Amgen 10-Q 2024-03-31

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 March 31, 2024

or

☐			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
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 April 29, 2024, the registrant had 536,434,692 shares of common stock, $0.0001 par value, outstanding.

AMGEN INC.

INDEX

						Page No.
			DEFINED TERMS AND PRODUCTS			ii
PART I—FINANCIAL INFORMATION						1
Item 1.			FINANCIAL STATEMENTS			1
			CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME			1
			CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME			2
			CONDENSED CONSOLIDATED BALANCE SHEETS			3
			CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY			4
			CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS			5
			NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			6
Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			26
Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			38
Item 4.			CONTROLS AND PROCEDURES			38
PART II—OTHER INFORMATION						39
Item 1.			LEGAL PROCEEDINGS			39
Item 1A.			RISK FACTORS			39
Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			49
Item 5.			OTHER INFORMATION			49
Item 6.			EXHIBITS			49
INDEX TO EXHIBITS						50
SIGNATURES						56

i

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
AOCI			accumulated other comprehensive income (loss)
ASR			accelerated share repurchase
AstraZeneca			AstraZeneca plc
BeiGene			BeiGene, Ltd.
ChemoCentryx			ChemoCentryx, Inc.
CMS			Centers for Medicare & Medicaid Services
COVID-19			coronavirus disease 2019
EMA			European Medicines Agency
EPS			earnings per share
EU			European Union
FDA			U.S. Food and Drug Administration
Fitch			Fitch Ratings, Inc.
FTC			Federal Trade Commission
GAAP			U.S. generally accepted accounting principles
HHS			U.S. Department of Health and Human Services
Horizon			Horizon Therapeutics plc
IPR&D			in-process research and development
IRA			Inflation Reduction Act of 2022
IRS			Internal Revenue Service
MD&A			management’s discussion and analysis
Moody’s			Moody’s Investors Service, Inc.
Neumora			Neumora Therapeutics, Inc.
OECD			Organisation for Economic Co-operation and Development
PBM			pharmacy benefit manager
PDAB			Prescription Drug Affordability 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
SG&A			selling, general and administrative
SOFR			Secured Overnight Financing Rate
U.S. Treasury			U.S. Department of Treasury
UTB			unrecognized tax benefit

ii

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
ACTIMMUNE			ACTIMMUNE® (interferon gamma-1b)(1)
Aimovig			Aimovig® (erenumab-aooe)
AMJEVITA/AMGEVITA			AMJEVITA® (adalimumab-atto)/AMGEVITA™ (adalimumab)
Aranesp			Aranesp® (darbepoetin alfa)
AVSOLA			AVSOLA® (infliximab-axxq)
BEKEMV			BEKEMV™ (eculizumab)
BLINCYTO			BLINCYTO® (blinatumomab)
BUPHENYL			BUPHENYL® (sodium phenylbutyrate)(1)
Corlanor			Corlanor® (ivabradine)
DUEXIS			DUEXIS® (ibuprofen and famotidine)(1)
ENBREL			Enbrel® (etanercept)
EPOGEN			EPOGEN® (epoetin alfa)
EVENITY			EVENITY® (romosozumab-aqqg)
IMLYGIC			IMLYGIC® (talimogene laherparepvec)
KANJINTI			KANJINTI® (trastuzumab-anns)
KRYSTEXXA			KRYSTEXXA® (pegloticase)(1)
KYPROLIS			KYPROLIS® (carfilzomib)
LUMAKRAS/LUMYKRAS			LUMAKRAS®/LUMYKRAS™ (sotorasib)
MVASI			MVASI® (bevacizumab-awwb)
Neulasta			Neulasta® (pegfilgrastim)
NEUPOGEN			NEUPOGEN® (filgrastim)
Nplate			Nplate® (romiplostim)
Otezla			Otezla® (apremilast)
Parsabiv			Parsabiv® (etelcalcetide)
PENNSAID			PENNSAID® (diclofenac sodium topical solution) 2%(1)
PROCYSBI			PROCYSBI® (cysteamine bitartrate)(1)
Prolia			Prolia® (denosumab)
QUINSAIR			QUINSAIR® (levofloxacin)(1)
RAVICTI			RAVICTI® (glycerol phenylbutyrate)(1)
RAYOS			RAYOS® (prednisone)(1)
Repatha			Repatha® (evolocumab)
RIABNI			RIABNI® (rituximab-arrx)
Sensipar/Mimpara			Sensipar®/Mimpara™ (cinacalcet)
TAVNEOS			TAVNEOS® (avacopan)
TEPEZZA			TEPEZZA® (teprotumumab-trbw)(1)
TEZSPIRE			TEZSPIRE® (tezepelumab-ekko)
UPLIZNA			UPLIZNA® (inebilizumab-cdon)(1)
Vectibix			Vectibix® (panitumumab)
WEZLANA/WEZENLA			WEZLANA™/WEZENLA™ (ustekinumab-auub)
XGEVA			XGEVA® (denosumab)

---

(1) Products were acquired from our Horizon acquisition on October 6, 2023.

iii

PART I—FINANCIAL INFORMATION

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(In millions, except per-share data)

(Unaudited)

			Three months ended March 31,
			2024						2023
Revenues:
Product sales			$	7,118					$	5,846
Other revenues			329						259
Total revenues			7,447						6,105
Operating expenses:
Cost of sales			3,200						1,720
Research and development			1,343						1,058
Selling, general and administrative			1,808						1,258
Other			105						148
Total operating expenses			6,456						4,184
Operating income			991						1,921
Other income (expense):
Interest expense, net			(824)						(543)
Other (expense) income, net			(235)						2,064
(Loss) income before income taxes			(68)						3,442
Provision for income taxes			45						601
Net (loss) income			$	(113)					$	2,841
(Loss) earnings per share:
Basic			$	(0.21)					$	5.32
Diluted			$	(0.21)					$	5.28
Shares used in calculation of (loss) earnings per share:
Basic			536						534
Diluted			536						538

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

(Unaudited)

			Three months ended March 31,
			2024						2023
Net (loss) income			$	(113)					$	2,841
Other comprehensive income (loss), net of reclassification adjustments and taxes:
Foreign currency translation			(24)						28
Cash flow hedges			126						(86)
Other			(3)						21
Other comprehensive income (loss), net of reclassification adjustments and taxes			99						(37)
Comprehensive (loss) income			$	(14)					$	2,804

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share data)

			March 31, 2024						December 31, 2023
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	9,708					$	10,944
Trade receivables, net			6,776						7,268
Inventories			8,724						9,518
Other current assets			2,821						2,602
Total current assets			28,029						30,332
Property, plant and equipment, net			6,002						5,941
Intangible assets, net			31,372						32,641
Goodwill			18,570						18,629
Other noncurrent assets			9,007						9,611
Total assets			$	92,980					$	97,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	1,628					$	1,590
Accrued liabilities			14,127						15,359
Current portion of long-term debt			3,959						1,443
Total current liabilities			19,714						18,392
Long-term debt			60,061						63,170
Long-term deferred tax liabilities			1,862						2,354
Long-term tax liabilities			3,964						4,680
Other noncurrent liabilities			2,357						2,326
Contingencies and commitments
Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—536.4 shares in 2024 and 535.4 shares in 2023			33,082						33,070
Accumulated deficit			(27,870)						(26,549)
Accumulated other comprehensive loss			(190)						(289)
Total stockholders’ equity			5,022						6,232
Total liabilities and stockholders’ equity			$	92,980					$	97,154

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per-share data)

(Unaudited)

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The following MD&A is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023. 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 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, 2023. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, and collaborations. 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 Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) discovers, develops, manufactures and delivers innovative medicines to fight some of the world’s toughest diseases. Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that dramatically improve people’s lives, while also reducing the social and economic burden of disease. We helped launch the biotechnology industry more than 40 years ago and have grown to be one of the world’s leading independent biotechnology companies. Our robust pipeline includes potential first-in-class medicines at all stages of development.

Our principal products are Prolia, ENBREL, XGEVA, Repatha, TEPEZZA, Otezla, KYPROLIS, Aranesp, EVENITY, Nplate, Vectibix, BLINCYTO, KRYSTEXXA and TEZSPIRE. We also market a number of other products, including but not limited to MVASI, AMJEVITA/AMGEVITA, Neulasta, Parsabiv, RAVICTI, LUMAKRAS/LUMYKRAS, UPLIZNA, Aimovig, TAVNEOS, PROCYSBI and EPOGEN.

Macroeconomic and other challenges

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, as well as rising healthcare costs continue to pose challenges to our business. Further, ongoing geopolitical conflicts continue to create additional uncertainty in global macroeconomic conditions. Additionally, with public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, resulting in net price declines. Moreover, legislation enacted to reduce healthcare expenditures, including provisions of the IRA, have affected, and are likely to continue to affect, our business. Finally, wholesale and end-user buying patterns can affect our product sales. These buying patterns can cause fluctuations in quarterly product sales but have generally not been significant to date when comparing full-year product performance to the prior year. See Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q.

Significant developments

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

Obesity Program Update

On May 2, 2024, the Company provided an update on the interim analysis of the maridebart cafraglutide (MariTide) Phase 2 study in adults with overweight or obesity, with or without type 2 diabetes mellitus. The Company reported that the interim analysis of this ongoing Phase 2 study is complete and it is actively planning and expects to initiate a broad Phase 3 program, including obesity, obesity related conditions, and diabetes. The Company also announced its plans to initiate an additional, dedicated Phase 2 trial investigating MariTide for the treatment of diabetes in patients with and without obesity. As part of this announcement, the Company also indicated that it is not planning to pursue further development of AMG 786, a small molecule obesity program.

Selected financial information

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

			Three months ended March 31,
			2024						2023						Change
Product sales
U.S.			$	4,973					$	3,975					25		%
ROW			2,145						1,871						15		%
Total product sales			7,118						5,846						22		%
Other revenues			329						259						27		%
Total revenues			$	7,447					$	6,105					22		%
Operating expenses			$	6,456					$	4,184					54		%
Operating income			$	991					$	1,921					(48)		%
Net (loss) income			$	(113)					$	2,841					*
Diluted (loss) earnings per share			$	(0.21)					$	5.28					*
Diluted shares			536						538						0		%

• Change in excess of 100%

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

Total product sales increased 22% for the three months ended March 31, 2024, primarily driven by 25% volume growth. U.S. volume grew 29% and ROW volume grew 17%. Product sales from acquired Horizon products contributed $914 million to product sales, and volume growth from our other brands, including Repatha, TEZSPIRE, EVENITY, Prolia and BLINCYTO, was 9%. Net selling price remained relatively unchanged for the three months ended March 31, 2024, compared to the prior period. For the remainder of 2024, we expect product sales growth from acquired Horizon products and volume growth from our other brands to be partially offset by net selling price declines on a year-over-year basis at a portfolio level.

Uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts have the potential to introduce variability into product sales. Furthermore, product sales continue to be impacted by actions from governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals. See Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023, and Part II, Item 1A. Risk Factors, of this Quarterly Report.

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

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

Results of operations

Product sales

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

			Three months ended March 31,
			2024						2023						Change
Prolia			$	999					$	927					8		%
ENBREL			567						579						(2)		%
XGEVA			561						536						5		%
Repatha			517						388						33		%
TEPEZZA(1)			424						—						N/A
Otezla			394						392						1		%
KYPROLIS			376						358						5		%
Aranesp			349						355						(2)		%
EVENITY			342						254						35		%
Nplate			317						362						(12)		%
Vectibix			247						233						6		%
BLINCYTO			244						194						26		%
KRYSTEXXA(1)			235						—						N/A
TEZSPIRE(2)			173						96						80		%
Other products(3)			1,373						1,172						17		%
Total product sales			$	7,118					$	5,846					22		%

N/A = not applicable

---

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

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

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

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report: (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, 2023: (i) Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products; (ii) Part I, Item 1A. Risk Factors; and (iii) Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales.

Prolia

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

			Three months ended March 31,
			2024						2023						Change
Prolia — U.S.			$	657					$	623					5		%
Prolia — ROW			342						304						13		%
Total Prolia			$	999					$	927					8		%

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

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

ENBREL

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

			Three months ended March 31,
			2024						2023						Change
ENBREL — U.S.			$	561					$	564					(1)		%
ENBREL — Canada			6						15						(60)		%
Total ENBREL			$	567					$	579					(2)		%

The decrease in ENBREL sales for the three months ended March 31, 2024 was driven by lower volume, partially offset by higher inventory levels. ENBREL typically has lower sales in the first quarter relative to subsequent quarters of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S. patients work through deductibles. Moving forward, we expect modest volume growth offset by declining net selling price.

XGEVA

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

			Three months ended March 31,
			2024						2023						Change
XGEVA — U.S.			$	366					$	384					(5)		%
XGEVA — ROW			195						152						28		%
Total XGEVA			$	561					$	536					5		%

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

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

Repatha

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

			Three months ended March 31,
			2024						2023						Change
Repatha — U.S.			$	273					$	197					39		%
Repatha — ROW			244						191						28		%
Total Repatha			$	517					$	388					33		%

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

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

TEPEZZA

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

			Three months ended March 31,
			2024						2023						Change
TEPEZZA — U.S.			$	419					$	—					N/A
TEPEZZA — ROW			5						—						N/A
Total TEPEZZA			$	424					$	—					N/A

N/A = not applicable

TEPEZZA was acquired on October 6, 2023 from our Horizon acquisition and generated $424 million in product sales for the three months ended March 31, 2024. As TEPEZZA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior period.

Otezla

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

			Three months ended March 31,
			2024						2023						Change
Otezla — U.S.			$	293					$	294					0		%
Otezla — ROW			101						98						3		%
Total Otezla			$	394					$	392					1		%

Global Otezla sales for the three months ended March 31, 2024 increased 1%. Otezla typically has lower sales in the first quarter relative to subsequent quarters of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S. patients work through deductibles.

KYPROLIS

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

			Three months ended March 31,
			2024						2023						Change
KYPROLIS — U.S.			$	234					$	234					—		%
KYPROLIS — ROW			142						124						15		%
Total KYPROLIS			$	376					$	358					5		%

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

Aranesp

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

			Three months ended March 31,
			2024						2023						Change
Aranesp — U.S.			$	100					$	115					(13)		%
Aranesp — ROW			249						240						4		%
Total Aranesp			$	349					$	355					(2)		%

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

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

EVENITY

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

			Three months ended March 31,
			2024						2023						Change
EVENITY — U.S.			$	236					$	164					44		%
EVENITY — ROW			106						90						18		%
Total EVENITY			$	342					$	254					35		%

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

Nplate

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

			Three months ended March 31,
			2024						2023						Change
Nplate — U.S.			$	190					$	246					(23)		%
Nplate — ROW			127						116						9		%
Total Nplate			$	317					$	362					(12)		%

The decrease in global Nplate sales for the three months ended March 31, 2024 was primarily driven by lower volume in comparison to the first quarter of 2023, which included a U.S. government order of $82 million. Excluding the U.S. government order from this comparison, global Nplate sales grew 13% for the three months ended March 31, 2024, primarily driven by

volume growth.

Vectibix

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

			Three months ended March 31,
			2024						2023						Change
Vectibix — U.S.			$	120					$	111					8		%
Vectibix — ROW			127						122						4		%
Total Vectibix			$	247					$	233					6		%

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

BLINCYTO

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

			Three months ended March 31,
			2024						2023						Change
BLINCYTO — U.S.			$	153					$	126					21		%
BLINCYTO — ROW			91						68						34		%
Total BLINCYTO			$	244					$	194					26		%

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

KRYSTEXXA

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

			Three months ended March 31,
			2024						2023						Change
KRYSTEXXA — U.S.			$	235					$	—					N/A
KRYSTEXXA — ROW			—						—						N/A
Total KRYSTEXXA			$	235					$	—					N/A

N/A = not applicable

KRYSTEXXA was acquired on October 6, 2023 from our Horizon acquisition and generated $235 million in product sales for the three months ended March 31, 2024. As KRYSTEXXA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior period.

TEZSPIRE

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

			Three months ended March 31,
			2024						2023						Change
TEZSPIRE — U.S.			$	173					$	96					80		%

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

Other products

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

			Three months ended March 31,
			2024						2023						Change
MVASI — U.S.			$	105					$	121					(13)		%
MVASI — ROW			97						81						20		%
AMJEVITA — U.S.			30						51						(41)		%
AMGEVITA — ROW			138						113						22		%
Neulasta — U.S.			87						211						(59)		%
Neulasta — ROW			31						38						(18)		%
Parsabiv — U.S.			65						58						12		%
Parsabiv — ROW			40						33						21		%
RAVICTI — U.S.(1)			92						—						N/A
RAVICTI — ROW(1)			2						—						N/A
LUMAKRAS — U.S.			53						48						10		%
LUMYKRAS — ROW			29						26						12		%
UPLIZNA — U.S.(1)			70						—						N/A
UPLIZNA — ROW(1)			10						—						N/A
Aimovig — U.S.			65						64						2		%
Aimovig — ROW			5						5						—		%
TAVNEOS — U.S.			45						23						96		%
TAVNEOS — ROW			6						—						N/A
PROCYSBI — U.S.(1)			49						—						N/A
PROCYSBI — ROW(1)			1						—						N/A
EPOGEN — U.S.			41						60						(32)		%
Other — U.S.(2)			261						185						41		%
Other — ROW(2)			51						55						(7)		%
Total other products			$	1,373					$	1,172					17		%
Total U.S. — other products			$	963					$	821					17		%
Total ROW — other products			410						351						17		%
Total other products			$	1,373					$	1,172					17		%

N/A = not applicable

---

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

(2) Consists of product sales from (i) KANJINTI, RIABNI, Corlanor, NEUPOGEN, AVSOLA, IMLYGIC, Sensipar/Mimpara, BEKEMV and WEZLANA/WEZENLA; and (ii) ACTIMMUNE, RAYOS, BUPHENYL, PENNSAID, QUINSAIR and DUEXIS in the periods after our Horizon acquisition on October 6, 2023.

Operating expenses

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

			Three months ended March 31,
			2024						2023						Change
Operating expenses:
Cost of sales			$	3,200					$	1,720					86		%
% of product sales			45.0		%				29.4		%
% of total revenues			43.0		%				28.2		%
Research and development			$	1,343					$	1,058					27		%
% of product sales			18.9		%				18.1		%
% of total revenues			18.0		%				17.3		%
Selling, general and administrative			$	1,808					$	1,258					44		%
% of product sales			25.4		%				21.5		%
% of total revenues			24.3		%				20.6		%
Other			$	105					$	148					(29)		%
Total operating expenses			$	6,456					$	4,184					54		%

Cost of sales

Cost of sales increased to 43.0% of total revenues for the three months ended March 31, 2024, driven by higher amortization expense from Horizon acquisition-related assets and, to a lesser extent, higher profit share and royalty expense. This increase was partially offset by the impact of the 2022 Puerto Rico tax law change, which replaced an excise tax with an income tax beginning in 2023. See Note 4, Income taxes, to the condensed consolidated financial statements.

Research and development

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

Selling, general and administrative

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

Other

Other operating expenses for the three months ended March 31, 2024, consisted primarily of a net impairment charge associated with an IPR&D asset and changes in the fair values of contingent consideration liabilities, both related to our Teneobio, Inc. acquisition from 2021.

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

Nonoperating expense/income and income taxes

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

			Three months ended March 31,
			2024						2023
Interest expense, net			$	(824)					$	(543)
Other (expense) income, net			$	(235)					$	2,064
Provision for income taxes			$	45					$	601
Effective tax rate			(66.2)		%				17.5		%

Interest expense, net

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

Other (expense) income, net

The change in Other (expense) income, net, for the three months ended March 31, 2024, was primarily due to unrealized losses on our strategic equity investments, primarily BeiGene and Neumora, compared with unrealized gains on these investments in the prior period. Prior period gains were principally composed of amounts recognized on our BeiGene investment as a result of a change from the equity method of accounting for this investment to recording the investment at fair value, with changes in fair value recognized in earnings. See Note 6, Investments, to the condensed consolidated financial statements.

Income taxes

The decrease in our effective tax rate for the three months ended March 31, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business, amortization of Horizon acquired assets and the first quarter 2024 unrealized loss on BeiGene investment. See Note 6, Investments*—BeiGene, Ltd.,* to the condensed consolidated financial statements.

As previously reported, the OECD reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Effective January 1, 2024, selected individual countries, including the United Kingdom and EU member countries, have enacted the global minimum tax agreement. Our legal entities in the countries that have enacted the agreement, along with their direct and indirect subsidiaries, are now subject to a 15% minimum tax rate on adjusted financial statement income. Other countries, including the United States and the U.S. territory of Puerto Rico, have not yet enacted the OECD agreement, and implementation remains highly uncertain. The continued enactment of the agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.

As of January 1, 2023, we are no longer subject to a 4% excise tax in the U.S. territory of Puerto Rico on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico. We qualify for and are subject to the alternative income tax rate on industrial development income of our Puerto Rico affiliate. In the United States, this income tax qualifies for foreign tax credits under the U.S. Treasury final foreign tax credit regulations. See Note 4, Income taxes, to the condensed consolidated financial statements.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, 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 resolution with the IRS appeals 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 the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 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 the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, 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 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 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 the years 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 and 2013–2015 Notices through the judicial process. The two cases were consolidated in the U.S. Tax Court on December 19, 2022. The trial is currently scheduled to begin on November 4, 2024.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we are under examination by a number of 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 impact on our condensed consolidated financial statements.

See our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1A, Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations, and Note 4, Income taxes, to the condensed consolidated financial statements in this filing for further discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):

			March 31, 2024						December 31, 2023
Cash and cash equivalents			$	9,708					$	10,944
Total assets			$	92,980					$	97,154
Current portion of long-term debt			$	3,959					$	1,443
Long-term debt			$	60,061					$	63,170
Stockholders’ equity			$	5,022					$	6,232

Cash and cash equivalents

Our balance of cash and cash equivalents was $9.7 billion as of March 31, 2024. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. 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 investments in innovation both internally and externally (including investments that expand our portfolio of products in areas of therapeutic interest), capital expenditures, repayment of debt, payment of dividends and stock repurchases.

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

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

During the three months ended March 31, 2024, we did not repurchase any of our common stock. As of March 31, 2024, $7.0 billion of authorization remained available under our stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of March 31, 2024 and December 31, 2023. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our strong financial position.

We opportunistically repurchase our debt when market conditions are favorable. During the three months ended March 31, 2024 and 2023, we spent $410 million and $420 million to extinguish principal amounts of debt of $544 million and $539 million, respectively.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, as well as our plans to reduce debt, pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities. We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of marketable securities, borrowings through commercial paper and/or syndicated credit facilities and access to other domestic and foreign debt markets and equity markets. See our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement and term loan credit agreement include a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements. We were in compliance with all applicable covenants under these arrangements as of March 31, 2024.

Cash flows

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

			Three months ended March 31,
			2024						2023
Net cash provided by operating activities			$	689					$	1,064
Net cash (used in) provided by investing activities			$	(217)					$	1,358
Net cash (used in) provided by financing activities			$	(1,708)					$	21,509

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

Investing

Cash used in investing activities during the three months ended March 31, 2024, was primarily due to capital expenditures of $230 million, including construction costs of new plants in North Carolina and Ohio. Cash provided by investing activities during the three months ended March 31, 2023, was primarily due to net cash inflows related to marketable securities activity of $1.7 billion, partially offset by capital expenditures of $344 million. We currently estimate 2024 spending on capital projects to be approximately $1.1 billion.

Financing

Cash used in financing activities during the three months ended March 31, 2024, was primarily due to the payment of dividends of $1.2 billion and the extinguishment of debt of $410 million. Cash provided by financing activities during the three months ended March 31, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $1.1 billion as well as the repayment and extinguishment of debt of $1.1 billion. See Note 9, Financing arrangements, and Note 10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

Critical 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, 2023.