538 219 1,757
Aranesp®
409 709 1,118 489 704 1,193
Repatha®
421 423 844 331 303 634
KYPROLIS®
547 277 824 527 266 793
Other products 3,059 1,974 5,033 3,164 1,652 4,816
Total product sales(1)
$ 12,835 $ 5,191 18,026 $ 13,325 $ 4,581 17,906
Other revenues 1,107 884
Total revenues $ 19,133 $ 18,790


	Three months ended March 31,
	2022						2021
	U.S.		ROW		Total		U.S.		ROW		Total
Enbrel	$	843	$	19	$	862	$	894	$	30	$	924
Prolia	582		270		852		501		257		758
XGEVA	368		134		502		334		134		468
Otezla	350		101		451		366		110		476
Aranesp	137		221		358		125		230		355
Neulasta	304		44		348		421		61		482
Repatha	165		164		329		139		147		286
KYPROLIS	196		91		287		159		92		251
Nplate	156		110		266		112		115		227
Other products	936		540		1,476		852		513		1,365
Total product sales(1)	$	4,037	$	1,694	5,731		$	3,903	$	1,689	5,592
Other revenues					507						309
Total revenues					$	6,238					$	5,901

____________

(1) Hedging gains and losses, which are included in product sales, were not material for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

4. Income taxes

The effective tax ~~rate~~rates for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~was 12.6% for both periods, compared with rates of 8.4%~~were 11.9% and ~~9.7%~~11.4%, ~~respectively, for the corresponding periods of the prior year.~~respectively.

The increase in our effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was primarily due to ~~the non-deductible IPR&D expense arising from the acquisition of Five Prime and prior~~current year ~~favorable~~net unfavorable items ~~partially~~compared to last year, offset by ~~a change~~changes in earnings mix. The effective tax rates differ from the federal statutory rate primarily as a result of foreign earnings from the Company’s operations conducted in Puerto Rico, a territory of the United States treated as a foreign jurisdiction for U.S. tax purposes, that are subject to a tax incentive grant through 2035. In addition, the Company’s operations conducted in Singapore are subject to a tax incentive grant through 2034. These foreign earnings are also subject to U.S. tax at a reduced rate of 10.5%.

The U.S. territory of Puerto Rico imposes an excise tax on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico. The rate of 4% is effective through December 31, 2027. We account for the excise tax as a manufacturing cost that is capitalized in inventory and expensed in cost of sales when the related products are sold. For U.S. income tax purposes, in 2022 the excise tax results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred.

In 2017, we received ~~a Revenue Agent Report (RAR)~~an RAR and a modified RAR from the ~~Internal Revenue Service (IRS)~~IRS for the years 2010, 2011 and 2012 proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued ~~a resolution with the IRS administrative appeals office. As previously reported, we were unable to reach~~ resolution with the IRS appeals ~~office.~~office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for 2010, 2011 and 2012 that we received in May and July ~~2021. The duplicate Notices~~2021, which seek to increase our U.S. taxable income for 2010-2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for 2010-2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings. ~~In any event, we firmly believe that the IRS’s positions in the Notices are without merit, and we will vigorously contest the Notices through the judicial process.~~

In ~~addition, in~~ 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010, 2011 and 2012. We ~~disagree~~disagreed with the proposed adjustments and calculations and ~~have been pursuing~~pursued resolution with the IRS ~~administrative~~ appeals ~~office. As~~office but were unable to reach resolution. In April 2022, we received a ~~consequence~~Notice that seeks to increase our U.S. taxable income for 2013-2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for 2013-2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010-2012 and 2013-2015 Notices are without merit. We are contesting the 2010-2012 Notices through the judicial process, and we expect to file a Petition in the U.S. Tax Court to contest the 2013-2015 Notice through the judicial process. We will seek consolidation of the two periods into one case in Tax Court litigation for the 2010-2012 period, the IRS administrative appeals office recently informed us that it does not plan to engage in discussions at this time regarding the allocation of profits between our entities in the United States and the U.S. territory of Puerto Rico for the 2013-2015 period. Court.

We are also currently under examination by the IRS for the years 2016, 2017 and ~~2018. We are also currently under examination~~2018 and by a number of ~~other~~ state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements.

We are no longer subject to U.S. federal income tax examinations for ~~the~~ years ended on or before December 31, 2009.

See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Income Taxes for further discussion and Part II, Item 1A, Risk Factors—The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability.

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the gross amounts of our ~~unrecognized tax benefits (UTBs)~~UTBs increased ~~$70~~$45 million, ~~and $180 million, respectively,~~ as a result of tax positions taken during the current year. Substantially all of the UTBs as of ~~September 30, 2021,~~March 31, 2022, if recognized, would affect our effective tax rate.

5. Earnings per share

The computation of basic ~~earnings per share (EPS)~~EPS is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which primarily include shares that may be issued under our stock option, restricted stock and performance unit award programs (collectively, dilutive securities), as determined by using the treasury stock method.

The computations for basic and diluted EPS were as follows (in millions, except per-share data):


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Income (Numerator):	Income (Numerator):									Income (Numerator):
Net income for basic and diluted EPS	Net income for basic and diluted EPS	$	1,884	$	2,021	$	3,994	$	5,649	Net income for basic and diluted EPS	$	1,476	$	1,646

Shares (Denominator):	Shares (Denominator):									Shares (Denominator):
Weighted-average shares for basic EPS	Weighted-average shares for basic EPS	567		585		572		588		Weighted-average shares for basic EPS	548		577
Effect of dilutive securities	Effect of dilutive securities	3		4		4		4		Effect of dilutive securities	3		4
Weighted-average shares for diluted EPS	Weighted-average shares for diluted EPS	570		589		576		592		Weighted-average shares for diluted EPS	551		581

Basic EPS	Basic EPS	$	3.32	$	3.45	$	6.98	$	9.61	Basic EPS	$	2.69	$	2.85
Diluted EPS	Diluted EPS	$	3.31	$	3.43	$	6.93	$	9.54	Diluted EPS	$	2.68	$	2.83

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.

~~6. Collaborations~~

On July 30, 2021, we closed our collaboration and licensing agreement with Kyowa Kirin Co., Ltd. (KKC) to jointly develop and commercialize an anti-OX40 fully human monoclonal antibody (AMG 451) worldwide, except in Japan. AMG 451 is for the treatment of atopic dermatitis, with potential in other autoimmune diseases.

Under the terms of the agreement, we will lead the global development, manufacturing and commercialization of AMG 451, except in Japan. KKC will co-promote AMG 451 with Amgen in the United States and have opt-in rights to co-promote AMG 451 in various other markets outside the United States, including in Europe and Asia.

We made an upfront payment of $400 million to KKC that was recognized in Research and development (R&D) expense in the third quarter of 2021. Amgen and KKC will share equally the global development costs, except in Japan, and the U.S. commercialization costs. Outside of the United States and Japan, any commercialization costs incurred by KKC will be reimbursed by Amgen. We may also be required to make milestone payments of up to $850 million contingent upon the achievement of certain regulatory events and commercial thresholds. We will also pay KKC significant double-digit royalties on global sales, except in Japan.

1110

6. Investments

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of interest-bearing securities, which are considered available-for-sale, by type of security were as follows (in millions):


Types of securities as of September 30, 2021		Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
Types of securities as of March 31, 2022										Types of securities as of March 31, 2022	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	U.S. Treasury notes	$	51	$	—	$	—	$	51	U.S. Treasury notes	$	16	$	—	$	—	$	16
U.S. Treasury bills	U.S. Treasury bills	3,900		—		—		3,900		U.S. Treasury bills	—		—		—		—

Money market mutual funds	Money market mutual funds	8,323		—		—		8,323		Money market mutual funds	5,837		—		—		5,837
Other short-term interest-bearing securities	Other short-term interest-bearing securities	1		—		—		1		Other short-term interest-bearing securities	—		—		—		—

Total interest-bearing securities	Total interest-bearing securities	$	12,275	$	—	$	—	$	12,275	Total interest-bearing securities	$	5,853	$	—	$	—	$	5,853


Types of securities as of December 31, 2020		Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
Types of securities as of December 31, 2021										Types of securities as of December 31, 2021	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	U.S. Treasury notes	$	129	$	1	$	—	$	130	U.S. Treasury notes	$	47	$	—	$	—	$	47
U.S. Treasury bills	U.S. Treasury bills	4,948		—		—		4,948		U.S. Treasury bills	1,400		—		—		1,400

Money market mutual funds	Money market mutual funds	4,765		—		—		4,765		Money market mutual funds	5,856		—		—		5,856
Other short-term interest-bearing securities	Other short-term interest-bearing securities	2		—		—		2		Other short-term interest-bearing securities	1		—		—		1
Total interest-bearing securities	Total interest-bearing securities	$	9,844	$	1	$	—	$	9,845	Total interest-bearing securities	$	7,304	$	—	$	—	$	7,304

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


Condensed Consolidated Balance Sheets locations	Condensed Consolidated Balance Sheets locations	September 30, 2021		December 31, 2020		Condensed Consolidated Balance Sheets locations	March 31, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	11,323	$	5,464	Cash and cash equivalents	$	5,837	$	7,256
Marketable securities	Marketable securities	952		4,381		Marketable securities	16		48
Total interest-bearing securities	Total interest-bearing securities	$	12,275	$	9,845	Total interest-bearing securities	$	5,853	$	7,304

Cash and cash equivalents in the above table excludes bank account cash of ~~$646~~$691 million and ~~$802~~$733 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

The fair values of available-for-sale investments by contractual maturity were as follows (in millions):


Contractual maturities	Contractual maturities	September 30, 2021		December 31, 2020		Contractual maturities	March 31, 2022		December 31, 2021
Maturing in one year or less	Maturing in one year or less	$	12,275	$	9,795	Maturing in one year or less	$	5,853	$	7,304
Maturing after one year through three years		—		50

Total available-for-sale investments	Total available-for-sale investments	$	12,275	$	9,845	Total available-for-sale investments	$	5,853	$	7,304

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ realized gains and losses on interest-bearing securities were not material. Realized gains and losses on interest-bearing securities are recorded in Other (expense) income, net, in the Condensed Consolidated Statements of Income. The cost of securities sold is based on the specific-identification method.

The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

1211

Equity securities

We held investments in equity securities with readily determinable fair values (publicly traded securities) of ~~$608~~$473 million and ~~$477~~$611 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net unrealized ~~gains~~losses on publicly traded securities were ~~$135~~$170 million and ~~$60 million, respectively. For the nine months ended September 30, 2021 and 2020, net unrealized gains on publicly traded securities were $104 million and $65~~$56 million, respectively. Realized gains and losses on sales of publicly traded securities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020~~ were not material.

We held investments of ~~$255~~$261 million and ~~$203~~$262 million in equity securities without readily determinable fair values as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, gains due to~~ upward adjustments ~~on these securities were $94 million~~ and ~~$12 million, respectively. For the nine months ended September 30, 2021 and 2020, gains due to upward adjustments on these securities were $129 million and $20 million, respectively. Downward~~downward adjustments on these securities were not material. Adjustments were based on observable price transactions.

Equity method investments

BeiGene, Ltd.

As of ~~September 30,~~March 31, 2022 and December 31, 2021, we had an ownership interest of approximately ~~20.3%~~18.4% in BeiGene, ~~Ltd. (BeiGene),~~ which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting. We amortize the difference between the fair value of equity securities acquired and our proportionate share of the carrying value of the underlying net assets of BeiGene over the useful lives of the assets that gave rise to this basis difference. This amortization and our share of the results of operations of BeiGene are included in Other (expense) income, net, in the Condensed Consolidated Statements of Income one quarter in ~~arrears, which began in the second quarter of 2020.~~arrears.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net ~~loss~~losses of ~~$98~~$108 million and ~~$181~~$97 million, respectively, and amortization of the basis difference of ~~$44~~$47 million and ~~$128~~$42 million, respectively. ~~During the three~~As of March 31, 2022 and ~~nine months ended September 30,~~December 31, 2021, the carrying value increased by $18 million and $56 million, respectively, from the impact of BeiGene ownership transactions. In addition, during the three and nine months ended September 30, 2021, we increased the carrying value by $50 million as a result of our purchase of additional shares directly from BeiGene. As of September 30, 2021, the carrying value and fair valuevalues of our investment in BeiGene totaled ~~$2.7~~$2.6 billion and ~~$6.9~~$2.8 billion, respectively, and the fair values of the investment totaled $3.6 billion and $5.1 billion, respectively. As of ~~September 30, 2021,~~March 31, 2022, we believe the carrying value of our equity investment in BeiGene is fully recoverable.

Neumora Therapeutics, Inc.

On September 30, 2021, we acquired approximately 25.9% ownership interest in Neumora, ~~Therapeutics, Inc. (Neumora),~~ a privately held company, for $257 million, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets, in exchange for a $100 million cash payment and $157 million in noncash consideration primarily related to future services. Although our equity investment provides us with the ability to exercise significant influence over Neumora, we have elected the fair value option to account for our equity investment. Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period. We believe the fair value option best reflects the economics of the underlying transaction. As of March 31, 2022 and December 31, 2021, our ownership interest in Neumora was 25.8% and 25.9%, respectively, and the fair values of our investment were $170 million and $220 million, respectively. Accordingly, during the three months ended March 31, 2022, we recognized a loss of $50 million for the reduction in fair value of our investment in Other (expense) income, net, in the Condensed Consolidated Statements of Income. For information on determination of fair values, see Note 11, Fair value measurement.

Limited partnerships

We held limited partnership investments of ~~$556~~$403 million and ~~$496~~$573 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. These investments, primarily investment funds of early-stage biotechnology companies, are accounted for by using the equity method of accounting and are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships as a practical expedient. These investments are typically redeemable only through distributions upon liquidation of the underlying assets. As of ~~September 30, 2021,~~March 31, 2022, unfunded additional commitments to be made for these investments during the next several years were ~~not material. For~~$182 million. During the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~we recognized net ~~unrealized gains and~~ losses ~~on our limited partnership investments were a net loss~~ of ~~$43~~$160 million and a net ~~gain~~gains of ~~$63~~$208 million, ~~respectively. For~~respectively, in Other (expense) income, net in the ~~nine months ended September 30, 2021 and 2020, net unrealized gains from our limited partnership investments were $122 million and $73 million, respectively.~~Condensed Consolidated Statements of Income on these investments.

1312

7. Inventories

Inventories consisted of the following (in millions):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	667	$	486	Raw materials	$	750	$	647
Work in process	Work in process	2,313		2,437		Work in process	2,582		2,367
Finished goods	Finished goods	1,172		970		Finished goods	1,079		1,072
Total inventories	Total inventories	$	4,152	$	3,893	Total inventories	$	4,411	$	4,086

9.8. Goodwill and other intangible assets

Goodwill

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


	~~Nine~~Three months ended ~~September 30, 2021~~March 31, 2022
Beginning balance	$	~~14,689~~14,890
Goodwill resulting from acquisition of a business(1)	22
Currency translation adjustment	~~(24)~~(15)
Ending balance	$	~~14,665~~14,897

____________

(1) Composed of adjustments to goodwill resulting from changes to the acquisition date fair values of net assets acquired in the acquisition of Teneobio (see Note 2, Acquisitions).

Other intangible assets

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


		September 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Gross carrying amounts		Accumulated amortization		Other intangible assets, net		Gross carrying amounts		Accumulated amortization		Other intangible assets, net			Gross carrying amounts		Accumulated amortization		Other intangible assets, net		Gross carrying amounts		Accumulated amortization		Other intangible assets, net
Finite-lived intangible assets:	Finite-lived intangible assets:													Finite-lived intangible assets:
Developed-product-technology rights	Developed-product-technology rights	$	25,575	$	(12,222)	$	13,353	$	25,591	$	(10,564)	$	15,027	Developed-product-technology rights	$	25,550	$	(13,316)	$	12,234	$	25,561	$	(12,769)	$	12,792
Licensing rights	Licensing rights	3,766		(2,931)		835		3,743		(2,791)		952		Licensing rights	3,864		(3,013)		851		3,807		(2,973)		834
Marketing-related rights	Marketing-related rights	1,362		(1,099)		263		1,367		(1,041)		326		Marketing-related rights	1,350		(1,129)		221		1,354		(1,112)		242
Research and development technology rights	Research and development technology rights	1,298		(1,120)		178		1,317		(1,065)		252		Research and development technology rights	1,386		(1,146)		240		1,377		(1,133)		244
Total finite-lived intangible assets	Total finite-lived intangible assets	32,001		(17,372)		14,629		32,018		(15,461)		16,557		Total finite-lived intangible assets	32,150		(18,604)		13,546		32,099		(17,987)		14,112
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:													Indefinite-lived intangible assets:
In-process research and development	In-process research and development	30		—		30		30		—		30		In-process research and development	1,021		—		1,021		1,070		—		1,070
Total other intangible assets	Total other intangible assets	$	32,031	$	(17,372)	$	14,659	$	32,048	$	(15,461)	$	16,587	Total other intangible assets	$	33,171	$	(18,604)	$	14,567	$	33,169	$	(17,987)	$	15,182

Developed-product-technology rights consists of rights related to marketed products. Licensing rights primarily consists of contractual rights to receive future milestone, royalty and profit-sharing payments; capitalized payments to third parties for milestones related to regulatory approvals to commercialize products; and upfront payments associated with royalty obligations for marketed products. Marketing-related rights primarily consists of rights related to the sale and distribution of marketed products. R&D technology rights pertains to technologies used in R&D that have alternative future uses.

IPR&D consists of R&D projects acquired in a business combination that are not complete at the time of acquisition due to remaining technological risks and/or lack of receipt of required regulatory approvals. We review IPR&D projects for impairment annually, whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and upon the establishment of technological feasibility or regulatory approval.

1413

During the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we recognized amortization associated with our finite-lived intangible assets of ~~$642~~$637 million and ~~$708~~$654 million, ~~respectively. During the nine months ended September 30, 2021 and 2020, we recognized amortization associated with our finite-lived intangible assets of $1.9 billion and $2.1 billion,~~ respectively. Amortization of intangible assets is primarily included in Cost of sales in the Condensed Consolidated Statements of Income. The total estimated amortization for our finite-lived intangible assets for the remaining ~~three~~nine months ending December 31, ~~2021,~~2022, and the years ending December 31, ~~2022,~~ 2023, 2024, 2025, 2026 and ~~2026,~~2027, are ~~$0.6~~$1.9 billion, $2.5 billion, $2.5 billion, $2.4 billion, ~~$2.4 billion, $2.2~~$1.7 billion and $1.8 billion, respectively.

1514

~~10.~~

9. Financing arrangements

Our borrowings consisted of the following (in millions):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
1.25% €1,250 million notes due 2022 (1.25% 2022 euro Notes)		$	1,448	$	1,527
2.70% notes due 2022 (2.70% 2022 Notes)		500		500
2.65% notes due 2022 (2.65% 2022 Notes)		1,500		1,500
3.625% notes due 2022 (3.625% 2022 Notes)		750		750
0.41% CHF700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)	0.41% CHF700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)	751		791		0.41% CHF700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)	$	759	$	767
2.25% notes due 2023 (2.25% 2023 Notes)	2.25% notes due 2023 (2.25% 2023 Notes)	750		750		2.25% notes due 2023 (2.25% 2023 Notes)	750		750
3.625% notes due 2024 (3.625% 2024 Notes)	3.625% notes due 2024 (3.625% 2024 Notes)	1,400		1,400		3.625% notes due 2024 (3.625% 2024 Notes)	1,400		1,400
1.90% notes due 2025 (1.90% 2025 Notes)	1.90% notes due 2025 (1.90% 2025 Notes)	500		500		1.90% notes due 2025 (1.90% 2025 Notes)	500		500
3.125% notes due 2025 (3.125% 2025 Notes)	3.125% notes due 2025 (3.125% 2025 Notes)	1,000		1,000		3.125% notes due 2025 (3.125% 2025 Notes)	1,000		1,000
2.00% €750 million notes due 2026 (2.00% 2026 euro Notes)	2.00% €750 million notes due 2026 (2.00% 2026 euro Notes)	869		916		2.00% €750 million notes due 2026 (2.00% 2026 euro Notes)	830		853
2.60% notes due 2026 (2.60% 2026 Notes)	2.60% notes due 2026 (2.60% 2026 Notes)	1,250		1,250		2.60% notes due 2026 (2.60% 2026 Notes)	1,250		1,250
5.50% £475 million notes due 2026 (5.50% 2026 pound sterling Notes)	5.50% £475 million notes due 2026 (5.50% 2026 pound sterling Notes)	640		649		5.50% £475 million notes due 2026 (5.50% 2026 pound sterling Notes)	624		643
2.20% notes due 2027 (2.20% 2027 Notes)	2.20% notes due 2027 (2.20% 2027 Notes)	1,750		1,750		2.20% notes due 2027 (2.20% 2027 Notes)	1,750		1,750
3.20% notes due 2027 (3.20% 2027 Notes)	3.20% notes due 2027 (3.20% 2027 Notes)	1,000		1,000		3.20% notes due 2027 (3.20% 2027 Notes)	1,000		1,000
1.65% note due 2028 (1.65% 2028 Notes)		1,250		—
1.65% notes due 2028 (1.65% 2028 Notes)						1.65% notes due 2028 (1.65% 2028 Notes)	1,250		1,250
3.00% notes due 2029 (3.00% 2029 Notes)						3.00% notes due 2029 (3.00% 2029 Notes)	750		—
4.00% £700 million notes due 2029 (4.00% 2029 pound sterling Notes)	4.00% £700 million notes due 2029 (4.00% 2029 pound sterling Notes)	943		957		4.00% £700 million notes due 2029 (4.00% 2029 pound sterling Notes)	920		947
2.45% notes due 2030 (2.45% 2030 Notes)	2.45% notes due 2030 (2.45% 2030 Notes)	1,250		1,250		2.45% notes due 2030 (2.45% 2030 Notes)	1,250		1,250
2.30% notes due 2031 (2.30% 2031 Notes)	2.30% notes due 2031 (2.30% 2031 Notes)	1,250		1,250		2.30% notes due 2031 (2.30% 2031 Notes)	1,250		1,250
2.00% notes due 2032 (2.00% 2032 Notes)	2.00% notes due 2032 (2.00% 2032 Notes)	1,250		—		2.00% notes due 2032 (2.00% 2032 Notes)	1,250		1,250
3.35% notes due 2032 (3.35% 2032 Notes)						3.35% notes due 2032 (3.35% 2032 Notes)	1,000		—
6.375% notes due 2037 (6.375% 2037 Notes)	6.375% notes due 2037 (6.375% 2037 Notes)	478		478		6.375% notes due 2037 (6.375% 2037 Notes)	478		478
6.90% notes due 2038 (6.90% 2038 Notes)	6.90% notes due 2038 (6.90% 2038 Notes)	254		254		6.90% notes due 2038 (6.90% 2038 Notes)	254		254
6.40% notes due 2039 (6.40% 2039 Notes)	6.40% notes due 2039 (6.40% 2039 Notes)	333		333		6.40% notes due 2039 (6.40% 2039 Notes)	333		333
3.15% notes due 2040 (3.15% 2040 Notes)	3.15% notes due 2040 (3.15% 2040 Notes)	2,000		2,000		3.15% notes due 2040 (3.15% 2040 Notes)	2,000		2,000
5.75% notes due 2040 (5.75% 2040 Notes)	5.75% notes due 2040 (5.75% 2040 Notes)	373		373		5.75% notes due 2040 (5.75% 2040 Notes)	373		373
2.80% note due 2041 (2.80% 2041 Notes)		1,150		—
2.80% notes due 2041 (2.80% 2041 Notes)						2.80% notes due 2041 (2.80% 2041 Notes)	1,150		1,150
4.95% notes due 2041 (4.95% 2041 Notes)	4.95% notes due 2041 (4.95% 2041 Notes)	600		600		4.95% notes due 2041 (4.95% 2041 Notes)	600		600
5.15% notes due 2041 (5.15% 2041 Notes)	5.15% notes due 2041 (5.15% 2041 Notes)	729		729		5.15% notes due 2041 (5.15% 2041 Notes)	729		729
5.65% notes due 2042 (5.65% 2042 Notes)	5.65% notes due 2042 (5.65% 2042 Notes)	415		415		5.65% notes due 2042 (5.65% 2042 Notes)	415		415
5.375% notes due 2043 (5.375% 2043 Notes)	5.375% notes due 2043 (5.375% 2043 Notes)	185		185		5.375% notes due 2043 (5.375% 2043 Notes)	185		185
4.40% notes due 2045 (4.40% 2045 Notes)	4.40% notes due 2045 (4.40% 2045 Notes)	2,250		2,250		4.40% notes due 2045 (4.40% 2045 Notes)	2,250		2,250
4.563% notes due 2048 (4.563% 2048 Notes)	4.563% notes due 2048 (4.563% 2048 Notes)	1,415		1,415		4.563% notes due 2048 (4.563% 2048 Notes)	1,415		1,415
3.375% notes due 2050 (3.375% 2050 Notes)	3.375% notes due 2050 (3.375% 2050 Notes)	2,250		2,250		3.375% notes due 2050 (3.375% 2050 Notes)	2,250		2,250
4.663% notes due 2051 (4.663% 2051 Notes)	4.663% notes due 2051 (4.663% 2051 Notes)	3,541		3,541		4.663% notes due 2051 (4.663% 2051 Notes)	3,541		3,541
3.00% notes due 2052 (3.00% 2052 Notes)	3.00% notes due 2052 (3.00% 2052 Notes)	1,350		—		3.00% notes due 2052 (3.00% 2052 Notes)	1,350		1,350
4.20% notes due 2052 (4.20% 2052 Notes)						4.20% notes due 2052 (4.20% 2052 Notes)	1,000		—
2.77% notes due 2053 (2.77% 2053 Notes)	2.77% notes due 2053 (2.77% 2053 Notes)	940		940		2.77% notes due 2053 (2.77% 2053 Notes)	940		940
4.40% notes due 2062 (4.40% 2062 Notes)						4.40% notes due 2062 (4.40% 2062 Notes)	1,250		—
Other notes due 2097	Other notes due 2097	100		100		Other notes due 2097	100		100
Unamortized bond discounts, premiums and issuance costs, net	Unamortized bond discounts, premiums and issuance costs, net	(1,221)		(1,188)		Unamortized bond discounts, premiums and issuance costs, net	(1,253)		(1,213)
Fair value adjustments	Fair value adjustments	371		566		Fair value adjustments	(53)		284
Other	Other	15		5		Other	14		15
Total carrying value of debt	Total carrying value of debt	37,579		32,986		Total carrying value of debt	36,854		33,309
Less current portion	Less current portion	(4,288)		(91)		Less current portion	(844)		(87)
Total long-term debt	Total long-term debt	$	33,291	$	32,895	Total long-term debt	$	36,010	$	33,222

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

1615

During the three months ended ~~September 30, 2021,~~March 31, 2022, we issued ~~$5.0~~$4.0 billion of debt consisting of $750 million of the 3.00% 2029 Notes, $1.0 billion of the 3.35% 2032 Notes, $1.0 billion of the 4.20% 2052 Notes and $1.25 billion of the ~~1.65% 2028~~4.40% 2062 Notes. The 3.00% 2029 Notes ~~$1.25 billion of~~were issued to finance eligible projects that meet specified criteria to benefit the ~~2.00% 2032 Notes, $1.15 billion of the 2.80% 2041 Notes and $1.35 billion of the 3.00% 2052 Notes.~~environment. In the event of a change-in-control triggering event, as defined in the terms of the notes, we may be required to purchase all or a portion of these notes at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest. In addition, these notes may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued and unpaid interest and a make-whole amount, which are defined by the terms of the notes. The notes may be redeemed without payment of make-whole amounts if redemption occurs during a specified period of time immediately prior to the maturing of the notes. Such time periods range from two months to six months prior to maturity.

During the three months ended June 30, 2021, we entered into the following interest rate swap contracts: (i) $1.0 billion notional amount with respect to the 2.45% 2030 Notes, resulting in an effective interest rate of three-month LIBOR plus 1.0% for that portion of the notes, and (ii) $500 million notional amount with respect to the 2.30% 2031 Notes, resulting in an effective interest rate of three-month LIBOR plus 0.8% for that portion of the notes.

~~11.~~10. Stockholders’ equity

Stock repurchase program

Activity under our stock repurchase program, on a trade date basis, was as follows (in millions):

2021 2020
Shares Dollars Shares Dollars
First quarter 3.7 $ 865 4.3 $ 933
Second quarter 6.5 1,592 2.6 591
Third quarter 4.6 1,069 3.0 752
Total stock repurchases 14.8 $ 3,526 9.9 $ 2,276


	2022			2021
	Shares	Dollars		Shares	Dollars
First quarter	24.6	$	5,410	3.7	$	865

On February 24, 2022, the Company entered into ASR agreements with 3 third-party financial institutions (Dealers). Under the ASR agreements, the Company made payments in an aggregate amount of $6.0 billion on February 25, 2022, to the Dealers and received and retired an initial 23.3 million shares of the Company’s common stock from the Dealers. The payments were recorded as reductions to shareholders’ equity, consisting of a $5.1 billion increase to accumulated deficit, which reflects the value of the initial shares received, and a $0.9 billion decrease in additional paid-in capital, which reflects the value of the stock that remains to be delivered by the Dealers pending final settlement. The final number of shares to be repurchased by the Company will be based on the daily volume-weighted average stock price of the Company’s common stock during the terms of the ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. At settlement, under certain circumstances, one or more of the Dealers may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of common stock or to make a cash payment, at its election, to a Dealer. The final settlement under the ASR agreements is scheduled to occur in the third quarter of 2022, subject to an earlier termination under certain limited circumstances, as set forth in the ASR agreements. In ~~March 2021, our Board~~total, we repurchased 24.6 million shares of ~~Directors increased~~common stock in the ~~amount authorized~~first quarter of 2022, including shares received under ~~our stock repurchase program by an additional $3.4 billion.~~ the ASR agreements.

As of ~~September 30, 2021, $2.9~~March 31, 2022, $4.6 billion of ~~authorization~~authorization remained available under our stock repurchase program.

~~In October 2021, the Board of Directors increased the amount authorized under our stock repurchase program by an additional $4.5 billion.~~

Dividends

In ~~July 2021,~~ March ~~2021 and December 2020,~~2022, the Board of Directors declared a quarterly cash dividend of ~~$1.76~~$1.94 per share, which ~~were~~will be paid in ~~September 2021,~~ June ~~2021 and March 2021, respectively.~~2022. In ~~October~~December 2021, the Board of Directors declared a quarterly cash dividend of ~~$1.76~~$1.94 per share, which ~~will be~~was paid ~~on December 8, 2021.~~in March 2022.

Accumulated other comprehensive income (loss)

The components of ~~Accumulated other comprehensive income (loss) (AOCI)~~AOCI were as follows (in millions):


		Foreign currency translation		Cash flow hedges		Available-for-sale securities		Other		AOCI			Foreign currency translation		Cash flow hedges		Available-for-sale securities		Other		AOCI
Balance as of December 31, 2020		$	(709)	$	(263)	$	1	$	(14)	$	(985)
Balance as of December 31, 2021												Balance as of December 31, 2021	$	(844)	$	61	$	—	$	(13)	$	(796)

Foreign currency translation adjustments	Foreign currency translation adjustments	(39)		—		—		—		(39)		Foreign currency translation adjustments	(51)		—		—		—		(51)
Unrealized gains	Unrealized gains	—		108		—		—		108		Unrealized gains	—		56		—		—		56
Reclassification adjustments to income	Reclassification adjustments to income	—		133		—		—		133		Reclassification adjustments to income	—		51		—		—		51
Other		—		—		—		1		1

Income taxes	Income taxes	—		(51)		—		—		(51)		Income taxes	—		(23)		—		—		(23)
Balance as of March 31, 2021		(748)		(73)		1		(13)		(833)
Balance as of March 31, 2022												Balance as of March 31, 2022	$	(895)	$	145	$	—	$	(13)	$	(763)

Foreign currency translation adjustments		14		—		—		—		14
Unrealized losses		—		(31)		—		—		(31)
Reclassification adjustments to income		—		(28)		—		—		(28)
Other		—		—		—		(1)		(1)
Income taxes		—		11		—		—		11
Balance as of June 30, 2021		(734)		(121)		1		(14)		(868)
Foreign currency translation adjustments		(35)		—		—		—		(35)
Unrealized gains (losses)		—		16		(1)		—		15
Reclassification adjustments to income		—		109		—		—		109
Other		—		—		—		(3)		(3)
Income taxes		—		(26)		—		—		(26)
Balance as of September 30, 2021		$	(769)	$	(22)	$	—	$	(17)	$	(808)

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

Three months ended September 30,
Components of AOCI 2021 2020 Condensed Consolidated
Statements of Income locations
Cash flow hedges:
Foreign currency contract (losses) gains $ (5) $ 41 Product sales
Cross-currency swap contract (losses) gains (104) 183 Other income, net
(109) 224 Income before income taxes
23 (49) Provision for income taxes
$ (86) $ 175 Net income
Available-for-sale securities:
Net realized gains $ — $ — Other income, net
— — Provision for income taxes
$ — $ — Net income
Nine months ended September 30,
Components of AOCI 2021 2020 Condensed Consolidated
Statements of Income locations
Cash flow hedges:
Foreign currency contract (losses) gains $ (24) $ 158 Product sales
Cross-currency swap contract (losses) gains (190) 101 Other income, net
(214) 259 Income before income taxes
45 (57) Provision for income taxes
$ (169) $ 202 Net income
Available-for-sale securities:
Net realized gains $ — $ 33 Other income, net
— (7) Provision for income taxes
$ — $ 26 Net income


	Three months ended March 31,
Components of AOCI	2022		2021		Condensed Consolidated Statements of Income locations
Cash flow hedges:
Foreign currency contract gains (losses)	$	27	$	(1)	Product sales
Cross-currency swap contract losses	(78)		(132)		Other (expense) income, net

	(51)		(133)		Income before income taxes
	11		28		Provision for income taxes
	$	(40)	$	(105)	Net income

~~12.~~

11. Fair value measurement

To estimate the fair value of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing an asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is divided into three levels based on the source of inputs as follows:


Level 1	—	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
Level 2	—	Valuations for which all significant inputs are observable either directly or indirectly—other than Level 1 inputs
Level 3	—	Valuations based on inputs that are unobservable and significant to the overall fair value measurement

The availability of observable inputs can vary among different types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.

The fair values of each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows (in millions):


		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)							Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)

Fair value measurement as of September 30, 2021, using:								Total
Fair value measurement as of March 31, 2022, using:													Fair value measurement as of March 31, 2022, using:						Quoted prices in active markets for identical assets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Assets:	Assets:																						Assets:
Available-for-sale securities:	Available-for-sale securities:												Available-for-sale securities:
U.S. Treasury notes	U.S. Treasury notes			$	51				$	—	$	—		$	51			U.S. Treasury notes					$	16				$	—	$	—	$	16
U.S. Treasury bills	U.S. Treasury bills	3,900				—			—		3,900		U.S. Treasury bills			—					—			—			—

Money market mutual funds	Money market mutual funds	8,323				—			—		8,323		Money market mutual funds			5,837				—			—			5,837
Other short-term interest-bearing securities	Other short-term interest-bearing securities	—				1			—		1		Other short-term interest-bearing securities			—				—			—			—
Equity securities	Equity securities	608				—			257		865		Equity securities			473				—			170			643
Derivatives:	Derivatives:												Derivatives:
Foreign currency contracts	Foreign currency contracts	—				127			—		127		Foreign currency contracts			—				235			—			235
Cross-currency swap contracts	Cross-currency swap contracts	—				119			—		119		Cross-currency swap contracts			—				65			—			65
Interest rate swap contracts	Interest rate swap contracts	—				29			—		29		Interest rate swap contracts			—				—			—			—

Total assets	Total assets	$	12,882			$	276		$	257	$	13,415	Total assets			$	6,326			$	300		$	170		$	6,796

Liabilities:	Liabilities:												Liabilities:
Derivatives:	Derivatives:												Derivatives:
Foreign currency contracts	Foreign currency contracts	$	—			$	54		$	—	$	54	Foreign currency contracts			$	—			$	51		$	—		$	51
Cross-currency swap contracts	Cross-currency swap contracts	—				360			—		360		Cross-currency swap contracts			—				358			—			358
Interest rate swap contracts	Interest rate swap contracts	—				105			—		105		Interest rate swap contracts			—				456			—			456
Contingent consideration obligations	Contingent consideration obligations	—				—			35		35		Contingent consideration obligations			—				—			330			330
Total liabilities	Total liabilities	$	—			$	519		$	35	$	554	Total liabilities			$	—			$	865		$	330		$	1,195

2018

Quoted prices in
active markets for
identical assets
(Level 1) Significant
other observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3)
Fair value measurement as of December 31, 2020, using: Total
Assets:
Available-for-sale securities:
U.S. Treasury notes $ 130 $ — $ — $ 130
U.S. Treasury bills 4,948 — — 4,948
Money market mutual funds 4,765 — — 4,765
Other short-term interest-bearing securities — 2 — 2
Equity securities 477 — — 477
Derivatives:
Foreign currency contracts — 28 — 28
Cross-currency swap contracts — 255 — 255
Interest rate swap contracts — 66 — 66
Total assets $ 10,320 $ 351 $ — $ 10,671
Liabilities:
Derivatives:
Foreign currency contracts $ — $ 237 $ — $ 237
Cross-currency swap contracts — 318 — 318
Interest rate swap contracts — 15 — 15
Contingent consideration obligations — — 33 33
Total liabilities $ — $ 570 $ 33 $ 603


	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

Fair value measurement as of December 31, 2021, using:							Total
Assets:
Available-for-sale securities:
U.S. Treasury notes	$	47	$	—	$	—	$	47
U.S. Treasury bills	1,400		—		—		1,400









Money market mutual funds	5,856		—		—		5,856
Other short-term interest-bearing securities	—		1		—		1
Equity securities	611		—		220		831
Derivatives:
Foreign currency contracts	—		183		—		183
Cross-currency swap contracts	—		66		—		66
Interest rate swap contracts	—		16		—		16
Total assets	$	7,914	$	266	$	220	$	8,400

Liabilities:
Derivatives:
Foreign currency contracts	$	—	$	39	$	—	$	39
Cross-currency swap contracts	—		339		—		339
Interest rate swap contracts	—		156		—		156
Contingent consideration obligations	—		—		342		342
Total liabilities	$	—	$	534	$	342	$	876

Interest-bearing and equity securities

The fair values of our U.S. Treasury securities, money market mutual funds and equity investments in publicly traded securities are based on quoted market prices in active markets, with no valuation adjustment. The fair value of equity securities without readily determinable fair values are initially valued at the transaction price and subsequently valued based upon a combination of ~~entity-specific financial information~~market performance and publicly available market information for similar companies that have actively traded equity securities.

Derivatives

All of our foreign currency forward derivative contracts have maturities of three years or less, and all are with counterparties that have minimum credit ratings of A– or equivalent by ~~Standard & Poor’s Financial Services LLC (S&P),~~S&P, Moody’s ~~Investors Service, Inc. (Moody’s)~~ or ~~Fitch Ratings, Inc. (Fitch).~~Fitch. We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that uses an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include foreign currency exchange rates, LIBOR, swap rates and obligor credit default swap rates. In addition, inputs for our foreign currency option contracts include implied volatility measures. These inputs, when applicable, are at commonly quoted intervals. See Note ~~13,~~12, Derivative instruments.

Our cross-currency swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch. We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that uses an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include foreign currency exchange rates, LIBOR, swap rates, obligor credit default swap rates and cross-currency-basis swap spreads. See Note ~~13,~~12, Derivative instruments.

Our interest rate swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch. We estimate the fair values of these contracts by using an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include LIBOR, swap rates and obligor credit default swap rates. See Note ~~13,~~12, Derivative instruments.

2119

~~During~~

Contingent consideration obligations

As a result of our business acquisitions, we have incurred contingent consideration obligations as discussed below. The contingent consideration obligations are recorded at their fair values by using probability-adjusted discounted cash flows, and we revalue these obligations each reporting period until the ~~three~~related contingencies have been resolved. The fair value measurements of these obligations are based on significant unobservable inputs related to licensing rights and ~~nine months ended September 30, 2021~~product candidates acquired in business combinations, and ~~2020, there were no material remeasurements~~they are reviewed quarterly by management in our R&D and commercial sales organizations. The inputs include, as applicable, estimated probabilities and the timing of achieving specified development, regulatory and commercial milestones as well as estimated annual sales. Significant changes that increase or decrease the probabilities of achieving the related development, regulatory and commercial events or that shorten or lengthen the time required to achieve such events or that increase or decrease estimated annual sales would result in corresponding increases or decreases in the fair values of ~~assets~~the obligations, as applicable. Changes in the fair values of contingent consideration obligations are recognized in Other operating expenses in the Condensed Consolidated Statements of Income.

Changes in the carrying amounts of contingent consideration obligations were as follows (in millions):


	Three Months Ended March 31,
	2022		2021
Beginning balance	$	342	$	33

Payments	(2)		(1)
Net changes in valuations	(10)		7
Ending balance	$	330	$	39

As of March 31, 2022 and ~~liabilities that~~December 31, 2021, our contingent consideration obligations are ~~not measured at fair value on a recurring basis.~~primarily the result of our acquisition of Teneobio in October 2021, which obligates us to pay the former shareholders up to $1.6 billion upon achieving separate development and regulatory milestones with regard to various R&D programs. See Note 2, Acquisitions.

Summary of the fair values of other financial instruments

Cash equivalents

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

Borrowings

We estimated the fair values of our borrowings by using Level 2 inputs. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the aggregate fair values of our borrowings were ~~$42.2~~$38.4 billion and ~~$39.4~~$37.9 billion, respectively, and the carrying values were ~~$37.6~~$36.9 billion and ~~$33.0~~$33.3 billion, respectively.

During the three months ended March 31, 2022 and 2021, there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

Investment in BeiGene

We estimated the fair value of our investment in BeiGene by using Level 1 inputs. As of March 31, 2022 and December 31, 2021, the fair values were $3.6 billion and $5.1 billion, and the carrying values were $2.6 billion and $2.8 billion, respectively.

During the three months ended March 31, 2022 and 2021, there were no transfers of assets or liabilities between fair value measurement levels, and there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

~~13.~~

12. Derivative instruments

The Company is exposed to foreign currency exchange rate and interest rate risks related to its business operations. To reduce our risks related to such exposures, we use or have used certain derivative instruments, including foreign currency forward, cross-currency swap, forward interest rate and interest rate swap contracts. We do not use derivatives for speculative- trading purposes.

Cash flow hedges

We are exposed to possible changes in the values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates primarily associated with our euro-denominated international product sales. Increases and decreases in the cash flows associated with our international product sales due to movements in foreign currency exchange rates are partially offset by corresponding increases and decreases in the cash flows from our international operating expenses resulting from these foreign currency exchange rate movements. To further reduce our exposure to foreign currency exchange rate fluctuations with regard to our international product sales, we enter into foreign currency forward contracts to hedge a portion of our projected international product sales up to a maximum of three years into the future; and at any given point in time, a higher percentage of nearer-term projected product sales are being hedged than in successive periods.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had outstanding foreign currency forward contracts with aggregate notional amounts of ~~$5.7~~$5.6 billion and ~~$5.1~~$5.7 billion, respectively. We have designated these foreign currency forward contracts, which are primarily euro based, as cash flow hedges. Accordingly, we report the unrealized gains and losses on these contracts in AOCI in the Condensed Consolidated Balance Sheets, and we reclassify them to Product sales in the Condensed Consolidated Statements of Income in the same periods during which the hedged transactions affect earnings.

To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term debt denominated in foreign currencies, we enter into cross-currency swap contracts. Under the terms of such contracts, we paid euros, pounds sterling and Swiss francs and received U.S. dollars for the notional amounts at the inception of the contracts; and based on these notional amounts, we exchange interest payments at fixed rates over the lives of the contracts by paying U.S. dollars and receiving euros, pounds sterling and Swiss francs. In addition, we will pay U.S. dollars to and receive euros, pounds sterling and Swiss francs from the counterparties at the maturities of the contracts for these same notional amounts. The terms of these contracts correspond to the related hedged debt, thereby effectively converting the interest payments and principal repayment on the debt from euros, pounds sterling and Swiss francs to U.S. dollars. We have designated these cross-currency swap contracts as cash flow hedges. Accordingly, the unrealized gains and losses on these contracts are reported in AOCI in the Condensed Consolidated Balance Sheets and reclassified to Other (expense) income, net, in the Condensed Consolidated Statements of Income in the same periods during which the hedged debt affects earnings.

The notional amounts and interest rates of our cross-currency swaps as of ~~September 30, 2021,~~March 31, 2022, were as follows (notional amounts in millions):


		Foreign currency				U.S. dollars					Foreign currency				U.S. dollars
Hedged notes	Hedged notes	Notional amounts		Interest rates		Notional amounts		Interest rates		Hedged notes	Notional amounts		Interest rates		Notional amounts		Interest rates

1.25% 2022 euro Notes		€	1,250	1.3	%	$	1,388	3.2	%
0.41% 2023 Swiss franc Bonds	0.41% 2023 Swiss franc Bonds	CHF	700	0.4	%	$	704	3.4	%	0.41% 2023 Swiss franc Bonds	CHF	700	0.4	%	$	704	3.4	%
2.00% 2026 euro Notes	2.00% 2026 euro Notes	€	750	2.0	%	$	833	3.9	%	2.00% 2026 euro Notes	€	750	2.0	%	$	833	3.9	%
5.50% 2026 pound sterling Notes	5.50% 2026 pound sterling Notes	£	475	5.5	%	$	747	6.0	%	5.50% 2026 pound sterling Notes	£	475	5.5	%	$	747	6.0	%
4.00% 2029 pound sterling Notes	4.00% 2029 pound sterling Notes	£	700	4.0	%	$	1,111	4.5	%	4.00% 2029 pound sterling Notes	£	700	4.0	%	$	1,111	4.5	%

In connection with the anticipated issuance of long-term fixed-rate debt, we occasionally enter into forward interest rate contracts in order to hedge the variability in cash flows due to changes in the applicable U.S. Treasury rate between the time we enter into these contracts and the time the related debt is issued. Gains and losses on forward interest rate contracts, which are designated as cash flow hedges, are recognized in AOCI in the Condensed Consolidated Balance Sheets and are amortized into Interest expense, net, in the Condensed Consolidated Statements of Income over the lives of the associated debt issuances. Amounts recognized in connection with forward interest rate swaps during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, and amounts expected to be recognized during the subsequent 12 months are not material.

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
Derivatives in cash flow hedging relationships	Derivatives in cash flow hedging relationships	2021		2020		2021		2020		Derivatives in cash flow hedging relationships	2022		2021
Foreign currency contracts	Foreign currency contracts	$	136	$	(163)	$	273	$	(25)	Foreign currency contracts	$	78	$	183
Cross-currency swap contracts	Cross-currency swap contracts	(120)		223		(180)		(107)		Cross-currency swap contracts	(22)		(75)

Total unrealized gains (losses)		$	16	$	60	$	93	$	(132)
Total unrealized gains										Total unrealized gains	$	56	$	108

Fair value hedges

To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that qualified for and were designated as fair value hedges. These interest rate swap contracts effectively convert fixed-rate coupons to floating-rate LIBOR-based coupons over the terms of the related hedge contracts. As of ~~September 30, 2021~~both March 31, 2022 and December 31, ~~2020,~~2021, we had interest rate swap contracts with aggregate notional amounts of ~~$7.4~~$6.7 billion ~~and $5.9 billion, respectively,~~ that hedge certain portions of our long-term debt issuances. During the three months ended June 30, 2021, we entered into $1.5 billion of interest rate swap contracts to hedge portions of our 2.45% 2030 Notes and 2.30% 2031 Notes (see Note 10, Financing arrangements).

For interest rate swap contracts that qualify for and are designated as fair value hedges, we recognize in Interest expense, net, in the Condensed Consolidated Statements of Income the unrealized gain or loss on the derivative resulting from the change in fair value during the period, as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk. If a hedging relationship involving an interest rate swap contract is terminated, the gain or loss realized on contract termination is recorded as an adjustment to the carrying value of the debt and amortized into Interest expense, net, over the remaining life of the previously hedged debt.

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


		Carrying amounts of hedged liabilities(1)				Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2)					Carrying amounts of hedged liabilities(1)				Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2)
Condensed Consolidated Balance Sheets locations	Condensed Consolidated Balance Sheets locations	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		Condensed Consolidated Balance Sheets locations	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Current portion of long-term debt	Current portion of long-term debt	$	840	$	89	$	90	$	89	Current portion of long-term debt	$	83	$	85	$	83	$	85
Long-term debt	Long-term debt	$	6,809	$	6,258	$	281	$	477	Long-term debt	$	6,395	$	6,729	$	(136)	$	199

____________

(1) Current portion of long-term debt includes ~~$87~~$83 million and ~~$89~~$85 million of carrying value with discontinued hedging relationships as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Long-term debt includes ~~$460~~$419 million and ~~$525~~$440 million of carrying value with discontinued hedging relationships as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

(2) Current portion of long-term debt includes ~~$87~~$83 million and ~~$89~~$85 million of hedging adjustments on discontinued hedging relationships as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Long-term debt includes ~~$360~~$319 million and ~~$425~~$340 million of hedging adjustments on discontinued hedging relationships as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

2422

Impact of hedging transactions

The following tables summarize the amounts recorded in income and expense line items and the effects thereon from fair value and cash flow hedging, including discontinued hedging relationships (in millions):


		Three months ended September 30, 2021						Nine months ended September 30, 2021							Three months ended March 31, 2022
		Product sales		Other income, net		Interest expense, net		Product sales		Other income, net		Interest expense, net			Product sales		Other (expense) income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	6,320	$	73	$	(296)	$	18,026	$	97	$	(862)	Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	5,731	$	(530)	$	(295)
The effects of cash flow and fair value hedging:	The effects of cash flow and fair value hedging:													The effects of cash flow and fair value hedging:
Losses on cash flow hedging relationships reclassified out of AOCI:
Gains (losses) on cash flow hedging relationships reclassified out of AOCI:														Gains (losses) on cash flow hedging relationships reclassified out of AOCI:
Foreign currency contracts	Foreign currency contracts	$	(5)	$	—	$	—	$	(24)	$	—	$	—	Foreign currency contracts	$	27	$	—	$	—
Cross-currency swap contracts	Cross-currency swap contracts	$	—	$	(104)	$	—	$	—	$	(190)	$	—	Cross-currency swap contracts	$	—	$	(78)	$	—

Gains (losses) on fair value hedging relationships—interest rate swap agreements:	Gains (losses) on fair value hedging relationships—interest rate swap agreements:													Gains (losses) on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	Hedged items(1)	$	—	$	—	$	54	$	—	$	—	$	195	Hedged items(1)	$	—	$	—	$	337
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	$	—	$	—	$	(31)	$	—	$	—	$	(128)	Derivatives designated as hedging instruments	$	—	$	—	$	(315)


		Three months ended September 30, 2020						Nine months ended September 30, 2020							Three months ended March 31, 2021
		Product sales		Other income, net		Interest expense, net		Product sales		Other income, net		Interest expense, net			Product sales		Other (expense) income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	6,104	$	55	$	(302)	$	17,906	$	69	$	(944)	Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	5,592	$	13	$	(285)
The effects of cash flow and fair value hedging:	The effects of cash flow and fair value hedging:													The effects of cash flow and fair value hedging:
Gains on cash flow hedging relationships reclassified out of AOCI:
Losses on cash flow hedging relationships reclassified out of AOCI:														Losses on cash flow hedging relationships reclassified out of AOCI:
Foreign currency contracts	Foreign currency contracts	$	41	$	—	$	—	$	158	$	—	$	—	Foreign currency contracts	$	(1)	$	—	$	—
Cross-currency swap contracts	Cross-currency swap contracts	$	—	$	183	$	—	$	—	$	101	$	—	Cross-currency swap contracts	$	—	$	(132)	$	—

Gains (losses) on fair value hedging relationships—interest rate swap agreements:	Gains (losses) on fair value hedging relationships—interest rate swap agreements:													Gains (losses) on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	Hedged items(1)	$	—	$	—	$	35	$	—	$	—	$	215	Hedged items(1)	$	—	$	—	$	175
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	$	—	$	—	$	(13)	$	—	$	—	$	(150)	Derivatives designated as hedging instruments	$	—	$	—	$	(152)

__________

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

No portions of our cash flow hedge contracts were excluded from the assessment of hedge effectiveness. As of ~~September 30, 2021, the~~March 31, 2022, we expected to reclassify $120 million of net gains ~~expected to be reclassified~~ on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 ~~months are not material.~~months.

2523

Derivatives not designated as hedges

To reduce our exposure to foreign currency fluctuations in certain assets and liabilities denominated in foreign currencies, we enter into foreign currency forward contracts that are not designated as hedging transactions. Most of these exposures are hedged on a month-to-month basis. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the total notional amounts of these foreign currency forward contracts were ~~$0.7 billion~~$655 million and ~~$1.0 billion,~~$680 million, respectively. Gains and losses recognized in earnings for our derivative instruments not designated as hedging instruments were not material for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

The fair values of derivatives included in the Condensed Consolidated Balance Sheets were as follows (in millions):

Derivative assets

Derivative liabilities

Derivative assets

Derivative liabilities

September 30, 2021

Condensed Consolidated
Balance Sheets locations

Fair values

Condensed Consolidated
Balance Sheets locations

Fair values

March 31, 2022

Condensed Consolidated
Balance Sheets locations

Fair values

Condensed Consolidated
Balance Sheets locations

Fair values

Derivatives designated as hedging instruments:

Foreign currency contracts

Other current assets/ Other noncurrent assets

127

Accrued liabilities/ Other noncurrent liabilities

Foreign currency contracts

Other current assets/ Other noncurrent assets

235

Accrued liabilities/ Other noncurrent liabilities

Cross-currency swap contracts

Other current assets/ Other noncurrent assets

119

Accrued liabilities/ Other noncurrent liabilities

360

Cross-currency swap contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

358

Interest rate swap contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

105

Interest rate swap contracts

Other current assets/ Other noncurrent assets

—

Accrued liabilities/ Other noncurrent liabilities

456

Total derivatives designated as hedging instruments

275

519

Total derivatives designated as hedging instruments

300

865

Derivative assets

Derivative liabilities

Derivative assets

Derivative liabilities

December 31, 2020

Condensed Consolidated
Balance Sheets locations

Fair values

Condensed Consolidated
Balance Sheets locations

Fair values

December 31, 2021

Condensed Consolidated
Balance Sheets locations

Fair values

Condensed Consolidated
Balance Sheets locations

Fair values

Derivatives designated as hedging instruments:

Foreign currency contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

237

Foreign currency contracts

Other current assets/ Other noncurrent assets

183

Accrued liabilities/ Other noncurrent liabilities

Cross-currency swap contracts

Other current assets/ Other noncurrent assets

255

Accrued liabilities/ Other noncurrent liabilities

318

Cross-currency swap contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

339

Interest rate swap contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

Interest rate swap contracts

Other current assets/ Other noncurrent assets

Accrued liabilities/ Other noncurrent liabilities

156

Total derivatives designated as hedging instruments

349

570

Total derivatives designated as hedging instruments

265

534

Our derivative contracts that were in liability positions as of ~~September 30, 2021,~~March 31, 2022, contain certain credit-risk-related contingent provisions that would be triggered if (i) we were to undergo a change in control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change in control. If these events were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early-termination provisions. In such circumstances, the counterparties could request immediate settlement of these contracts for amounts that approximate the then current fair values of the contracts. In addition, our derivative contracts are not subject to any type of master netting arrangement, and amounts due either to or from a counterparty under the contracts may be offset against other amounts due either to or from the same counterparty only if an event of default or termination, as defined, were to occur.

The cash flow effects of our derivative contracts in the Condensed Consolidated Statements of Cash Flows are included in Net cash provided by operating activities, except for the settlement of notional amounts of cross-currency swaps, which are included in Net cash used in financing activities.

2624

~~14.~~

13. Contingencies and commitments

Contingencies

In the ordinary course of business, we are involved in various legal proceedings, government investigations and other matters that are complex in nature and have outcomes that are difficult to predict. See our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, Part I, Item 1A. Risk Factors—Our business may be affected by litigation and government investigations. We describe our legal proceedings and other matters that are significant or that we believe could become significant in this footnote; and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020; in Note 12, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2021; and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2021.

We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously.

Our legal proceedings involve various aspects of our business and a variety of claims, some of which present novel factual allegations and/or unique legal theories. In each of the matters described in this filing; and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020; in Note 12, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2021; or in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2021, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material. In addition, a number of the matters pending against us are at very early stages of the legal process, which in complex proceedings of the sort we face often extend for several years. As a result, none of the matters described in this filing; and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020; in Note 12, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2021; or in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2021, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material. While it is not possible to accurately predict or determine the eventual outcomes of these matters, an adverse determination in one or more of these matters currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Certain recent developments concerning our legal proceedings and other matters are discussed below:

~~Abbreviated New Drug Application (ANDA)~~Repatha Patent Litigation

~~Otezla~~® ~~ANDA Patent Litigation~~

Amgen Inc., et al. v. ~~Sandoz Inc.,~~Sanofi, et al.

On ~~September~~March 28, 2022, Amgen filed a reply brief in support of its petition for certiorari to the U.S. Supreme Court. On April 18, 2022, the Supreme Court requested that the Office of the Solicitor General of the United States submit a brief providing the government’s view on the issues raised by Amgen’s petition.

Patent Disputes in the International Region

On March 23, 2022, Amgen filed counterclaims alleging that PRALUENT® infringes Amgen’s European Patent 2,641,917 (the ‘917 Patent). A European Patent Office (EPO) opposition to the ‘917 Patent, filed by Sanofi on February 5, 2021, ~~consistent with its September 20, 2021 opinion~~is pending, and ~~order,~~the hearing before the EPO’s Opposition Division is scheduled for February 21, 2023.

NEUPOGEN (filgrastim)/Neulasta Patent Litigation

Amgen Inc., et al. v. Hospira Inc. et al.

On March 18, 2022, the parties filed a stipulation of dismissal, and the U.S. District Court for the District of ~~New Jersey~~Delaware (the ~~New Jersey~~Delaware District Court) ~~entered final judgment in favor~~dismissed the case on March 21, 2022.

Patent Trial and Appeal Board (PTAB) Challenge

Apotex PTAB Challenge

On April 4, 2022, Amgen’s appeal of ~~Amgen and against Zydus Pharmaceuticals (USA) Inc. (Zydus) with respect to~~the PTAB’s decision, holding all claims ~~3 and 6~~ of Amgen’s U.S. Patent No. ~~7,427,638~~8,952,138 (the ~~’638~~‘138 Patent), claim 6 of U.S. Patent No. 8,455,536 (the ’536 Patent) and claims 2 and 27 of U.S. Patent No. 8,093,283 (the ‘283 Patent); and final judgment in favor of Zydus and against Amgen with respect to claims 1 and 15 of U.S. Patent No. 7,893,101 (the ‘101 Patent) and claims 2, 19 and 21 of U.S. Patent No. 10,092,541 (the ’541 Patent). The final judgment ordered that the effective date of any final approval by the U.S. Food and Drug Administration (FDA) of Zydus’s ANDA must be after expiration of the 3 infringed patents (the ’638, ’536 and ’283 Patents) and any regulatory exclusivity to which Amgen may become entitled. The final judgment also includes an injunction prohibiting Zydus from making, using, offering to sell, or selling in the United States, or importing into the United States, Zydus’s generic apremilast products during the term of the three infringed patents.

On October 12, 2021, the New Jersey District Court also entered final judgment in favor of Amgen and against Sandoz Inc. (Sandoz) with respect to claims 3 and 6 of the ’638 Patent, claim 6 of the ’536 Patent and claims 1 and 15 of the ’101 Patent; and final judgment in favor of Sandoz and against Amgen with respect to claims 2, 19 and 21 of the ’541 Patent. The final judgment ordered that the effective date of any final approval by the FDA of Sandoz’s ANDA must be after expiration of the 3 infringed patents (the ’638, ’536 and ’101 Patents) and any regulatory exclusivity to which Amgen may become entitled. The final judgment also includes an injunction prohibiting Sandoz from making, using, offering to sell, or selling in the United States, or importing into the United States, Sandoz’s generic apremilast products during the term of the 3 infringed patents.

~~Zydus and Amgen filed notices of appeal~~ unpatentable, was submitted to the U.S. Court of Appeals for the Federal Circuit (the Federal Circuit Court) for determination on ~~October 27, 2021 and October 28, 2021, respectively.~~

~~Sensipar~~® ~~(cinacalcet) ANDA Patent Litigation~~

~~Amgen Inc. v. Amneal Pharmaceuticals LLC, et al. (formerly, Amgen Inc. v. Aurobindo Pharma Ltd. et al.)~~

the briefs without oral argument. On ~~October 20, 2021, the U.S. District Court for the District of Delaware (the Delaware District Court) issued final judgment in favor of Piramal Healthcare UK Limited and Slate Run Pharmaceuticals LLC.~~

~~ENBREL Patent Litigation~~

~~Immunex Corporation, et al. v. Samsung Bioepis Co., Ltd.~~

On November 2, 2021, Amgen and Samsung Bioepis Co., Ltd. (Bioepis), with the consent of Hoffmann-La Roche Inc. (Roche), jointly submitted to the New Jersey District Court a confidential stipulation and a form of final judgment and order of permanent injunction resolving the dispute between the parties and enjoining Bioepis from making, using, offering to sell, or selling within the United States, or importing into the United States, any product containing etanercept until the April ~~24, 2029 expiry of Roche’s U.S. Patent No. 8,163,522.~~

~~Repatha~~® ~~Patent Litigation~~

~~Patent Disputes in the International Region~~

National litigations in the United Kingdom, France, the Netherlands and Italy have been settled. In Germany, Sanofi-Aventis Deutschland GmbH and Regeneron Pharmaceuticals, Inc. have filed actions claiming they are entitled to damages arising from the provisional enforcement of an injunction against PRALUENT® ~~that was lifted after the European Patent Office Technical Board of Appeal’s October 29, 2020 ruling that certain claims encompassing PRALUENT~~® ~~in Amgen’s European Patent No. 2,215,124 were invalid.~~

~~NEUPOGEN~~® ~~(filgrastim)/Neulasta~~® ~~Patent Litigation~~

~~Amgen Inc., et al. v. Pfizer Inc. et al.~~

~~On September 8, 2021, pursuant to joint stipulation, the Delaware District Court dismissed the lawsuits regarding U.S. Patent Nos. 9,643,997 and 10,577,392.~~

~~Patent Trial and Appeal Board (PTAB) Challenge~~

~~Apotex PTAB Challenge~~

~~On September 2, 2021,~~14, 2022, the Federal Circuit Court ~~issued a remand~~held that the PTAB misconstrued the patent claims and reversed the PTAB’s decision because Apotex failed to ~~permit Amgen to request rehearing~~prove the invention of the ~~PTAB’s final written decision holding that all claims of U.S.~~‘138 Patent ~~No. 8.952,138 as~~ unpatentable.

~~Pfizer~~

Pfizer PTAB Challenge

~~On February 10, 2021, Hospira, Inc. and Pfizer Inc. (collectively, Pfizer)~~On March 18, 2022, the parties filed a ~~petition~~joint motion to ~~institute~~terminate the inter partes review ~~(IPR)~~ proceeding at the U.S. Patent and Trademark Office ~~(USPTO)~~ of U.S. Patent No. ~~8,273,707 (the ’707 Patent), challenging~~8,273,707. On April 20, 2022, the PTAB granted the motion and terminated the proceeding.

Antitrust Class Action

Sensipar Antitrust Class Actions

On March 11, 2022, the Delaware District Court granted defendants’ (including Amgen’s) motion to dismiss except as to the reverse payment claim and various state law claims from 10 of the ~~’707 Patent as unpatentable. Amgen’s preliminary response was filed on May 18, 2021.~~

On August 17, 2021, the PTAB of the USPTO granted Pfizer’s petition to institute IPR of the ’707 Patent. On August 23, 2021, the PTAB issued the schedule for the proceeding, including oral argument (if requested) on May 18, 2022.

~~Breach of Contract Action~~

~~Novartis Pharma AG v. Amgen Inc.~~

On October 26, 2021, the U.S. District Court for the Southern District of New York held a status conference with the parties and set the dates for Novartis Pharma AG’s (Novartis) opening brief for its motion for partial summary judgment on 2 claims, fraudulent inducement and negligent misrepresentation, to be due on January 14, 2022, Amgen’s opposition to be due on February 14, 2022 and Novartis’ reply to be due on March 10, 2022. This motion, if granted, will not dispose of the entire case as other claims related to breach of contract remain pending.states in which plaintiffs reside.

U.S. Tax Litigation

Amgen Inc. & Subsidiaries v. Commissioner of Internal Revenue

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

~~15. Subsequent event~~

On October 19, 2021, Amgen completed its acquisition of Teneobio, Inc. (Teneobio), a privately held, clinical-stage biotechnology company developing a new class of biologics called heavy-chain only antibodies (HCAbs). Amgen acquired all outstanding shares in exchange for a $900 million upfront payment, as well as future contingent milestone payments potentially worth up to an additional $1.6 billion in cash upon the achievement of certain development and regulatory events.

The accounting impact of this acquisition and the results of operations for Teneobio will be included in our consolidated financial statements beginning in the fourth quarter of 2021. The initial accounting for this acquisition is incomplete, pending identification and measurement of the assets acquired and liabilities assumed.

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Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)~~MD&A is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021. Our results of operations discussed in MD&A are presented in conformity with GAAP. Amgen operates in one business segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.

Forward-looking statements

This report and other documents we file with the ~~Securities and Exchange Commission (SEC)~~SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases, written statements or our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. We describe our respective risks, uncertainties and assumptions that could affect the outcome or results of operations in Item 1A. Risk Factors in Part II herein and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2020, and in Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, collaborations and effects of pandemics. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Overview

Amgen is a biotechnology company committed to unlocking the potential of biology for patients suffering from serious illnesses. A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Our principal ~~products—those with the most significant annual commercial sales—~~products are ENBREL, Prolia,®, XGEVA, Otezla,®~~, XGEVA~~®, Aranesp, Neulasta,®~~, Aranesp~~®, Repatha,® KYPROLIS and ~~KYPROLIS~~®.Nplate. We also ~~market~~market a number of other products, including MVASI,® ~~(bevacizumab-awwb), Nplate~~® ~~(romiplostim),~~ Vectibix,® ~~(panitumumab),~~ EVENITY, BLINCYTO, EPOGEN, AMGEVITA, Aimovig, KANJINTI,® ~~(trastuzumab-anns), EPOGEN~~® ~~(epoetin alfa), EVENITY~~® ~~(romosozumab-aqqg), BLINCYTO~~® ~~(blinatumomab), AMGEVITA~~™ ~~(adalimumab), Aimovig~~® ~~(erenumab-aooe),~~ Parsabiv,® ~~(etelcalcetide),~~ LUMAKRAS/LUMYKRAS, NEUPOGEN,®~~, Sensipar~~®/ Sensipar/Mimpara™ ~~(cinacalcet)~~ and ~~LUMAKRAS~~®~~/LUMYKRAS~~™ ~~(sotorasib).~~TEZSPIRE.

COVID-19 pandemic

A novel strain of coronavirus (SARS-CoV-2, or severe acute respiratory syndrome coronavirus 2, causing coronavirus disease 19, or COVID-19) was declared a global pandemic by the World Health Organization on March 11, 2020. Since the onset of the pandemic in 2020, we have been closely monitoring the pandemic’s effects on our global operations. We continue to take appropriate steps to minimize risks to our employees, a significant number of whom have continued to work virtually. ~~Employee access to company facilities has been in accordance with applicable government health and safety protocols and guidance issued in response to the COVID-19 pandemic.~~ To date, our remote working arrangements have not significantly affected our ability to maintain critical business operations, and we have not experienced disruptions to or shortages of our supply of medicines.

Since the beginning of the COVID-19 pandemic, we have seen changes in demand for some of our products driven by changes in the frequency of patient visits to doctors’ offices that has impacted ~~providing~~the provision of treatments to existing patients and reduced diagnoses in new patients. ~~Through the third quarter,~~During 2021, there ~~has been~~was gradual recovery in both patient visits and diagnoses ~~although overall these remain below~~that approached pre-COVID-19 ~~levels. The~~levels early in the fourth quarter. However, in late 2021, Omicron and other variants began to impact the healthcare sector and, as a result, COVID-19 continued to affect our business around the world through the first quarter of 2022. Going forward, we may experience ongoing variability in demand patterns from COVID-19 for 2022. Further, the cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which ~~we expect to continue~~continues to impact our ~~business during the remainder of the year.~~business. We ~~are~~will continue to closely ~~monitoring~~monitor the effects of ~~emerging~~ COVID-19 ~~variants~~ on patient behavior and ~~access.~~access to care.

Since early 2021, global vaccination efforts have been ~~underway~~under way to control ~~the pandemic. However, uncertainty remains as to the length of time required for vaccination of a meaningful portion of the population and as to the efficacy of such vaccinations on the trajectory of~~ the pandemic. Challenges to vaccination efforts, new variants and other causes of virus spread may require governments to issue additional restrictions and/or order shutdowns in various geographies. As a result, we expect to see continued volatility for at least the duration of the pandemic as governments respond to current local conditions.

With respect to our drug development activities, we are continuously monitoring COVID-19 infection rates, including changes from new variants, and working to mitigate effects on future study enrollment in our clinical trials and evaluating the ~~impact~~impacts in all countries where our clinical trials occur. We remain focused on supporting our active clinical sites in their ~~providing~~provision of care ~~for~~to patients and in our ~~providing~~provision of investigational drug supply.

Despite the ongoing pandemic and business impacts noted above, we believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditures and debt service requirements as well as to engage in ~~the~~ capital-return and other business initiatives that we plan to pursue. For a discussion of the risks the COVID-19 pandemic presents to our results, see ~~Risk Factors in Item 1A. Risk Factors in~~ Part ~~II herein and in Part I,~~1, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2020, and in Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021.

Significant developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~period~~year ended ~~June 30,~~December 31, 2021. For additional developments or for a more comprehensive discussion of certain developments discussed below, see our Annual Report on Form 10-K for the year ended December 31, ~~2020, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021.

~~Business Development~~Operations

~~Acquisition~~

~~Teneobio~~New manufacturing facilities

•~~On October 19, 2021, Amgen completed its acquisition~~In March 2022, we broke ground to build a drug substance plant in North Carolina that will increase our manufacturing network capacity.

Products/Pipeline

Oncology/Hematology

LUMAKRAS/LUMYKRAS

•In April 2022, we announced long-term efficacy and safety data from the CodeBreaK 100 Phase 1/2 trial in patients with KRAS G12C-mutated advanced NSCLC who received LUMAKRAS. Data from 174 heavily pre-treated patients (172 with baseline measurable lesion(s)) were featured in an oral presentation at the American Association for Cancer Research annual meeting. LUMAKRAS demonstrated a centrally confirmed ORR of ~~Teneobio,~~40.7%, disease control rate of 83.7% and median duration of response of 12.3 months. The results also showed median PFS of 6.3 months and overall survival of 12.5 months, with 32.5% of patients still alive at two years. No new safety signals for LUMAKRAS were identified with the long-term follow-up.

Inflammation

ABP 654

•In April 2022, we announced preliminary results from a ~~privately held, clinical-stage biotechnology company,~~Phase 3 study evaluating the efficacy and safety of ABP 654 compared to STELARA® (ustekinumab) in adult patients with moderate to severe plaque psoriasis. The study met the primary efficacy endpoint, demonstrating no clinically meaningful differences between ABP 654 and STELARA®.

Repatha

•In April 2022, we announced top-line results from the Repatha FOURIER-OLE studies, two open label extension (OLE) studies to the Phase 3 FOURIER cardiovascular outcomes trial, composed of a study with 5,035 patients enrolled in Eastern Europe and the United States and a study with 1,600 patients enrolled in Western Europe. FOURIER-OLE was designed to assess the long-term safety and tolerability of Repatha over five years in adults with clinically evident atherosclerotic cardiovascular disease. The FOURIER-OLE studies showed that Repatha, administered at 140 mg every two weeks or 420 mg monthly, was safe and well-tolerated. Patients received Repatha for ~~$900 million as well as future contingent milestone payments potentially worth~~approximately 5 years, with some patients receiving Repatha for up to 8.5 years in aggregate across the FOURIER and OLE studies. No new long-term safety findings were observed. In addition, medically significant and sustained reduction in low-density lipoprotein cholesterol (LDL-C) levels were observed in most patients, with greater than 85 percent of patients achieving an ~~additional $1.6 billion upon~~LDL-C level of <40 mg/dL during the ~~achievement of certain development and regulatory events.~~

OLE period.

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Selected financial information

The following is an overview of our results of operations (in millions, except percentages and per-share data):


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2021		2020		Change		2021		2020		Change			2022		2021		Change
Product sales	Product sales													Product sales
U.S.	U.S.	$	4,558	$	4,618	(1)	%	$	12,835	$	13,325	(4)	%	U.S.	$	4,037	$	3,903	3	%
ROW	ROW	1,762		1,486		19	%	5,191		4,581		13	%	ROW	1,694		1,689		—	%
Total product sales	Total product sales	6,320		6,104		4	%	18,026		17,906		1	%	Total product sales	5,731		5,592		2	%
Other revenues	Other revenues	386		319		21	%	1,107		884		25	%	Other revenues	507		309		64	%
Total revenues	Total revenues	$	6,706	$	6,423	4	%	$	19,133	$	18,790	2	%	Total revenues	$	6,238	$	5,901	6	%
Operating expenses	Operating expenses	$	4,328	$	3,970	9	%	$	13,798	$	11,659	18	%	Operating expenses	$	3,738	$	3,772	(1)	%
Operating income	Operating income	$	2,378	$	2,453	(3)	%	$	5,335	$	7,131	(25)	%	Operating income	$	2,500	$	2,129	17	%
Net income	Net income	$	1,884	$	2,021	(7)	%	$	3,994	$	5,649	(29)	%	Net income	$	1,476	$	1,646	(10)	%
Diluted EPS	Diluted EPS	$	3.31	$	3.43	(3)	%	$	6.93	$	9.54	(27)	%	Diluted EPS	$	2.68	$	2.83	(5)	%
Diluted shares	Diluted shares	570		589		(3)	%	576		592		(3)	%	Diluted shares	551		581		(5)	%

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

Total product sales increased for the three months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by higher unit demand for certain brands, including Repatha, Prolia,®~~, Repatha~~® EVENITY and ~~EVENITY~~®,LUMAKRAS/LUMYKRAS, and by favorable changes to estimated sales deductions, partially offset by declines in the net selling prices of certain ~~products. Total product sales increased for~~products and the ~~nine months ended September 30, 2021, primarily driven by higher unit demand for certain brands, including Prolia~~®~~, Repatha~~® ~~and MVASI~~®~~, partially offset by declines in~~negative impact of foreign currency exchange. For the ~~net selling prices~~remainder of ~~certain products. We expect the trend of net selling price declines to continue to affect our business. Going forward,~~2022, we expect that net selling ~~price declines~~prices will becontinue to decline at a portfolio level driven by ~~ENBREL, Neulasta~~®~~, Repatha~~® ~~and some of our biosimilar products. There was gradual recovery through~~increased competition. In addition, in the ~~third~~first quarter of ~~2021 in~~2022, ENBREL and Otezla followed the historic pattern of lower first quarter sales relative to the remainder of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S. patients ~~resuming their treatments and in new patient starts, although overall, both numbers remain below pre-COVID-19 levels.~~work through deductibles.

Throughout the COVID-19 pandemic, we experienced changes in demand for some of our products. The pandemic has interrupted many physician–patient interactions, which has led to delays in diagnoses and treatments, with varying degrees of impact across our portfolio. In general, declines in the sales of our products that were impacted by the dynamics of the pandemic were most significant in the early months of the pandemic, with product demand beginning to show some recovery in late 2020. ~~Through~~During 2021, we observed gradual recovery from the ~~third quarter of~~COVID-19 pandemic, with patient visits and diagnosis rates that approached pre-pandemic levels early in the fourth quarter. However, late in 2021, ~~demand continued~~Omicron and other variants began to ~~gradually recover from~~impact the healthcare sector. This led to diminished capacity in the healthcare sector and reduced working days for our own sales force. In March and continuing into April we have seen the impact of Omicron in the ~~pandemic~~U.S. recede, which allowed us to engage in increased field-facing activities. Provider and ~~there was improvement~~patient activity has also increased leading to improvements in ~~patient visits and diagnoses. Healthcare provider activity also stabilized during the third quarter after having improved during the first half of 2021.~~demand for our products. However, the cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which ~~we expect to continue~~continues to impact our ~~business for the remainder of the year.~~business. Given the unpredictable nature of the pandemic, we expect there could be ongoing intermittent disruptions in physician–patient interactions, and as a result, we ~~continue to expect~~may experience quarter-to-quarter variability. In addition, other changes in the healthcare ecosystem have the potential to introduce variability into product sales trends. For example, ~~we expect~~ changes in U.S. employment ~~to lead~~have led to changes to the insured population. Growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product demand and sales. Overall, uncertainty remains around the timing and magnitude of our sales during the COVID-19 pandemic. See ~~Risk Factors in Part II, Item 1A. of this Form 10-Q and~~ Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2020, and in Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30,~~ 2021.

Other revenues increased for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by the sale of COVID-19 antibody material.

Operating expenses ~~increased~~decreased for the three months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by ~~an upfront payment~~lower SG&A expense and expenses associated with cost-saving initiatives that occurred in the ~~KKC licensing agreement. Operating expenses increased for the nine~~three months ended ~~September 30,~~March 31, 2021, ~~primarily driven~~partially offset by ~~IPR&D expense related~~higher cost of sales. Our operating expenses are expected to be higher in the ~~bemarituzumab program acquired as part~~remaining quarters of the ~~Five Prime acquisition~~year as we continue to invest in innovation and ~~by an upfront payment associated with the KKC licensing agreement.~~long-term growth.

3229

Although changes in foreign currency exchange rates result in increases or decreases in our reported international product sales, the benefit or detriment that such movements have on our international product sales is partially offset by corresponding increases or decreases in our international operating expenses and our related foreign currency hedging activities. Our hedging ~~activities~~activities seek to offset the impacts, both positive and negative, that foreign currency exchange rate changes may have on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros. The net impact from changes in foreign currency exchange rates was not material for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Results of operations

Product sales

Worldwide product sales were as follows (dollar amounts in millions):

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
ENBREL $ 1,289 $ 1,325 (3) % $ 3,357 $ 3,724 (10) %
Prolia®
803 701 15 % 2,375 2,014 18 %
Otezla®
609 538 13 % 1,619 1,578 3 %
XGEVA®
517 481 7 % 1,473 1,397 5 %
Neulasta®
415 555 (25) % 1,383 1,757 (21) %
Aranesp®
396 384 3 % 1,118 1,193 (6) %
Repatha®
272 205 33 % 844 634 33 %
KYPROLIS®
293 260 13 % 824 793 4 %
Other products 1,726 1,655 4 % 5,033 4,816 5 %
Total product sales $ 6,320 $ 6,104 4 % $ 18,026 $ 17,906 1 %


	Three months ended March 31,
	2022		2021		Change
ENBREL	$	862	$	924	(7)	%
Prolia	852		758		12	%
XGEVA	502		468		7	%
Otezla	451		476		(5)	%
Aranesp	358		355		1	%
Neulasta	348		482		(28)	%
Repatha	329		286		15	%
KYPROLIS	287		251		14	%
Nplate	266		227		17	%
Other products	1,476		1,365		8	%
Total product sales	$	5,731	$	5,592	2	%

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report: (i) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview and Selected Financial Information; and (ii) Part II, Item 1A. Risk Factors; and in the following sections of our Annual Report on Form 10-K for the year ended December 31, ~~2020:~~2021: (i) Item 1. Business—Marketing, Distribution and Selected Marketed Products, (ii) Item 1A. Risk Factors and (iii) Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of Operations—Product Sales, as well as in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021, in (i) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Product Sales; and (ii) Part II, Item 1A. Risk Factors.Sales.

ENBREL

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


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2021		2020		Change		2021		2020		Change			2022		2021		Change
ENBREL — U.S.	ENBREL — U.S.	$	1,263	$	1,289	(2)	%	$	3,270	$	3,619	(10)	%	ENBREL — U.S.	$	843	$	894	(6)	%
ENBREL — Canada	ENBREL — Canada	26		36		(28)	%	87		105		(17)	%	ENBREL — Canada	19		30		(37)	%
Total ENBREL	Total ENBREL	$	1,289	$	1,325	(3)	%	$	3,357	$	3,724	(10)	%	Total ENBREL	$	862	$	924	(7)	%

The decrease in ENBREL sales for the three months ended September 30, 2021, was driven by a decline in unit demand, unfavorable changes in inventory and lower net selling price, partially offset by favorable changes to estimated sales deductions. The decrease in ENBREL for the nine months ended September 30, 2021,March 31, 2022, was driven by declines in net selling price and ~~unit demand. For the remainder of 2021, we expect the trend of net selling price declines to continue compared with the prior year.~~unfavorable changes in inventory.

3330

~~We are involved~~Prolia

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


	Three months ended March 31,
	2022		2021		Change
Prolia — U.S.	$	582	$	501	16	%
Prolia — ROW	270		257		5	%
Total Prolia	$	852	$	758	12	%

The increase in global Proliasales for the three months ended March 31, 2022, was driven by higher unit demand and net selling price.

XGEVA

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


	Three months ended March 31,
	2022		2021		Change
XGEVA — U.S.	$	368	$	334	10	%
XGEVA — ROW	134		134		—	%
Total XGEVA	$	502	$	468	7	%

The increase in global XGEVAsales for the three months ended March 31, 2022, was driven by favorable changes to estimated sales deductions and higher net selling price partially offset by lower unit demand.

Otezla

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


	Three months ended March 31,
	2022		2021		Change
Otezla — U.S.	$	350	$	366	(4)	%
Otezla — ROW	101		110		(8)	%
Total Otezla	$	451	$	476	(5)	%

The decrease in global Otezla sales for the three months ended March 31, 2022, was primarily driven by lower net selling price and unfavorable changes in inventory, partially offset by higher unit demand.

For a discussion of litigation ~~with a company seeking~~related to ~~market its FDA-approved biosimilar version of ENBREL. See~~ Otezla, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements~~2021.

Aranesp

Total Aranesp sales by geographic region were as follows (dollar amounts in ~~our Quarterly Report on Form 10-Q~~millions):


	Three months ended March 31,
	2022		2021		Change
Aranesp — U.S.	$	137	$	125	10	%
Aranesp — ROW	221		230		(4)	%
Total Aranesp	$	358	$	355	1	%

The increase in global Aranesp sales for the ~~period~~three months ended ~~June 30, 2021. Companies with approved~~March 31, 2022, was driven by favorable changes to estimated sales deductions, partially offset by lower net selling price due to competition.

Aranesp continues to face competition from a long-acting ESA andalso faces competition from biosimilar versions of ~~ENBREL may seek~~EPOGEN, which will continue to ~~enter~~impact sales in the ~~U.S. market if we are not ultimately successful in our litigations, or even earlier. Other companies are also developing proposed biosimilar versions of ENBREL.~~future.

~~Prolia~~®Neulasta

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
Prolia® — U.S.
$ 530 $ 478 11 % $ 1,569 $ 1,341 17 %
Prolia® — ROW
273 223 22 % 806 673 20 %
Total Prolia®
$ 803 $ 701 15 % $ 2,375 $ 2,014 18 %


	Three months ended March 31,
	2022		2021		Change
Neulasta — U.S.	$	304	$	421	(28)	%
Neulasta — ROW	44		61		(28)	%
Total Neulasta	$	348	$	482	(28)	%

The ~~increase~~decrease in global ~~Prolia~~® ~~sales for the three and nine months ended September 30, 2021, was primarily driven by higher unit demand.~~

~~Otezla~~®

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
Otezla® — U.S.
$ 495 $ 439 13 % $ 1,284 $ 1,280 — %
Otezla® — ROW
114 99 15 % 335 298 12 %
Total Otezla®
$ 609 $ 538 13 % $ 1,619 $ 1,578 3 %

~~The increase in global Otezla~~®sales for the three months ended ~~September 30, 2021, was primarily driven by higher unit demand and favorable changes to estimated sales deductions, partially offset by lower net selling price. The increase in global Otezla~~® ~~sales for the nine months ended September 30, 2021,~~March 31, 2022, was driven by ~~higher unit demand, partially offset by lower~~ net selling ~~price.~~price and unit demand. Increased competition as a result of biosimilar versions of Neulasta has had and will continue to have a significant adverse impact on brand sales, including accelerating net price erosion and lower unit demand. We also expect other biosimilar versions, including biosimilars that will use an on-body injector that would compete with our Onpro injector, to be approved in the future.

~~For~~For a discussion of ~~litigation~~ongoing patent litigations related to ~~Otezla~~®,biosimilars, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020; Notes 12~~2021 and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021, respectively; and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.statements.

~~XGEVA~~®Repatha

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
XGEVA® — U.S.
$ 372 $ 363 2 % $ 1,061 $ 1,036 2 %
XGEVA® — ROW
145 118 23 % 412 361 14 %
Total XGEVA®
$ 517 $ 481 7 % $ 1,473 $ 1,397 5 %


	Three months ended March 31,
	2022		2021		Change
Repatha — U.S.	$	165	$	139	19	%
Repatha — ROW	164		147		12	%
Total Repatha	$	329	$	286	15	%

The increase in global ~~XGEVA~~® Repatha sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was driven by higher unit demand, partially offset by lower net selling price.

~~Neulasta~~®

~~Total Neulasta~~® ~~sales by geographic region were as follows (dollar amounts~~ Contracting changes to improve Medicare Part D and commercial patient access resulted in ~~millions):~~

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
Neulasta® — U.S.
$ 360 $ 484 (26) % $ 1,215 $ 1,538 (21) %
Neulasta® — ROW
55 71 (23) % 168 219 (23) %
Total Neulasta®
$ 415 $ 555 (25) % $ 1,383 $ 1,757 (21) %

~~The~~the decrease ~~in global Neulasta~~® ~~sales for the three months ended September 30, 2021, was primarily driven by the impact of biosimilar competition on~~to net selling ~~price and unit demand. The decrease in global Neulasta~~® sales for the nine months ended September 30, 2021, was driven by the impact of biosimilar competition on net selling price and unit demand, partially offset by favorable changes to estimated sales deductions. Increased competition in the United States and Europe as a result of biosimilar versions of Neulasta® has had and will continue to have a significant adverse impact on brand sales, including additional net price erosion and lower unit demand. We also expect other biosimilar versions to be approved in the future.price.

For a discussion of ongoing ~~patent litigations~~litigation related to ~~biosimilars,~~Repatha, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020; Notes 12~~2021 and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021, respectively; and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.statements.

~~Aranesp~~®

KYPROLIS

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
Aranesp® — U.S.
$ 149 $ 158 (6) % $ 409 $ 489 (16) %
Aranesp® — ROW
247 226 9 % 709 704 1 %
Total Aranesp®
$ 396 $ 384 3 % $ 1,118 $ 1,193 (6) %

~~The increase in global Aranesp~~® sales for the three months ended September 30, 2021, was driven by higher unit demand and favorable changes to estimated sales deductions, partially offset by lower net selling price due to competition. The decrease in global Aranesp® ~~sales for the nine months ended September 30, 2021, was primarily driven by lower net selling price due to competition.~~

~~Aranesp~~® ~~continues to face competition from a long-acting erythropoiesis-stimulating agent (ESA) andalso faces competition from a biosimilar version of EPOGEN~~®~~, which will continue to impact sales in the future.~~

~~Repatha~~®

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
Repatha® — U.S.
$ 139 $ 92 51 % $ 421 $ 331 27 %
Repatha® — ROW
133 113 18 % 423 303 40 %
Total Repatha®
$ 272 $ 205 33 % $ 844 $ 634 33 %

~~The increase in global Repatha~~® ~~sales for the three and nine months ended September 30, 2021, was primarily driven by higher unit demand, partially offset by lower net selling price.~~

~~For a discussion of ongoing litigation related to Repatha~~®, see Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020; Notes 12 and 13, Contingencies and commitments, to the condensed consolidated financial statements for the periods ended March 31, 2021 and June 30, 2021, respectively; and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

~~KYPROLIS~~®

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
KYPROLIS® — U.S.
$ 198 $ 173 14 % $ 547 $ 527 4 %
KYPROLIS® — ROW
95 87 9 % 277 266 4 %
Total KYPROLIS®
$ 293 $ 260 13 % $ 824 $ 793 4 %


	Three months ended March 31,
	2022		2021		Change
KYPROLIS — U.S.	$	196	$	159	23	%
KYPROLIS — ROW	91		92		(1)	%
Total KYPROLIS	$	287	$	251	14	%

The increase in global KYPROLIS® sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was ~~primarily~~ driven by higher unit demand.

~~We are engaged in litigation with two companies that are challenging certain of our patents related to KYPROLIS~~® and that are seeking to market generic carfilzomib products. Separately, we have entered into confidential settlement agreements with other companies developing generic carfilzomib products, and the court has entered consent judgments enjoining those companies from infringing certain of our patents, subject to terms of the confidential settlement agreements. See Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020; and Notes 12 and 13, Contingencies and commitments, to the condensed consolidated financial statements for the periods ended March 31, 2021 and June 30, 2021, respectively. The FDA has reported that it has granted tentative or final approval of ANDAs for generic carfilzomib products filed by a number of companies. The date of approval of those ANDAs for generic carfilzomib products is governed by the ~~Hatch-Waxman~~Hatch–Waxman Act and any applicable settlement agreements between us and certain companies that seek to develop generic carfilzomib products.

Nplate

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


	Three months ended March 31,
	2022		2021		Change
Nplate — U.S.	$	156	$	112	39	%
Nplate — ROW	110		115		(4)	%
Total Nplate	$	266	$	227	17	%

The increase in global Nplate sales for the ~~parties.~~three months ended March 31, 2022, was driven by higher unit demand and favorable changes to estimated sales deductions.

3633

Other products

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

Three months ended
September 30, Nine months ended
September 30,
2021 2020 Change 2021 2020 Change
MVASI® — U.S.
$ 187 $ 185 1 % $ 617 $ 442 40 %
MVASI® — ROW
87 46 89 % 245 76 *
Nplate® — U.S.
156 118 32 % 404 352 15 %
Nplate® — ROW
117 94 24 % 341 271 26 %
Vectibix® — U.S.
84 90 (7) % 255 249 2 %
Vectibix®— ROW
116 103 13 % 375 341 10 %
KANJINTI® — U.S.
92 149 (38) % 354 346 2 %
KANJINTI® — ROW
24 18 33 % 79 63 25 %
EPOGEN® — U.S.
138 149 (7) % 393 465 (15) %
EVENITY® — U.S.
94 54 74 % 230 131 76 %
EVENITY®— ROW
55 5 * 157 129 22 %
BLINCYTO® — U.S.
74 54 37 % 201 167 20 %
BLINCYTO® — ROW
51 35 46 % 139 109 28 %
AMGEVITA™ — ROW
111 80 39 % 324 228 42 %
Aimovig® — U.S.
77 105 (27) % 225 274 (18) %
Aimovig® — ROW
2 — NM 2 — NM
Parsabiv® — U.S.
24 156 (85) % 107 462 (77) %
Parsabiv® — ROW
37 27 37 % 104 82 27 %
NEUPOGEN® — U.S.
32 44 (27) % 86 117 (26) %
NEUPOGEN® — ROW
20 21 (5) % 51 62 (18) %
Sensipar® — U.S.
— 7 (100) % 4 81 (95) %
Sensipar®/Mimpara™ — ROW
19 32 (41) % 62 162 (62) %
LUMAKRAS® — U.S.
33 — NM 42 — NM
LUMYKRAS™ — ROW
3 — NM 3 — NM
Other — U.S. 61 31 97 % 141 78 81 %
Other — ROW 32 52 (38) % 92 129 (29) %
Total other products $ 1,726 $ 1,655 4 % $ 5,033 $ 4,816 5 %
Total U.S. — other products $ 1,052 $ 1,142 (8) % $ 3,059 $ 3,164 (3) %
Total ROW — other products 674 513 31 % 1,974 1,652 19 %
Total other products $ 1,726 $ 1,655 4 % $ 5,033 $ 4,816 5 %


	Three months ended March 31,
	2022		2021		Change
MVASI — U.S.	$	168	$	224	(25)	%
MVASI — ROW	76		70		9	%
Vectibix — U.S.	85		79		8	%
Vectibix— ROW	116		112		4	%
EVENITY — U.S.	110		57		93	%
EVENITY— ROW	60		50		20	%
BLINCYTO — U.S.	79		65		22	%
BLINCYTO — ROW	59		42		40	%
EPOGEN — U.S.	120		125		(4)	%
AMGEVITA — ROW	108		106		2	%
Aimovig — U.S.	98		66		48	%
Aimovig — ROW	3		—		NA
KANJINTI — U.S.	80		130		(38)	%
KANJINTI — ROW	16		31		(48)	%
Parsabiv — U.S.	57		46		24	%
Parsabiv — ROW	29		33		(12)	%
LUMAKRAS — U.S.	48		—		NA
LUMYKRAS — ROW	14		—		NA
NEUPOGEN — U.S.	23		18		28	%
NEUPOGEN — ROW	15		16		(6)	%
Sensipar — U.S.	4		—		NA
Sensipar/Mimpara — ROW	16		23		(30)	%
Other — U.S.	64		42		52	%
Other — ROW	28		30		(7)	%
Total other products	$	1,476	$	1,365	8	%
Total U.S. — other products	$	936	$	852	10	%
Total ROW — other products	540		513		5	%
Total other products	$	1,476	$	1,365	8	%

~~___________~~

NMNA - ~~Not meaningful~~not applicable

* - Change in excess of 100%

3734

Operating expenses

Operating expenses were as follows (dollar amounts in millions):


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
		2021			2020			Change		2021			2020			Change			2022			2021			Change
Operating expenses:	Operating expenses:																	Operating expenses:
Cost of sales	Cost of sales	$	1,609		$	1,561		3	%	$	4,736		$	4,562		4	%	Cost of sales	$	1,561		$	1,490		5	%
% of product sales	% of product sales	25.5		%	25.6		%			26.3		%	25.5		%			% of product sales	27.2		%	26.6		%
% of total revenues	% of total revenues	24.0		%	24.3		%			24.8		%	24.3		%			% of total revenues	25.0		%	25.2		%
Research and development	Research and development	$	1,422		$	1,062		34	%	$	3,471		$	2,978		17	%	Research and development	$	959		$	967		(1)	%
% of product sales	% of product sales	22.5		%	17.4		%			19.3		%	16.6		%			% of product sales	16.7		%	17.3		%
% of total revenues	% of total revenues	21.2		%	16.5		%			18.1		%	15.8		%			% of total revenues	15.4		%	16.4		%
Acquired in-process research and development		$	—		$	—		—	%	$	1,505		$	—		NM
% of product sales		—		%	—		%			8.3		%	—		%
% of total revenues		—		%	—		%			7.9		%	—		%

Selling, general and administrative	Selling, general and administrative	$	1,305		$	1,346		(3)	%	$	3,943		$	3,957		—	%	Selling, general and administrative	$	1,228		$	1,254		(2)	%
% of product sales	% of product sales	20.6		%	22.1		%			21.9		%	22.1		%			% of product sales	21.4		%	22.4		%
% of total revenues	% of total revenues	19.5		%	21.0		%			20.6		%	21.1		%			% of total revenues	19.7		%	21.3		%
Other	Other	$	(8)		$	1		*		$	143		$	162		(12)	%	Other	$	(10)		$	61		*
Total operating expenses																		Total operating expenses	$	3,738		$	3,772		(1)	%

~~___________~~

~~NM - Not meaningful~~

* - Change in excess of 100%

Cost of sales

Cost of sales decreased to ~~24.0%~~25.0% of total revenues for the three months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by the COVID-19 antibody profit share agreement and lower amortization expense from acquisition-related assets, ~~offset by unfavorable product mix.~~

~~Cost of sales increased to 24.8% of total revenues for the nine months ended September 30, 2021, primarily driven by unfavorable product mix,~~ partially offset by ~~lower amortization expense from acquisition-related assets.~~higher manufacturing costs and increased royalties and profit share.

Research and development

The ~~increase~~decrease in R&D expense for the three months ended ~~September 30, 2021,~~March 31, 2022, was driven by ~~a licensing-related upfront payment to KKC, partially offset by~~ lower ~~late-stage~~marketed product support ~~for existing programs.~~

~~The increase in R&D expense for the nine months ended September 30, 2021, was primarily driven by a licensing-related upfront payment to KKC~~ and ~~higher~~ research and early pipeline spend, which included a business development acquisition in the three months ended March 31, 2021, partially offset by ~~lower~~higher late-stage ~~support for existing programs.~~

~~Acquired in-process research and~~ development

~~Acquired IPR&D expense for the nine months ended September 30, 2021, is related to the bemarituzumab~~ program ~~acquired as part of the Five Prime acquisition.~~spend.

Selling, general and administrative

The decrease in ~~Selling, general and administrative (SG&A)~~SG&A expense for the three months ended ~~September 30, 2021,~~March 31, 2022, was primarily driven by lower spend in general and administrative activities.

The decrease in SG&A expense for the nine months ended September 30, 2021, was primarily driven by lower spend in general and administrative activities and favorable adjustments to estimated U.S. healthcare reform federal excise fees, partially offset by higher marketed-product support and investment in new launches.

Other

Other operating expenses for the three months ended ~~September 30, 2021,~~March 31, 2022, consisted primarily of ~~changes in the fair values of contingent consideration liabilities.~~an IPR&D asset adjustment. Other operating expenses for the ~~nine~~three months ended ~~September 30,~~March 31, 2021, consisted primarily of expenses related to cost savings initiatives.

~~Other operating expenses for the nine months ended September 30, 2020, consisted of legal settlement expenses.~~

Nonoperating expense/income and income taxes

Nonoperating expense/income and income taxes were as follows (dollar amounts in millions):


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2021			2020			2021			2020				2022			2021
Interest expense, net	Interest expense, net	$	(296)		$	(302)		$	(862)		$	(944)		Interest expense, net	$	(295)		$	(285)
Other income, net		$	73		$	55		$	97		$	69
Other (expense) income, net														Other (expense) income, net	$	(530)		$	13
Provision for income taxes	Provision for income taxes	$	271		$	185		$	576		$	607		Provision for income taxes	$	199		$	211
Effective tax rate	Effective tax rate	12.6		%	8.4		%	12.6		%	9.7		%	Effective tax rate	11.9		%	11.4		%

Interest expense, net

The ~~decrease~~increase in Interest expense, net, for the three months ended ~~September 30, 2021,~~March 31, 2022, was primarily due to ~~lower~~higher overall debt outstanding and higher LIBOR rates in the current year period on debt for which we effectively pay a variable rate of interest through the use of interest rate ~~swaps, partially offset by higher overall debt outstanding in the current year period.~~swaps.

Other (expense) income, net

The decrease in ~~Interest expense,~~Other (expense) income, net, for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, was primarily due to net costs associated with the early retirement of debt in the first quarter of the prior year and lower LIBOR rates in the current year period on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps, partially offset by higher overall debt outstanding in the current year period.

~~Other income, net~~

~~The increase in Other income, net, for the three and nine months ended September 30, 2021, was primarily due to net gains~~losses recognized on our strategic equity investments ~~partially offset by higher losses~~ in ~~connection~~the current year compared with ~~our BeiGene investment.~~net gains recognized in the prior year.

Income taxes

The Administration proposed and Congress ~~are~~is considering significant changes to existing tax ~~law, including an increase in the corporate tax rate and the tax rate on foreign earnings.~~law. These changes, if enacted, could substantially increase ~~U.S. taxation of our operations both in and outside the United States, including~~taxes we pay to the U.S. ~~territory of Puerto Rico. In addition,~~government. Further, the ~~Organisation for Economic Co-operation and Development (OECD)~~OECD recently reached agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. If enacted, this agreement could result in tax increases in both the United States and foreign jurisdictions. The U.S. Treasury recently released final foreign tax credit regulations that eliminate U.S. creditability of the Puerto Rico Excise Tax beginning in 2023, which will increase our U.S. tax liability. The U.S. territory of Puerto Rico is considering changes to its tax system that may minimize or eliminate this impact, but the outcome of such potential changes is uncertain. Changes to existing tax law in the United States, the U.S. territory of Puerto Rico, or other jurisdictions, including the potential changes discussed above, could result in tax increases where we do business and could have a material adverse effect on the results of our operations.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010, 2011 and 2012 proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued ~~a resolution with the IRS administrative appeals office. As previously reported, we were unable to reach~~ resolution with the IRS appeals ~~office.~~office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for 2010, 2011 and 2012 that we received in May and July ~~2021. The duplicate Notices~~2021, which seek to increase our U.S. taxable income for 2010-2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for 2010-2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings. ~~In any event, we firmly believe that the IRS’s positions in the Notices are without merit, and we will vigorously contest the Notices through the judicial process.~~

We are also currently under examination by the IRS for the years 2016, 2017 and ~~2018. We are also currently under examination~~2018 and by a number of ~~other~~ state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued ~~as noted above~~ and could have a material adverse impact on our condensed consolidated financial statements.

We are no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2009.

SeePart II, Item 1A, Risk Factors—The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability, and Note 4, Income taxes, to the condensed consolidated financial statements for further ~~discussion.~~discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Cash, cash equivalents and marketable securities	Cash, cash equivalents and marketable securities	$	12,921	$	10,647	Cash, cash equivalents and marketable securities	$	6,544	$	8,037
Total assets	Total assets	$	64,993	$	62,948	Total assets	$	59,196	$	61,165
Current portion of long-term debt	Current portion of long-term debt	$	4,288	$	91	Current portion of long-term debt	$	844	$	87
Long-term debt	Long-term debt	$	33,291	$	32,895	Long-term debt	$	36,010	$	33,222
Stockholders’ equity	Stockholders’ equity	$	8,217	$	9,409	Stockholders’ equity	$	916	$	6,700

Cash, cash equivalents and marketable securities

Our balance of cash, cash equivalents and marketable securities was ~~$12.9~~$6.5 billion at ~~September 30, 2021.~~March 31, 2022. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

Capital allocation

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

We intend to continue to invest in our business while returning capital to stockholders through the payment of cash dividends and stock repurchases, thereby reflecting our confidence in the future cash flows of our business and our desire to optimize our cost of capital. The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, availability of financing on acceptable terms, debt service requirements, our credit rating, changes to applicable tax laws or corporate laws, changes to our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements. In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock. The manner of stock repurchases may include block purchases, tender offers, ASRs and market transactions.

In ~~July~~December 2021, ~~March 2021 and December 2020,~~ the Board of Directors declared a quarterly cash dividend of ~~$1.76~~$1.94 per share of common stock ~~which were paid on September 8, 2021, June 8, 2021 and March 8, 2021, respectively,~~for the first quarter of 2022, an increase of 10% ~~over the quarterly cash dividend~~for this period, which was paid ~~in each quarter in 2020.~~on March 8, 2022. In ~~October 2021,~~March 2022, the Board of Directors declared a quarterly cash dividend of ~~$1.76~~$1.94 per share of common stock, which will be paid on ~~December~~June 8, ~~2021.~~2022.

We also returned capital to stockholders through our stock repurchase program. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we executed trades to repurchase ~~$3.5~~$5.4 billion of common ~~stock.~~stock, including $5.1 billion of an initial purchase under the ASR agreements described below. As of ~~September 30, 2021, $2.9~~March 31, 2022, $4.6 billion of authorization remained available under our stock repurchase program.

In ~~October 2021,~~February 2022, we entered into ASR agreements under which we paid an aggregate amount of $6.0 billion to the ~~Board~~Dealers and retired an initial 23.3 million shares of ~~Directors increased~~common stock. Approximately $0.9 billion of stock remains to be delivered by the ~~amount authorized~~Dealers pending final settlement, which will be based on the daily volume-weighted average stock price of our common stock during the terms of the ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. At settlement, which is scheduled to occur in the third quarter of 2022, the Dealers may be required to deliver additional shares of common stock to us, or under certain circumstances, we may be required to deliver shares of common stock or to make a cash payment, at our ~~stock repurchase program by an additional $4.5 billion.~~

election, to the Dealers.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our continuing profitability and strong financial position.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, ~~to meet~~ capital expenditure and debt service requirements, ~~to fund~~ our plans to pay dividends and repurchase stock and ~~to fulfill~~ other business initiatives we ~~expect~~plan to strategically pursue, including acquisitions and licensing activities. We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of marketable securities, ~~equity markets and~~ borrowings ~~(including~~through commercial paper and/or syndicated credit facilities and access to other domestic and foreign debt ~~markets).~~markets and equity markets. See our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, Part I, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement includes a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (Consolidated EBITDA) to (ii) Consolidated Interest Expense, each as defined and described in the credit agreement. We were in compliance with all applicable covenants under these arrangements as of ~~September 30, 2021.~~March 31, 2022.

Cash flows

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


		Nine months ended September 30,					Three months ended March 31,
		2021		2020			2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	6,453	$	8,344	Net cash provided by operating activities	$	2,164	$	2,104
Net cash provided by (used in) investing activities		$	963	$	(4,017)
Net cash used in investing activities						Net cash used in investing activities	$	(111)	$	(319)
Net cash used in financing activities	Net cash used in financing activities	$	(1,713)	$	(1,277)	Net cash used in financing activities	$	(3,514)	$	(1,939)

Operating

Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds. Cash provided by operating activities during the ~~nine~~three months ended ~~September 30, 2021, decreased~~March 31, 2022, increased primarily due to ~~(i) the monetization of interest rate swaps in the prior year, (ii) a difference in the timing of payments to tax authorities and sales deductions paid to customers, (iii) lower Net~~higher net income, after adjustments for noncash items, ~~and (iv) the timing of collections from customers.~~

~~Investing~~

~~Cash provided by investing activities during the nine months ended September 30, 2021, was primarily due to net cash inflows related to marketable securities of $3.4 billion,~~ partially offset by the ~~acquisition~~impact of ~~Five Prime for $1.6 billion, net of cash acquired, and~~working capital ~~expenditures of $593 million.~~ items.

Investing

Cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2022, was primarily due to ~~our $3.2 billion~~$190 million of ~~equity investments,~~capital expenditures, partially offset by proceeds from sales of property, plant and equipment. Cash used in investing activities during the three months ended March 31, 2021, was primarily ~~BeiGene,~~due to cash outflows related to capital expenditures of ~~$435~~$166 million and net ~~cash outflows~~activity related to marketable securities of ~~$394~~$74 million. We currently estimate ~~2021~~2022 spending on capital projects to be approximately ~~$900~~$950 million.

Financing

Cash used in financing activities during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, was primarily due to payments to repurchase our common stock of ~~$3.5~~$6.4 billion, including amounts paid under the ASR agreements discussed above, and the payment of dividends of ~~$3.0~~$1.1 billion, partially offset by proceeds from the issuance of debt of ~~$4.9~~$4.0 billion. Cash used in financing activities during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, was primarily due to the payment of dividends of ~~$2.8~~$1.0 billion and payments to repurchase our common stock of ~~$2.3 billion, partially offset by proceeds from the issuance of debt, net of repayments, of $3.9 billion.~~$871 million. See Note ~~10,~~9, Financing arrangements, and Note ~~11,~~10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

Critical ~~accounting policies~~Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. A summary of our critical accounting policies and estimates is presented in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.


Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information about our market risk is disclosed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and is incorporated herein by reference. ~~Except as discussed below, there~~There were no material changes during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, to the information provided in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~Interest rate sensitive financial instruments~~

To achieve a desired mix of fixed and floating interest rate debt, we entered into additional interest rate swap contracts with an aggregate notional amount of $1.5 billion during the three months ended June 30, 2021. As of September 30, 2021, an aggregate notional amount of $7.4 billion of interest rate swap contracts was outstanding. These interest rate swap contracts effectively converted a fixed-interest-rate coupon to a floating-rate LIBOR-based coupon over the life of the respective notes. A hypothetical 100-basis-point increase in interest rates relative to interest rates at September 30, 2021, would have resulted in a reduction in fair value of approximately $370 million on our interest rate swap contracts on that date. The analysis of the interest rate swap contracts does not consider the impact that hypothetical changes in interest rates would have on the related fair value of debt that these interest-rate-sensitive instruments were designed to offset.


Item 4.			CONTROLS AND PROCEDURES

We maintain “disclosure controls and procedures,” as such term is defined under the Securities Exchange Act Rule 13a-15(e) that are designed to ensure that information required to be disclosed in Amgen’s Exchange Act reports gets recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information gets accumulated and communicated to Amgen’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to facilitate timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, Amgen’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, Amgen’s management necessarily was required to apply its judgment in evaluating the cost–benefit relationship of possible controls and procedures. We carried out an evaluation under the supervision and with the participation of our management, including Amgen’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Amgen’s disclosure controls and procedures. Based on their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Management determined that as of ~~September 30, 2021,~~March 31, 2022, no changes in our internal control over financial reporting had occurred during the fiscal quarter then ended that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II — OTHER INFORMATION


Item 1.			LEGAL PROCEEDINGS

See ~~Notes 12,~~Note 13, ~~and 14,~~ Contingencies and commitments, to the condensed consolidated financial statements included in our Quarterly ~~Reports~~Report on Form 10-Q for the ~~periods~~period ended March 31, ~~2021, June 30, 2021 and September 30, 2021, respectively,~~2022, for discussions that are limited to certain recent developments concerning our legal proceedings. Those discussions should be read in conjunction with Note 19, Contingencies and commitments, to the consolidated financial statements in Part IV of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.


Item 1A.			RISK FACTORS

This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. These statements are not guarantees of future performance and ~~they~~ involve certain risks, uncertainties and assumptions that are difficult to predict. You should carefully consider the risks and uncertainties our business faces. The risks described below are not the only ones we face. Our business is also subject to the risks that affect many other companies, such as employment relations, general economic conditions, geopolitical events and international operations. Further, additional risks not currently known to us or that we currently believe are immaterial may in the future materially and adversely affect our business, operations, liquidity and stock price.

Below we provide, in supplemental form, the material changes to our risk factors that occurred during the past quarter. Our risk factors disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, provide additional disclosure for these supplemental risks, as well as other risks to our Company, and are incorporated herein by reference.

RISKS RELATED TO ECONOMIC CONDITIONS AND OPERATING A GLOBAL BUSINESS, INCLUDING DURING THE COVID-19 PANDEMIC

~~The COVID-19 pandemic,~~Our sales and operations are subject to the ~~effort to mitigate the spread~~risks of the disease, have had, and are expected to continue to have, an adverse effect, and may have a material adverse effect, on our clinical trials, operations, manufacturing, supply chains, distribution systems, product development, product sales,doing business ~~and results of operations.~~internationally, including in emerging markets.

~~The novel coronavirus identified~~As we continue our expansion efforts in ~~late 2019, SARS-CoV-2, which causes~~emerging markets around the ~~disease known~~world, through acquisitions and licensing transactions as ~~COVID-19,~~well as through the development and introduction, both independently and through collaborations such as our collaboration with BeiGene, of our products in new markets, we face numerous risks to our business. There is ~~an ongoing~~no guarantee that our efforts and strategies to expand sales in emerging markets will succeed. Our international business, including in China and emerging market countries, may be especially vulnerable to periods of global ~~pandemic that has resulted in public~~ and ~~governmental efforts to contain or slow~~local political, legal, regulatory and financial instability, including issues of geopolitical relations, the ~~spread~~imposition of the disease, including widespread shelter-in-place orders, social distancing interventions, quarantines, travel restrictions and various forms of operational shutdowns. The COVID-19 pandemic and the resulting measures implementedinternational sanctions in response to certain state actions and/or sovereign debt issues. Further, in the ~~pandemic are adversely affecting,~~first quarter of 2022, the Asia Pacific region has also experienced a surge of COVID-19 infections, resulting in the activation of strict containment measures in certain countries in that region. If relations between the United States and ~~are expected to continue to adversely affect,~~other governments deteriorate, our business ~~(including~~and investments in such markets may also be adversely affected. We may also be required to increase our ~~R&D, clinical trials,~~reliance on third-party agents and unfamiliar operations ~~manufacturing, supply chains, distribution systems, product development~~ and ~~sales activities), the business activities of our suppliers, customers, third-party payers and our patients.~~arrangements including those previously utilized by companies we partner with or acquire in emerging markets. See our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, Part I, Item 1A. Risk Factors—The COVID-19 pandemic, and the public and governmental effort to mitigate against the spread of the disease, have had, and are expected to continue to have, an adverse effect, and may have a material adverse effect, on our clinical trials, operations, supply chains, distribution systems, product development, product sales, business and results of operations;~~see also~~ ~~Our current products and products in development cannot be sold without regulatory approval~~;~~and see also~~ We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications. ~~Due~~Our expansion efforts in China and emerging markets around the world are dependent upon the establishment of an environment that is predictable, navigable and supportive of biopharmaceutical innovation, sustained access for our products and predictable pricing controls. For example, China continues to strengthen regulations on the collection, use and transmission of Chinese human genetic resources, and has expanded regulations on the conduct of biotechnology R&D activities in China. Our applications to the ~~pandemic~~HGRAC seeking approval to conduct clinical trials in China are delayed pending further guidance from HGRAC. Additionally, on March 25, 2022, BeiGene disclosed in a SEC filing its engagement of a U.S.-based independent registered public accounting firm for the fiscal year ending December 31, 2022 in response to the requirement that foreign companies provide access to their audit information to U.S. authorities. Our international operations and ~~these measures~~business may also be subject to less protective intellectual property or other applicable laws, diverse data privacy and ~~their effects, we have experienced,~~protection requirements, changing tax laws and ~~expect to continue to experience, unpredictable reductions in demand for certain of our products, exacerbated by COVID-19 surges resulting in repeated shutdowns and/~~tariffs, trade restrictions or ~~disruptions in certain geographies.~~

~~Federal, state and local, and international governmental policies and initiatives~~other barriers designed to ~~reduce the transmission of COVID-19 also have resulted~~protect industry in the ~~cancellation~~ home country against foreign competition, far-reaching antibribery and anticorruption laws and regulations and/or ~~delay of diagnostic, elective, specialty~~evolving legal and other procedures and appointments to avoid non-essential patient exposure to medical environments and potential infection with COVID-19 and to focus limited resources and personnel capacity toward the treatment of COVID-19. For example, a recent NPR/Harvard poll found that, with hospitals crowded from COVID-19, one in five U.S. households has had to delay care for serious illnesses in the past few months. These measures and challenges will likely continue to varying degrees for the duration of the pandemic and have significantly reduced patient access to, and administration of, certain of our drugs. For example, Prolia® ~~requires administration by a healthcare provider in doctors’ offices or other healthcare settings that are affected by COVID-19. The U.S. label for Prolia~~® ~~instructs healthcare professionals who discontinue Prolia~~® to transition the patient to an alternative antiresorptive, including oral treatments that do not require administration by a healthcare provider. Further, as a result of COVID-19, oncology patients, in consultation with their doctors, may be selecting therapies that are less immunosuppressive orregulatory environments.

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~~therapies that do not require administration~~In response to the ongoing armed conflict in ~~a hospital setting, potentially adversely affecting certain of our products. Also, new patients have been,~~Ukraine, the U.S. government, numerous state governments, the EU and are expected to continue to be, less likely to be diagnosed and/or to start therapeutics during the pandemic, and these effects, together with the lower treatment rates during the pandemic, have had, and are expected to continue to have, a cumulative negative effect on the commercial performance of our business. The decreaseother countries in ~~diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment,~~ which we ~~expect to continue to impact our~~conduct business ~~for the remainder~~have imposed a wide range of the year. Once the pandemic subsides, we anticipate there could be a backlog of patients seeking appointments with physicians relating to a variety of medical conditions, and as a result, patients seeking treatment with certain of our products may have to navigate lower provider capacity, and this lower provider capacity could have a continued adverse effect on our sales following the opening up of various geographies and/or the end of the pandemic. Further, the effects of the COVID-19 pandemic may result in long-term shifts in preferences among healthcare professionals and patients toward treatmentseconomic sanctions that ~~do not require administration by healthcare professionals or visits to medical facilities.~~

As the pandemic continues, and if conditions worsen or if the duration of the pandemic extends significantly, we expect to experience additional adverse effects on our development, operational and commercial activities, customer purchases and our collections of accounts receivable. It remains uncertain the degree to which these adverse effects would impact our future operational and commercial activities, customer purchases and our collections as conditions begin to improve. There has been a resurgence in COVID-19 infections in numerous jurisdictions to date in 2021, resulting in the reinstatement of stricter restrictions and shutdowns in a number of jurisdictions, including in the United States., Europe and Asia Pacific regions. It is expected that the pandemic will continue to ebb and flow, with different jurisdictions having higher levels of infections than others over the course of the pandemic. New variants of the SARS-CoV-2 virus have emerged, including the delta variant, and have been shown to be present in many geographies, and appear to spread more easily and quickly than other variants. Further, although some studies suggest that antibodies generated with currently authorized vaccines may be effective against these variants, it remains uncertain whether currently available vaccines will retain their efficacy against future variants of the virus. Further, even while vaccine booster shots are available for certain patients, persistent vaccine hesitancy may result in under-vaccinated populations which may prolong the duration of the COVID-19 pandemic and continue to disrupt the availability of healthcare services to the patients we serve. Jurisdictions may implement, continue or reinstate border closures, impose or reimpose prolonged quarantines and further restrict ~~travel~~commerce and business ~~activity, which could significantly affect our ability to support our operations~~dealings with Russia, certain regions of Ukraine and ~~customers~~certain entities and the ability of our employees to get to their workplaces to discover, study, develop and produce our product candidates and products, disrupt the movement of our products through the supply chain, and further prevent or discourage patients from participating in our clinical trials, seeking healthcare services and the administration of certain of our products. Further, in connection with the global outbreak and spread of COVID-19 and in an effort to increase the wider availability of needed medical products, we or our suppliersindividuals. This conflict may elect to, or governments may require us or our suppliers to, allocate manufacturing capacity (for example pursuant to the U.S. Defense Production Act) in a way that adversely affects our regular operations, customer relationships and financial results. In the United States, on January 21, 2021, President Biden issued an Executive Order instructing federal agencies to use all available legal authorities, including the Defense Production Act, to improve current and future pandemic response and biological threat preparedness. The rapid reallocation of resources for the treatment and prevention of COVID-19 (including the production of COVID-19 vaccinations or related therapies, such as our agreement to contribute to the production of COVID-19 antibody therapies for Eli Lilly and Company) and/or disruptions and shortages in the global supply chain caused by the pandemic, could also result in increased competition for, or reduced availability of, materials or components used in the development, manufacturing, distribution, or administration of our products. For example, during the second quarter of 2021, an industry-wide shortage of certain lab kit supplies necessary for some activities that support our clinical trials has developed that we are actively monitoring and managing. In addition, unpredictable increases in demand for certain of our products could exceed our capacity to meet such demand, which could adversely affect our financial results and customer relationships.

~~The COVID-19 pandemic and the volatile global economic conditions stemming from it may~~ precipitate or amplify the other risks described herein and in ~~the “Risk Factors” section of~~ our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, Part I, Item 1A. Risk Factors, including risks relating to cybersecurity, global economic conditions, clinical trials and supply chains, which could ~~materially~~ adversely affect our business, operations and financial ~~conditions~~condition and results. ~~For example, if a natural disaster or other potentially disruptive event occurs concurrently with the COVID-19 pandemic, such disaster or event could deplete our inventory levels and~~

As we could experience a disruption to our manufacturing or ability to supply our products. Further, the global pandemic has exacerbated geopolitical tensions, and some countries, such as China, may be especially vulnerable to such dynamics. If relations between the United States and China or other governments deteriorates, our business and investments in China or other such markets may also be adversely affected. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1A. Risk Factors—~~Our sales and operations~~expand internationally, we are subject to fluctuations in foreign currency exchange rates relative to the ~~risks~~U.S. dollar. While we have a program in place that is designed to reduce our exposure to foreign currency exchange rate fluctuations through foreign currency hedging arrangements, our hedging efforts do not completely offset the effect of ~~doing business internationally, including~~these fluctuations on our revenues and earnings. In addition, we have a number of financial instruments referencing the LIBOR. On July 27, 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it will no longer require banks to submit rates for the calculation of LIBOR to the LIBOR administrator after 2021, and it is anticipated that LIBOR will be completely phased out and replaced by 2023. In March 2020 and in ~~emerging markets.~~

~~The rapid development and fluidity~~January 2021, the FASB issued a new accounting standard to ease the financial burdens of the ~~pandemic preclude any prediction as~~expected market transition from LIBOR and other interbank offered rates to alternative reference rates. While it appears likely that Secured Overnight Financing Rate (SOFR) will be the ~~ultimate effect~~replacement reference rate adopted in the market, the specific mechanisms to replace LIBOR in our existing LIBOR-linked financial instruments have not been finalized. As such, the replacement of COVID-19 on us. The duration of the measures being taken by the authorities to mitigate against the spread of COVID-19 (including the distribution and/or availability of vaccines), and the extent to which such measures are effective, if at all, remain highly uncertain. The magnitude and degree of COVID-19’sLIBOR could have an adverse effect on ~~our business (including our product development,~~

~~product sales, operating results and resulting cash flows) and financial condition will be driven by~~ the severity and duration of the pandemic, the pandemic’s effect on the United States and global economies and the timing, scope and effectiveness of federal, state, local and international governmental responses to the pandemic. If mitigation of the pandemic continues to require further shelter-in-place and shutdown orders and/market for, or restrictions on individual and/or group conduct, any adverse effects of the COVID-19 pandemic will likely grow and could be enduring and our business and financial position could be materially adversely affected.

~~A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability~~value of, our ~~information technology systems, network-connected control systems and/or our data, interrupt the operation~~LIBOR-linked financial instruments. See Part IV—Note 1, Summary of ~~our business and/or affect our reputation.~~

To achieve our business objectives, we rely on sophisticated information technology systems, including software, mobile applications, cloud services and network-connected control systems, some of which are managed, hosted, provided or serviced by third parties. Internal or external events that compromise the confidentiality, integrity and availability of our systems and data may significantly interrupt the operation of our business, result in significant ~~costs and/or adversely affect our reputation.~~

Our information technology systems are highly integrated into our business, including our R&D efforts, our clinical and commercial manufacturing processes and our product sales and distribution processes. Further, as the majority of our employees are working remotely, our reliance on our and third-party information technology systems has increased substantially and is expected to continue to increase. The complexity and interconnected nature of our systems makes them potentially vulnerable to breakdown or other service interruptions. Upgrades or changes to our systems or the software that we use may result in the introduction of new cybersecurity vulnerabilities and risks. Our systemsaccounting policies—Recent accounting pronouncements. We are also subject to ~~frequent cyberattacks. As~~ the ~~cyber-threat landscape evolves, these attacks are growing~~economic and political uncertainties stemming from the United Kingdom’s exit from the EU, commonly referred to as “Brexit,” which occurred on January 31, 2020. While our manufacturing and packaging activities take place largely outside the United Kingdom, minimizing the need to make costly and significant changes to those operations, we have nevertheless been working to put in ~~frequency, sophistication~~place contingency plans to attempt to mitigate the effects of Brexit on us. Overall, the legal and ~~intensity~~operational challenges of our international business operations, along with government controls, the challenges of attracting and ~~are becoming increasingly difficult to detect. Such attacks could include the use of harmful~~retaining qualified personnel and ~~virulent malware, including ransomware or other denials of service, that can be deployed through various means, including the software supply chain, e-mail, malicious websites~~obtaining and/or ~~the use~~maintaining necessary regulatory or pricing approvals of social engineering. We have also experienced unsuccessful denial of service attacks against our network, and although such attacks did not succeed, there can be no assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful in the future. Attacks such as those experienced by governmental entities (including those that approve and/or regulate our products, such as the European Medicines Agency (EMA)) and other multi-national companies, including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and could have amay result in material adverse ~~effect~~effects on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing, selling and/or distributing our products. For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines and vaccines. As a result of the cyberattack, its orders and sales for certain products in certain markets were negatively affected. In December 2020, SolarWinds Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems. See our Annual Report on Form 10-K for the year ended December 31, 2020, ~~Part I, Item 1A. Risk Factors—~~The COVID-19 pandemic, and the public and governmental effort to mitigate against the spread of the disease, have had, and are expected to continue to have, an adverse effect, and may have a material adverse effect, on our clinical trials, operations, supply chains, distribution systems, product development,international product sales, business and results of ~~operations~~operations. ~~for a discussion of the cyberattack on the EMA.~~

Our systems also contain and utilize a high volume of sensitive data, including intellectual property, trade secrets, financial information, regulatory information, strategic plans, sales trends and forecasts, litigation materials and/or personal information belonging to us, our staff, our patients, customers and/or other parties. In some cases, we utilize third-party service providers to process, store, manage or transmit such data, which may increase our risk. Intentional or inadvertent data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers (including providers of information technology-specific services), nation states (including groups associated with or supported by foreign intelligence agencies), organized crime organizations, “hacktivists” or others, create risks that our sensitive data may be exposed to unauthorized persons, our competitors, or the public. For example, a supplier recently experienced a data breach in which an unauthorized third party acquired access to certain information provided to the supplier in the course of its provision of services to us, including business documents and certain personally identifiable patient information (not including social security or other financial or health insurance information). As required, we promptly notified the applicable state attorneys general and the individuals whose personally identifiable information was affected of this data breach at the supplier. Although the supplier data breach did not result in a material adverse effect on our business, there can be no assurance that a similar future cybersecurity incident would not result in a material adverse effect on our business or results of operations. Another vendor experienced a cyberattack and, while initially reporting that our information was not involved, the vendor subsequently informed us that the attacker had accessed limited, non-significant information. Although this breach did not have a significant

~~adverse effect on us, we may not receive timely reporting of future breaches.~~

Domestic and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our partners with business services, and companies we have or may acquire face similar risks, and security breaches of their systems or service outages could adversely affect our security, leave us without access to important systems, products, raw materials, components, services or information or expose our confidential data or sensitive personal information. For example, in 2019, two vendors that perform testing and analytical services that we use in developing and manufacturing our products have experienced cyberattacks, and in April and September of 2020, vendors that provide us with information technology services and clinical data services, respectively, each experienced ransomware attacks. Although there was no breach of our systems, each of these incidents required us to disconnect our systems from those vendors’ systems. While we were able to reconnect our systems following restoration of these vendors’ capabilities without significantly affecting product availability, a more extended service outage affecting these or other vendors, particularly where such vendor is the single source from which we obtain the services, could have a material adverse effect on our business or results of operations. In addition, we distribute our products in the United States primarily through three pharmaceutical wholesalers, and a security breach that impairs the distribution operations of our wholesalers could significantly impair our ability to deliver our products to healthcare providers and patients.

Although we have experienced system breakdowns, attacks and information security breaches, we do not believe such breakdowns, attacks and breaches have had a material adverse effect on our business or results of operations. We continue to invest in the monitoring, protection and resilience of our critical and/or sensitive data and systems. However, there can be no assurances that our efforts will detect, prevent or fully recover systems or data from all breakdowns, service interruptions, attacks and/or breaches of our systems that could adversely affect our business and operations and/or result in the loss or exposure of critical, proprietary, private, confidential or otherwise sensitive data, which could result in material financial, legal, business or reputational harm to us or negatively affect our stock price. While we maintain cyber-liability insurance, our insurance is not sufficient to cover us against all losses that could potentially result from a service interruption, breach of our systems or loss of our critical or sensitive data.

We are also subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating to the collection, storage, handling, use, disclosure, transfer and security of personal data. The legislative and regulatory environment regarding privacy and data protection is continuously evolving and developing and the subject of significant attention globally. For example, we are subject to the European Union’s General Data Protection Regulation, which became effective in May 2018, and the California Consumer Privacy Act of 2018 (CCPA), which became effective in January 2020, both of which provide for substantial penalties for non-compliance. The CCPA was amended in late 2020, to create the California Privacy Rights Act to create opt-in requirements for the use of sensitive personal data and the formation of a new dedicated agency for the enforcement of the law, the California Privacy Protection Agency. Since then, Virginia and Colorado both passed similar consumer privacy laws that will go into effect in 2023. Other jurisdictions where we operate continue to propose similar legislation and/or regulations with others expected to pass in 2021. Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.

RISKS RELATED TO GOVERNMENT REGULATIONS AND THIRD-PARTY POLICIES

Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability.

Sales of our products depend on the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans. Governments and private payers continue to pursue initiatives to manage drug utilization and contain costs. These payers are increasingly focused on the effectiveness, benefits and costs of similar treatments, which have resulted, and are expected to continue to result, in lower reimbursement rates for our products or narrower populations for whom payers will reimburse. Continued intense public scrutiny of the price of drugs and other healthcare costs, together with payer dynamics, have limited, and are likely to continue to limit, our ability to set or adjust the price of our products based on their value, which can have a material adverse effect on our business. In the United States, particularly over the past few years, a number of legislative and regulatory proposals have been introduced in an attempt to lower drug prices. These include proposals that would allow the U.S. government to negotiate drug prices directly, limit drug reimbursement in Medicare and/or the commercial market based on a reference prices or permit importation of drugs from Canada. Additional proposals would require a rebate to the government for any price increase in excess of the Consumer Price Index for All Urban Consumers and/or to shift some of the costs of these Medicare Part D reforms to manufacturers to offset the cost. Proposals focused on drug pricing have been implemented and are likely to continue to be proposed and may be adopted and implemented in some form. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability.

~~—Changing U.S. federal coverage and reimbursement policies and practices have affected and may continue to affect access to, pricing and sales of our products~~

A substantial portion of our U.S. business relies on reimbursement from federal government healthcare programs and commercial insurance plans regulated by federal and state governments. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1. Business—Reimbursement. Our business has been and will continue to be affected by legislative actions changing U.S. federal reimbursement policy. Congress has been focused on drug pricing reforms and oversight since 2018, and is ongoing. For example, in 2020, Amgen participated in House Oversight and Reform Committee hearings on drug pricing practices. Additionally, in 2019 and 2020, a number of other Congressional committees debated drug pricing reform proposals. For example, in 2019, the Senate Finance Committee advanced a bill that would, among other things, penalize pharmaceutical manufacturers for raising prices on drugs covered by Medicare Parts B and/or D faster than the rate of inflation, cap out-of-pocket expenses for Medicare Part D beneficiaries and require higher/additional manufacturer discounts in Medicare Part D. Additionally, in late 2019, a drug-pricing bill, H.R. 3, passed the House of Representatives, which would, among other things, enable direct price negotiations by the federal government on certain drugs (with the maximum price paid by Medicare capped by prices derived from an international index), includes a penalty for failing to reach agreement with the government and requires that manufacturers offer these negotiated prices to other payers. Further, proposals from H.R. 3 have been incorporated into other proposed legislation, including the House’s drug pricing provisions based on H.R. 3 in the Build Back Better reconciliation bill, and proposals from H.R. 3 are also likely to be included in the version of the reconciliation bill that remains to be further debated between the House, Senate and White House. Other legislation has also contained drug pricing reforms, including the Infrastructure Investment and Jobs Act passed by the Senate in August 2021, which includes a provision that would, starting in 2023, require manufacturers to provide Medicare with rebates for certain drugs paid under Medicare Part B, and the American Rescue Plan Act of 2021, which includes a provision, to be implemented in 2024, that increases the Medicaid rebate liability for certain medicines that raise prices in excess of inflation. On November 2, 2021, Congress announced a framework for drug pricing reform that includes inflation penalties, Medicare negotiation for select drugs paid for under Parts B and D, and a Medicare Part D redesign. As of the date of this filing, this framework remains in discussion with policymakers in Congress and the Administration.

There are other outstanding proposals that have been introduced by the prior Administration that, if enacted and implemented in whole or in part, could also affect access to and sales of our products, including, but not limited to, proposals to allow importation of prescription medications from Canada or other countries and to set Medicare payment rates using international price referencing. Further, in mid-2020, the prior Administration announced a number of Executive Orders intended to reduce the cost of biopharmaceuticals for patients, including a most favored nation (MFN) policy for Medicare Parts B and D, under which the Health & Human Services (HHS) was directed to take steps to implement payment models that set Medicare purchase prices based on the lowest price available in economically comparable countries for certain Part B and Part D medicines. In September 2020, in response to the corresponding Executive Order, HHS released a final rule to allow states (or other nonfederal government entities) to submit proposals to the FDA allowing for the importation of certain nonbiologic prescription drugs from Canada. Currently, the rule is being challenged by litigation, however, should such litigation be unsuccessful and should the Secretary of HHS authorize state proposals for importation, this rule could allow the importation of Canadian versions of certain of Amgen’s products (including Otezla®), that could have a material adverse effect on Amgen’s business. Further, in November 2020, also in response to the corresponding Executive Order, HHS released an interim final rule to implement the MFN pricing approach. If implemented, the MFN rule would set the reimbursement rate for 50 Medicare Part B drugs (including our products, such as Prolia®~~, XGEVA~~®~~, KYPROLIS~~®~~, Neulasta~~®~~, Nplate~~®~~, EPOGEN~~® ~~and Aranesp~~®) equal to the lowest adjusted price for such products of the 22 OECD nations. Lawsuits have been filed by certain trade groups challenging the implementation of this MFN rule based on, among other things, procedural defects. Late in 2020, in the case filed by the Biotechnology Innovation Organization (BIO) and others, the U.S. District Court for the Northern District of California issued a preliminary injunction preventing the rule from taking effect nationwide, pending the government’s completion of required administrative procedures. The case was subsequently stayed by the court and will remain stayed until at least November 10, 2021, when the parties will be required to submit a joint status report to the court. Another case, filed by the Pharmaceutical Research and Manufacturers of America and others in the U.S. District Court for the District of Maryland, was also stayed until either a final rule based on the MFN interim rule is published in the Federal Register, or until the court orders a lifting of the stay based on, among other things, the status of the nationwide preliminary injunction issued in the BIO case. In August 2021, Centers for Medicare & Medicaid Services (CMS) released a proposal to withdraw the MFN rule, noting, however, that the proposal to withdraw “does not reflect any judgment by HHS regarding future policy.”Notwithstanding these stays and the proposed withdrawal of the rule, the MFN rule’s approach to drug pricing and other similar approaches remain of interest. Further, despite the change in Administration, we expect continued significant focus on healthcare and similar drug pricing proposals for the foreseeable future, including proposals similar to the MFN rule or other proposals that would grant the HHS secretary the authority to negotiate drug prices directly with manufacturers. On July 9, 2021, the Administration issued an Executive Order designed to address anticompetitive behavior across multiple sectors, and for the healthcare sector, called for, among other things, more scrutiny of anticompetitive activity by the Federal Trade

Commission (FTC), emphasized the need for actions to allow for greater competition from generics and biosimilars, and called for the FDA to work with states and Indian Tribes to develop prescription drug importation programs. The Executive Order established a process and timeline for federal agencies to deliver ideas on drug pricing to the Administration, including requiring HHS to develop a comprehensive plan within 45 days to address drug pricing. Subsequently, on September 9, 2021, the HHS released a report that presented guiding principles for the Administration’s drug pricing proposals, including changes to promote competition throughout the prescription drug industry, highlighting potential legislative policies that Congress could pursue (including drug price negotiation in Medicare Parts B and D, making those negotiated prices available to commercial plans and legislation to speed the entry of biosimilar and generic drugs) and examples of potential administrative tools available to the HHS (including various testing models and enhanced focus of the FTC and the USPTO to address impediments to generic drug and biosimilar competition). Also in response to the July 9 Executive Order, the FDA sent a letter to the USPTO describing ways to strengthen coordination between the two agencies, offered training to help identify prior art, and seeking USPTO’s views on practices that extend market exclusivities, whether pharmaceutical patent examiners need additional resources, and the effect of post-grant challenges at the PTAB on drug patents.

Our business has been, and is expected to continue to be, affected by changes in U.S. federal reimbursement policy resulting from federal regulations and federal demonstration projects. Over the past three years, federal agencies, including the CMS, announced a number of recommendations, policies, proposals and demonstration projects addressing drug pricing. CMS is the federal agency responsible for administering Medicare and overseeing state Medicaid programs and Health Insurance Marketplaces and has substantial power to implement policy changes or demonstration projects that can quickly and significantly affect how drugs, including our products, are covered and reimbursed. CMS issued guidance to allow certain Medicare plans offered by private insurance companies to require that patients receiving Medicare Part B drugs first try a drug preferred by the plan before covering another therapy (Step Therapy) and lowered reimbursement rates for new Medicare Part B drugs. Further, HHS issued a final rule under Medicare Part D revising the regulations under the federal antikickback statute to encourage Pharmacy Benefit Managers (PBMs) to use rebates received from biopharmaceutical manufacturers to reduce patient cost-sharing at the point of sale. While the implementation date for the rule is January 1, 2023, the rule remains subject to litigation, there are numerous logistical hurdles to overcome before it can be effectively implemented, and it is unclear how PBMs will respond and what the current Administration’s position is on the rule. Further, while the prior Administration finalized a rule (effective January 1, 2022) mandating price and cost-sharing transparency for almost all health plans and insurers in the individual and group commercial markets, the current Administration has delayed implementation of those drug price transparency provisions and has indicated that there will be future rulemaking on the issue. It is unclear how group health plans and health insurers may respond. The Administration also could develop and seek to advance a range of policy proposals that could impact U.S. federal reimbursement policy for drugs and biologics, including changes to Medicare Part B.

CMS policy changes and demonstration projects to test new care, delivery and payment models can significantly affect how drugs, including our products, are covered and reimbursed. In end-stage renal disease (ESRD), CMS uses bundled payment rates. Between 2018 and 2020, Sensipar® ~~and Parsabiv~~®, our calcimimetics that are used in dialysis clinics, were eligible for temporary drug add-on payment adjustments (TDAPA) to the bundled rate. In November 2020, CMS released its final rule ending the TDAPA for calcimimetics and adjusting ESRD Prospective Payment System bundled rates on January 1, 2021 by $9.93 per dialysis treatment for calcimimetics. As a result, sales of Parsabiv® have been materially adversely affected by this rule change. Additionally, CMS created a new mandatory payment model, effective January 1, 2021, focused on encouraging greater use of home dialysis and kidney transplants for ESRD patients that could result in changes to treatment of dialysis patients, including reduction of the use of our ESAs. Further, in November 2019, CMS announced additional voluntary payment models for nephrologists and dialysis facility partners that also seek to encourage home dialysis and preemptive transplantation through increased risk sharing, effective January 1, 2022. CMS has also solicited suggestions regarding other potential care models. In 2016, CMS initiated the Oncology Care Model demonstration, which provides participating physician practices with performance-based financial incentives that aim to manage or reduce Medicare costs without negatively affecting the efficacy of care, that has been extended by one year (to 2022) due to COVID-19. We believe the Oncology Care Model has reduced utilization of certain of our oncology products by participating physician practices and expect it to continue to do so in the future. Additionally, in late 2019, CMS announced a request for information on the Oncology Care First model, a new voluntary model that builds on the Oncology Care Model. CMS has indicated a continued interest in exploring demonstrations of mandatory models, and may propose both new mandatory payment models in the future that could adversely affect our business. For example, HHS’s September 2021 comprehensive plan to address drug pricing included potential future mandatory models that link payment for prescription drugs and biologics to factors such as: improved patient outcomes, reductions in health disparities, patient affordability, and lower overall costs; bundled payment models; total cost of care models; models in which Medicare Part B savings from utilization of biosimilars, generics, or other high-value products are shared between prescribing providers and the government; models that provide additional Medicare Part D cost-sharing support for biosimilars and generics; and potential expansion of the Part D Senior Savings Model to additional classes of drugs. CMS recently finalized a rule that, starting January 1, 2023, unless a manufacturer can ensure that the full amount of manufacturer patient assistance programs is passed on to the patient, such amount will be treated as a price reduction that will be taken into account when

reporting our Best Price and/or Average Manufacturer Price. Given the use by PBMs and insurers of copay accumulator adjustment programs to apply such patient assistance for the benefit of such companies and not to defray costs to patients, it could be difficult to impossible for manufacturers to ensure that the full value of such amounts is being passed on to the patient. This new policy, if implemented, would have significant implications for our ability to offer copay assistance programs. In this dynamic environment, particularly in light of the pressures on healthcare budgets as a result of the pandemic, we are unable to predict which or how many federal policy, legislative, regulatory, executive or administrative changes may ultimately be, or effectively estimate the consequences to our business if, enacted and implemented. However, to the extent that these or other federal government initiatives further decrease or modify the coverage or reimbursement available for our products, require that we pay increased rebates or shift other costs to us, limit or affect our decisions regarding the pricing of or otherwise reduce the use of our U.S. products, or limit our ability to offer co-pay payment assistance to commercial patients, such actions could have a material adverse effect on our business and results of operations.

We also face risks relating to the reporting of pricing data that affects the reimbursement of and discounts provided for our products. U.S. government price reporting regulations are complex and may require a biopharmaceutical manufacturer to update certain previously submitted data. If our submitted pricing data are incorrect, we may become subject to substantial fines and penalties or other government enforcement actions, which could have a material adverse effect on our business and results of operations. In addition, as a result of restating previously reported price data, we also may be required to pay additional rebates and provide additional discounts.

The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability.

We are subject to income and other taxes in the United States and other jurisdictions in which we do business. As a result, our ~~provision~~provision for income taxes is derived from a combination of applicable tax rates in the various places we operate. Significant judgment is required for determining our provision for income tax.

One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely examined by tax authorities in those jurisdictions. Significant disputes can ~~arise~~and have arisen with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts, and such tax authorities (including the IRS) are becoming more aggressive in their audits and are particularly focused on such matters. In 2017, we received aan RAR and a modified RAR from the IRS for the years 2010, 2011 and 2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. ~~As previously reported, we~~We disagreed with the proposed adjustments and calculations and pursued a resolution with the IRS administrative appeals ~~office. However, we~~office but were unable to reach ~~resolution with the IRS appeals office.~~resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two ~~duplicative~~duplicate Notices for 2010, 2011 and 2012 that we received in May and July 2021 which seek to increase our U.S. taxable income. We firmly believe that the IRS’s positions set forth in the Notices are without merit, and we will vigorously contest the Notices through the judicial process. See Note 4, Income taxes, to the condensed consolidated financial statements.income for 2010-2012.

We firmly believe that the IRS positions set forth in the 2010-2012 and 2013-2015 Notices are without merit. We are contesting the 2010-2012 Notices through the judicial process, and we expect to file a Petition in the U.S. Tax Court to contest the 2013-2015 Notice through the judicial process. We will seek consolidation of the ~~2010-2012~~two periods into one case in Tax Court litigation, the IRS administrative appeals office recently informed us that it does not plan to engage in discussions at this time regarding the allocation of profits between our entities in the United States and the U.S. territory of Puerto Rico for the 2013-2015 period. Court.

We are also currently under examination by the IRS for the years 2016, 2017 and ~~2018. We are also currently under examination~~2018 and by a number of ~~other~~ state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse effect on the results of our operations.

See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income Taxes; Part I—Note 4, Income taxes, to the Condensed Consolidated Financial Statements.

Our provision for income taxes and results of operations in the future could be adversely affected by changes to our operating structure, changes in the mix of income and expenses in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities and changes in applicable tax laws, regulations or administrative interpretations thereof. The Tax Cuts and Jobs Act (the 2017 Tax Act) is complex and a large volume of regulations and guidance has been issued and could be subject to different interpretations. We could face audit challenges to our application of the 2017 Tax Act. The Administration proposed and Congress ~~are~~is considering significant changes to existing tax ~~law, including an increase in the corporate tax~~

~~rate and the tax rate on foreign earnings.~~law. These changes, if enacted, could substantially increase ~~U.S. taxation of our operations both in and outside the United States, including~~taxes we pay to the U.S. ~~territory of Puerto Rico.~~government. Further, the OECD recently reached agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. If enacted, this agreement could result in tax increases in both the United States and foreign ~~jurisdictions~~. jurisdictions.

The U.S. Treasury recently released final foreign tax credit regulations that eliminate U.S. creditability of the Puerto Rico Excise Tax beginning 2023, which will increase our U.S. tax liability. The U.S. territory of Puerto Rico is considering changes to its tax system that may minimize or eliminate this impact, but the outcome of such potential changes is uncertain. Changes to existing tax law in the United States, the U.S. territory of Puerto Rico, or other jurisdictions, ~~that would likely~~including the potential changes discussed above, could result in tax increases where we do business and could have a material adverse effect on the results of our operations.


Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended ~~September 30, 2021,~~March 31, 2022, we had one outstanding stock repurchase program, under which the repurchase activity was as follows:

Period Total number
of shares
purchased
Average
price paid
per share (1)
Total number
of shares purchased
as part of publicly announced program
Maximum dollar
value that may
yet be purchased
under the program(2)
July 1 - 31 1,763,784 $ 245.52 1,763,784 $ 3,486,312,736
August 1 - 31 1,250,282 $ 226.31 1,250,282 $ 3,203,364,954
September 1 - 30 1,624,898 $ 217.23 1,624,898 $ 2,850,385,563
Total 4,638,964 $ 230.43 4,638,964


Period	Total number of shares purchased	Average price paid per share (1)	Total number of shares purchased as part of publicly announced program	Maximum dollar value that may yet be purchased under the program
January 1 - 31	1,083,500	227.99	1,083,500	10,642,348,215
February 1 - 28
Other repurchases	280,000	225.30	280,000	10,579,263,848
Accelerated stock repurchases(2)	23,258,997		23,258,997	4,579,263,848
March 1 - 31	—		—	4,579,263,848
Total	24,622,497		24,622,497

___________

(1) Average price paid per share includes related expenses.

(2) ~~In March 2021, our Board~~As part of ~~Directors increased~~ the ~~amount authorized under our~~ stock repurchase program, the Company entered into ASR agreements with three third-party financial institutions (Dealers) in February 2022. Under the ASR agreements, the Company made payments in an aggregate amount of $6.0 billion to the Dealers and received and retired an initial 23,258,997 shares of common stock. Approximately $0.9 billion of shares of the Company’s common stock remains to be delivered by anthe Dealers pending final settlement. The final number of shares to be repurchased by the Company will be based on the daily volume-weighted average stock price of the Company’s common stock during the terms of the ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. At settlement, which is scheduled to occur in the third quarter of 2022, the Dealers may be required to deliver additional ~~$3.4 billion. In October 2021,~~shares of common stock to the ~~Board~~Company, or under certain circumstances, the Company may be required to deliver shares of ~~Directors increased~~common stock or to make a cash payment, at its election, to the ~~amount authorized under our stock repurchase program by an additional $4.5 billion.~~Dealers.

5043


Item 6.			EXHIBITS

Reference is made to the Index to Exhibits included herein.

5144

INDEX TO EXHIBITS


Exhibit No.						Description
2.1						Asset Purchase Agreement, dated August 25, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 8-K on August 26, 2019 and incorporated herein by reference.)

2.2						Amendment No. 1 to the Asset Purchase Agreement, dated October 17, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 8-K on October 17, 2019 and incorporated herein by reference.)

2.3						Amendment No. 2 to the Asset Purchase Agreement, dated October 17, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

2.4						Letter Agreement, dated November 21, 2019, by and between Amgen Inc. and the parties named therein re: Treatment of Certain Product Inventory in connection with Amgen’s acquisition of Otezla®. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

2.5						Irrevocable Guarantee, dated August 25, 2019, by and between Amgen Inc. and Bristol-Myers Squibb Company. (Filed as an exhibit to Form 8-K on August 26, 2019 and incorporated herein by reference.)

2.6						Agreement and Plan of Merger, dated ~~as of March 4, 2021, by and among Amgen Inc., Franklin Acquisition Sub, Inc. and Five Prime Therapeutics, Inc.~~ ~~(Filed as an exhibit to Form 8-K on March 4, 2021 and incorporated herein by reference.)~~

2.7*						~~Agreement and Plan of Merger, dated~~ July 27, 2021, by and among Amgen Inc., Teneobio, Inc., Tuxedo Merger Sub, Inc., and Fortis ~~Advisors~~Advis ors LLC. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential).(Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2021 on November 3, 2021 and incorporated herein by reference.)

3.1						Restated Certificate of Incorporation of Amgen Inc. (As Restated March 6, 2013.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2013 on May 3, 2013 and incorporated herein by reference.)

3.2						Amended and Restated Bylaws of Amgen Inc. (As Amended and Restated February 15, 2016.) (Filed as an exhibit to Form 8-K on February 17, 2016 and incorporated herein by reference.)

4.1						Form of stock certificate for the common stock, par value $.0001 of the Company. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 1997 on May 14, 1997 and incorporated herein by reference.)

4.2						Form of Indenture, dated January 1, 1992. (Filed as an exhibit to Form S-3 Registration Statement filed on December 19, 1991 and incorporated herein by reference.)

4.3						Agreement of Resignation, Appointment and Acceptance dated February 15, 2008. (Filed as an exhibit to Form 10-K for the year ended December 31, 2007 on February 28, 2008 and incorporated herein by reference.)

4.4						First Supplemental Indenture, dated February 26, 1997. (Filed as an exhibit to Form 8-K on March 14, 1997 and incorporated herein by reference.)

4.5						8-1/8% Debentures due April 1, 2097. (Filed as an exhibit to Form 8-K on April 8, 1997 and incorporated herein by reference.)

4.6						Officer’s Certificate of Amgen Inc., dated April 8, 1997, establishing a series of securities entitled “8 1/8% Debentures due April 1, 2097.” (Filed as an exhibit to Form 8-K on April 8, 1997 and incorporated herein by reference.)

4.7						Indenture, dated August 4, 2003. (Filed as an exhibit to Form S-3 Registration Statement on August 4, 2003 and incorporated herein by reference.)

4.8						Corporate Commercial Paper - Master Note between and among Amgen Inc., as Issuer, Cede & Co., as Nominee of The Depository Trust Company, and Citibank, N.A., as Paying Agent. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 1998 on May 13, 1998 and incorporated herein by reference.)

4.9						Officers’ Certificate of Amgen Inc., dated May 30, 2007, including form of the Company’s 6.375% Senior Notes due 2037. (Filed as an exhibit to Form 8-K on May 30, 2007 and incorporated herein by reference.)

4.10						Officers’ Certificate of Amgen Inc., dated May 23, 2008, including form of the Company’s 6.90% Senior Notes due 2038. (Filed as exhibit to Form 8-K on May 23, 2008 and incorporated herein by reference.)


4.11						Officers’ Certificate of Amgen Inc., dated January 16, 2009, including form of the Company’s 6.40% Senior Notes due 2039. (Filed as exhibit to Form 8-K on January 16, 2009 and incorporated herein by reference.)


Exhibit No.						Description
4.12						Officers’ Certificate of Amgen Inc., dated March 12, 2010, including form of the Company’s 5.75% Senior Notes due 2040. (Filed as exhibit to Form 8-K on March 12, 2010 and incorporated herein by reference.)

4.13						Officers’ Certificate of Amgen Inc., dated September 16, 2010, including form of the Company’s 4.95% Senior Notes due 2041. (Filed as an exhibit to Form 8-K on September 17, 2010 and incorporated herein by reference.)

4.14						Officers’ Certificate of Amgen Inc., dated June 30, 2011, including form of the Company’s 5.65% Senior Notes due 2042. (Filed as an exhibit to Form 8-K on June 30, 2011 and incorporated herein by reference.)

4.15						Officers’ Certificate of Amgen Inc., dated November 10, 2011, including form of the Company’s 5.15% Senior Notes due 2041. (Filed as an exhibit to Form 8-K on November 10, 2011 and incorporated herein by reference.)

4.16						Officers’ Certificate of Amgen Inc., dated December 5, 2011, including form of the Company’s 5.50% Senior Notes due 2026. (Filed as an exhibit to Form 8-K on December 5, 2011 and incorporated herein by reference.)

4.17						Officers’ Certificate of Amgen Inc., dated May 15, 2012, including ~~forms~~form of the Company’s ~~3.625% Senior Notes due 2022 and~~ 5.375% Senior Notes due 2043. (Filed as an exhibit to Form 8-K on May 15, 2012 and incorporated herein by reference.)

4.18						Officers’ Certificate of Amgen Inc., dated September 13, 2012, including form of the Company’s 4.000% Senior Notes due 2029. (Filed as an exhibit to Form 8-K on September 13, 2012 and incorporated herein by reference.)

4.19						Indenture, dated May 22, 2014, between Amgen Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Filed as an exhibit to Form 8-K on May 22, 2014 and incorporated herein by reference.)

4.20						Officers’ Certificate of Amgen Inc., dated May 22, 2014, including form of the Company’s 3.625% Senior Notes due 2024. (Filed as an exhibit to Form 8-K on May 22, 2014 and incorporated herein by reference.)

4.21						Officer’s Certificate of Amgen Inc., dated May 1, 2015, including forms of the Company’s ~~2.700% Senior Notes due 2022,~~ 3.125% Senior Notes due 2025 and 4.400% Senior Notes due 2045. (Filed as an exhibit on Form 8-K on May 1, 2015 and incorporated herein by reference.)

4.22						Officer’s Certificate of Amgen Inc., dated as of February 25, 2016, including ~~forms~~form of the Company’s ~~1.250% Senior Notes due 2022 and~~ 2.000% Senior Notes due 2026. (Filed as an exhibit on Form 8-K on February 26, 2016 and incorporated herein by reference.)

4.23						Form of Permanent Global Certificate for the Company’s 0.410% bonds due 2023. (Filed as an exhibit on Form 8-K on March 8, 2016 and incorporated herein by reference.)

4.24						Terms of the Bonds for the Company’s 0.410% bonds due 2023. (Filed as an exhibit on Form 8-K on March 8, 2016 and incorporated herein by reference.)

4.25						Officer’s Certificate of Amgen Inc., dated as of June 14, 2016, including forms of the Company’s 4.563% Senior Notes due 2048 and 4.663% Senior Notes due 2051. (Filed as an exhibit to Form 8-K on June 14, 2016 and incorporated herein by reference.)

4.26						Officer’s Certificate of Amgen Inc., dated as of August 19, 2016, including forms of the Company’s 2.250% Senior Notes due 2023 and 2.600% Senior Notes due 2026. (Filed as an exhibit to Form 8-K on August 19, 2016 and incorporated herein by reference.)

4.27						Officer’s Certificate of Amgen Inc., dated as of ~~May 11, 2017 including form of the Company’s 2.650% Senior Notes due 2022.~~ ~~(Filed as an exhibit to Form 8-K on May 11, 2017 and incorporated herein by reference.)~~

~~4.28~~						~~Officer’s Certificate of Amgen Inc., dated as of~~ November 2, 2017, including in the form of the Company’s 3.200% Senior Notes due 2027. (Filed as an exhibit to Form 8-K on November 2, 2017 and incorporated herein by reference.)

~~4.29~~4.28						Officer’s Certificate of Amgen Inc., dated as of February 21, 2020, including forms of the Company’s 1.900% Senior Notes due 2025, 2.200% Senior Notes due 2027, 2.450% Senior Notes due 2030, 3.150% Senior Notes due 2040 and 3.375% Senior Notes due 2050. (Filed as an exhibit to Form 8-K on February 21, 2020 and incorporated herein by reference.)


~~4.30~~4.29						Officer’s Certificate of Amgen Inc., dated as of May 6, 2020, including form of the Company’s 2.300% Senior Notes due 2031. (Filed as an exhibit to Form 8-K on May 6, 2020 and incorporated herein by reference.)


~~4.31~~Exhibit No.						Description
4.30						Officer’s Certificate of Amgen Inc., dated as of August 17, 2020, including forms of the Company’s 2.770% Senior Notes due 2053. (Filed as an exhibit to Form 8-K on August 18, 2020 and incorporated herein by reference.)

~~4.32~~4.31						Registration Rights Agreement, dated as of August 17, 2020, by and among Amgen Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC, as lead dealer managers, and BNP Paribas Securities Corp., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Blaylock Van, LLC and Siebert Williams Shank & Co., LLC, as co-dealer managers. (Filed as an exhibit to Form 8-K on August 18, 2020 and incorporated herein by reference.)

4.32						Officer’s Certificate of Amgen Inc., dated as of August 9, 2021, including forms of the Company’s 1.650% Senior Notes due 2028, 2.000% Senior Notes due 2032, 2.800% Senior Notes due 2041 and 3.000%Senior Notes due 2052. (Filed as an exhibit to Form 8-K on August 9, 2021 and incorporated herein by reference.)

4.33						Officer’s Certificate of Amgen Inc., dated as of February 22, 2022, including forms of the Company’s 3.000% Senior Notes due 2029, 3.350% Senior Notes due 2032, 4.200% Senior Notes due 2052 and 4.400% Senior Notes due 2062. (Filed as an exhibit to Form 8-K on February 22, 2022 and incorporated herein by reference.)

10.1+						Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (Filed as Appendix C to the Definitive Proxy Statement on Schedule 14A on April 8, 2013 and incorporated herein by reference.)

10.2+						First Amendment to Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, effective March 4, 2015. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2015 on April 27, 2015 and incorporated herein by reference.)

10.3+						Second Amendment to Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, effective March 2, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2016 on May 2, 2016 and incorporated herein by reference.)

10.4+						Form of Grant of Stock Option Agreement for the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (As Amended a nd Restated on December ~~15, 2020.~~2 , 202 1 .) (Filed as an exhibit to Form 10-K for the year ended December 31, ~~2020~~2021 on February ~~9, 2021~~16, 2022 and incorporated herein by reference.)

10.5+						Form of Restricted Stock Unit Agreement for the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (As Amended and Restated on December ~~15, 2020.~~2 , 202 1 .) (Filed as an exhibit to Form 10-K for the year ended December 31, ~~2020~~2021 on February ~~9, 2021~~16, 2022 and incorporated herein by reference.)

10.6+						Amgen Inc. 2009 Performance Award Program. (As Amended on December 12, 2017.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2017 on February 13, 2018 and incorporated herein by reference.)

10.7+						Form of Performance Unit Agreement for the Amgen Inc. 2009 Performance Award Program. (As Amended and Re stated on December ~~15, 2020.~~2 , 202 1 .) (Filed as an exhibit to Form 10-K for the year ended December 31, ~~2020~~2021 on February ~~9, 2021~~16, 2022 and incorporated herein by reference.)

10.8+						Amgen Inc. 2009 Director Equity Incentive Program. (As Amended and Restated on October 21, 2020.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2020 on February 9, 2021 and incorporated herein by reference.)

10.9+						Form of Grant of Non-Qualified Stock Option Agreement for the Amgen Inc. 2009 Director Equity Incentive Program. (Filed as an exhibit to Form 8-K on May 8, 2009 and incorporated herein by reference.)

10.10+						Form of Restricted Stock Unit Agreement for the Amgen Inc. 2009 Director Equity Incentive Program. (As Amended on December 11, 2019.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

10.11+						Form of Cash-Settled Restricted Stock Unit Agreement for the Amgen 2009 Director Equity Incentive Program. (As Amended on December 11, 2019.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

10.12+						Amgen Inc. Supplemental Retirement Plan. (As Amended and Restated effective October 16, 2013.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2013 on February 24, 2014 and incorporated herein by reference.)

10.13+						First Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 14, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2016 on October 28, 2016 and incorporated herein by reference.)


Exhibit No.						Description

10.14+						Second Amendment to the Amgen Inc. Supplemental Retirement Plan ~~(As Amended and Restated~~ , effective October 23, 2019). (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

10.15+						~~Amended~~Third Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 20, 2021. (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and ~~Restated~~ incorporated herein by reference.)

10.16+						A m e n d e d a n d R e s t a t e d Amgen ~~Change~~ C hange of Control Severance Plan. (As Amended and Restated effective December 9, 2010 and subsequently amended effective March 2, 2011.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 on May 10, 2011 and incorporated herein by reference.)



~~10.16+~~10.17+*						Amgen Inc. Executive Incentive Plan. (As Amended and Restated effective January 1, ~~2009.)~~ ~~(Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2008 on November 7, 2008 and incorporated herein by reference.)~~

~~10.17+~~						~~First Amendment to the Amgen Inc. Executive Incentive Plan, effective December 13, 2012.~~ ~~(Filed as an exhibit to Form 10-K for the year ended December 31, 2012 on February 27, 2013 and incorporated herein by reference.~~2022.)

10.18+						~~Second Amendment to the Amgen Inc. Executive Incentive Plan, effective January 1, 2017.~~ ~~(Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2017 on April 27, 2017 and incorporated herein by reference.)~~

~~10.19+~~						Amgen Nonqualified Deferred Compensation Plan. (As Amended and Restated effective October 16, 2013.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2013 on February 24, 2014 and incorporated herein by reference.)

~~10.20+~~10.19+						First Amendment to the Amgen Nonqualified Deferred Compensation Plan, effective October 14, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2016 on October 28, 2016 and incorporated herein by reference.)

~~10.21+~~10.20+						Second Amendment to the Amgen Nonqualified Deferred Compensation Plan,, effective January 1, 2020. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

~~10.22+~~10.21+						~~Agreement between~~Third Amendment to the Amgen ~~Inc. and Murdo Gordon, dated July 25, 2018.~~Nonqualified Deferred Compensation Plan, effective January 1, 2022. ~~(Filed~~(Filed as an exhibit to Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~September 30, 2018~~December 31, 2021 on ~~October 31, 2018~~February 16, 2022 and incorporated herein by reference.)

~~10.23+~~10.22+						Agreement between Amgen Inc. and Peter Griffith, dated October 18, 2019. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2020 on May 1, 2020 and incorporated herein by reference.)

10.23+						Aircraft Time Sharing Agreement, dated December 3, 2021, by and between Amgen Inc. and Robert A. Bradway. (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.)

10.24						Second Amended and Restated Credit Agreement, dated December 12, 2019, among Amgen Inc., the Banks therein named, Citibank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as syndication agent. (Filed as an exhibit to Form 8-K on December 12, 2019 and incorporated herein by reference.)

10.25						Collaboration and License Agreement between Amgen Inc. and Celltech R&D Limited dated May 10, 2002 (portions of the exhibit have been omitted pursuant to a request for confidential treatment) and Amendment No. 1, effective June 9, 2003, to Collaboration and License Agreement between Amgen Inc. and Celltech R&D Limited (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-K/A for the year ended December 31, 2012 on July 31, 2013 and incorporated herein by reference.)

10.26						Amendment No. 2 to Collaboration and License Agreement, effective November 14, 2016, between Amgen Inc. and Celltech R&D Limited (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-K for the year ended December 31, 2016 on February 14, 2017 and incorporated herein by reference.)

10.27						Letter Agreement, dated June 25, 2019, by and between Amgen Inc. and UCB Celltech (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2019 on July 31, 2019 and incorporated herein by reference.)

10.28						Collaboration Agreement, dated April 22, 1994, by and between Bayer Corporation (formerly Miles, Inc.) and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 by Onyx Pharmaceuticals, Inc. on May 10, 2011 and incorporated herein by reference.)

10.29						Amendment to Collaboration Agreement, dated April 24, 1996, by and between Bayer Corporation and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2006 by Onyx Pharmaceuticals, Inc. on May 10, 2006 and incorporated herein by reference.)


Exhibit No.						Description
10.30						Amendment to Collaboration Agreement, dated February 1, 1999, by and between Bayer Corporation and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2006 by Onyx Pharmaceuticals, Inc. on May 10, 2006 and incorporated herein by reference.)

10.31						Settlement Agreement and Release, dated October 11, 2011, by and between Bayer Corporation, Bayer AG, Bayer HealthCare LLC and Bayer Pharma AG and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-K for the year ended December 31, 2011 by Onyx Pharmaceuticals, Inc. on February 27, 2012 and incorporated herein by reference.)


10.32						Fourth Amendment to Collaboration Agreement, dated October 11, 2011, by and between Bayer Corporation and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-K for the year ended December 31, 2011 by Onyx Pharmaceuticals, Inc. on February 27, 2012 and incorporated herein by reference.)

10.33						Side Letter Regarding Collaboration Agreement, dated May 29, 2015, by and between Bayer HealthCare LLC and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2015 on August 5, 2015 and incorporated herein by reference.)

10.34						Side Letter Regarding Collaboration Agreement and Stivarga Agreement, dated February 13, 2020, by and between Onyx Pharmaceuticals, Inc. and Bayer HealthCare LLC. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2020 on May 1, 2020 and incorporated herein by reference.)

10.35						Sourcing and Supply Agreement, dated January 6, 2017, by and between Amgen USA Inc., a wholly owned subsidiary of Amgen Inc., and DaVita Inc. (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2017 on April 27, 2017 and incorporated herein by reference.)

10.36						Exclusive License and Collaboration Agreement, dated August 28, 2015, by and between Amgen Inc. and Novartis Pharma AG (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2017 on July 26, 2017 and incorporated herein by reference.)

10.37						Amendment No. 1 to the Exclusive License and Collaboration Agreement, dated April 21, 2017, by and between Amgen Inc. and Novartis Pharma AG (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2017 on July 26, 2017 and incorporated herein by reference.)

10.38						Amendment No. 2 to the Exclusive License and Collaboration Agreement, dated April 21, 2017, by and between Amgen Inc. and Novartis Pharma AG (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2017 on July 26, 2017 and incorporated herein by reference.)

10.39						~~Amended and Restated~~ Ame nd ment No. 3 to the Exclusi ve License a nd Collaboration Agreement, dated ~~June~~ January 31 , 202 2 ~~2021,~~, by and between Amgen Inc. and Novartis Pharma AG (portions of the exhibit have been omitted because they are both (i) not material and (ii) ~~would be competitively harmful if publicly disclosed)~~is the type of information that the Company treats as private or confidential). (Filed as an exhibit to the Company’s Current Report on Form ~~10-Q for the quarter ended June 30, 2021~~8-K on ~~August 4, 2021~~January 31, 2022 and incorporated herein by reference.)

10.40						Collaboration Agreement, dated October 31, 2019, by and between Amgen Inc. and BeiGene Switzerland GmbH, a wholly-owned subsidiary of BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

10.41						Guarantee, dated as of October 31, 2019, made by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.)

10.42						Share Purchase Agreement, dated October 31, 2019, by and between Amgen Inc. and BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Schedule 13D on January 8, 2020 and incorporated herein by reference.)

10.43						Amendment No. 1 to Share Purchase Agreement, dated December 6, 2019, by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Schedule 13D on January 8, 2020 and incorporated herein by reference.)

10.44						Restated Amendment No. 2 to Share Purchase Agreement, dated September 24, 2020, by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2020 on October 29, 2020 and incorporated herein by reference.)


Exhibit No.						Description

10.45						Collaboration Agreement dated March 30, 2012 by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC, a wholly owned subsidiary of AstraZeneca Pharmaceuticals LP (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2012 on May 8, 2012 and incorporated herein by reference.)

10.46						Amendment No. 1 to the Collaboration Agreement, dated October 1, 2014, by and among Amgen Inc., AstraZeneca Collaboration Ventures, LLC and AstraZeneca Pharmaceuticals LP (portions of the exhibit have been omitted pursuant to a request for confidential treatment). (Filed as an exhibit to Form 10-K for the year ended December 31, 2014 on February 19, 2015 and incorporated herein by reference.)


10.47						Amendment Nos. 2 through 6 to the March 30, 2012 Collaboration Agreement between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC, dated May 2 and 27 and October 2, 2016, January 31, 2018, and May 15, 2020, respectively (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2020 on July 29, 2020 and incorporated herein by reference.)

10.48						Amendment No. 7 to the Collaboration Agreement, dated December ~~18,~~1 7 , 2020, by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2020 on February 9, 2021 and incorporated herein by reference.)

10.49						Amendment No. 8 to the Collaboration Agreement, dated November 19, 2021, by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.)(Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.)

10.50						License and Collaboration Agreement, dated June 1, 2021, by and between Amgen Inc. and Kyowa Kirin Co., Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2021 on August 4, 2021 and incorporated herein by reference.)

10.51						Form of ASR Agreement. (Filed as an exhibit to Form 8-K on February 24, 2022 and incorporated herein by reference.)

31*						Rule 13a-14(a) Certifications.

32**						Section 1350 Certifications.

101.INS						Inline 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*						Inline XBRL Taxonomy Extension Schema Document.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

____________________________

(* = filed herewith)

(** = furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended)

(+ = management contract or compensatory plan or arrangement)

5750

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Amgen Inc.

(Registrant)

Date:

~~November 2, 2021~~April 27, 2022

By:

/S/ PETER H. GRIFFITH

Peter H. Griffith

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

5851


		Page No.
	Defined Terms and Products	ii
PART I - FINANCIAL INFORMATION		1
Item 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	1
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	2
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	65
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	76
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3027
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4240
Item 4.	CONTROLS AND PROCEDURES	4240
PART II - OTHER INFORMATION		4341
Item 1.	LEGAL PROCEEDINGS	4341
Item 1A.	RISK FACTORS	4341
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5043
Item 6.	EXHIBITS	5144
INDEX TO EXHIBITS		5245
SIGNATURES		5851


	Three months ended September 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
Enbrel® (etanercept)	$	1,263	$	26	$	1,289	$	1,289	$	36	$	1,325
Prolia® (denosumab)	530		273		803		478		223		701
Otezla® (apremilast)	495		114		609		439		99		538
XGEVA® (denosumab)	372		145		517		363		118		481
Neulasta® (pegfilgrastim)	360		55		415		484		71		555
Aranesp® (darbepoetin alfa)	149		247		396		158		226		384
Repatha® (evolocumab)	139		133		272		92		113		205
KYPROLIS® (carfilzomib)	198		95		293		173		87		260
Other products	1,052		674		1,726		1,142		513		1,655
Total product sales(1)	$	4,558	$	1,762	6,320		$	4,618	$	1,486	6,104
Other revenues					386						319
Total revenues					$	6,706					$	6,423

	Nine months ended September 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
ENBREL	$	3,270	$	87	$	3,357	$	3,619	$	105	$	3,724
Prolia®	1,569		806		2,375		1,341		673		2,014
Otezla®	1,284		335		1,619		1,280		298		1,578
XGEVA®	1,061		412		1,473		1,036		361		1,397
Neulasta®	1,215		168		1,383		1,538		219		1,757
Aranesp®	409		709		1,118		489		704		1,193
Repatha®	421		423		844		331		303		634
KYPROLIS®	547		277		824		527		266		793
Other products	3,059		1,974		5,033		3,164		1,652		4,816
Total product sales(1)	$	12,835	$	5,191	18,026		$	13,325	$	4,581	17,906
Other revenues					1,107						884
Total revenues					$	19,133					$	18,790