Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share amounts)	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	5,037	$	6,085
Short-term marketable debt securities	—		1,179
Accounts receivable, net	4,587		4,660
Inventories	1,869		1,787
Prepaid and other current assets	3,287		2,374
Total current assets	14,779		16,085
Property, plant and equipment, net	5,391		5,317
Long-term marketable debt securities	—		1,163
Intangible assets, net	20,546		26,454
Goodwill	8,314		8,314
Other long-term assets	5,494		4,792
Total assets	$	54,525	$	62,125
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	903	$	550
Accrued rebates	4,113		3,802
Current portion of long-term debt and other obligations, net	1,812		1,798
Other current liabilities	4,896		5,130
Total current liabilities	11,725		11,280
Long-term debt, net	21,437		23,189
Long-term income taxes payable	782		2,039
Deferred tax liability	794		1,588
Other long-term obligations	1,396		1,280
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,246 shares issued and outstanding	1		1
Additional paid-in capital	7,327		6,500
Accumulated other comprehensive income	73		28
Retained earnings	11,073		16,304
Total Gilead stockholders’ equity	18,475		22,833
Noncontrolling interest	(84)		(84)
Total stockholders’ equity	18,390		22,749
Total liabilities and stockholders’ equity	$	54,525	$	62,125

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions, except per share amounts)	2024		2023		2024		2023
Revenues:
Product sales	$	7,515	$	6,994	$	21,074	$	19,864
Royalty, contract and other revenues	30		56		111		138
Total revenues	7,545		7,051		21,185		20,002
Costs and expenses:
Cost of goods sold	1,574		1,565		4,670		4,408
Research and development expenses	1,395		1,457		4,266		4,310
Acquired in-process research and development expenses	505		91		4,674		808
In-process research and development impairment	1,750		—		4,180		—
Selling, general and administrative expenses	1,433		1,315		4,184		4,482
Total costs and expenses	6,657		4,428		21,975		14,009
Operating income (loss)	888		2,623		(790)		5,993
Interest expense	238		232		728		692
Other (income) expense, net	(306)		72		(41)		95
Income (loss) before income taxes	956		2,318		(1,477)		5,206
Income tax (benefit) expense	(297)		146		(174)		1,010
Net income (loss)	1,253		2,172		(1,303)		4,196
Net loss attributable to noncontrolling interest	—		(8)		—		(40)
Net income (loss) attributable to Gilead	$	1,253	$	2,180	$	(1,303)	$	4,236
Basic earnings (loss) per share attributable to Gilead	$	1.00	$	1.75	$	(1.04)	$	3.39
Shares used in basic earnings (loss) per share attributable to Gilead calculation	1,247		1,248		1,247		1,249
Diluted earnings (loss) per share attributable to Gilead	$	1.00	$	1.73	$	(1.04)	$	3.37
Shares used in diluted earnings (loss) per share attributable to Gilead calculation	1,254		1,257		1,247		1,259

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2024		2023		2024		2023
Net income (loss)	$	1,253	$	2,172	$	(1,303)	$	4,196
Other comprehensive (loss) income, net:
Net foreign currency translation gain (loss)	54		(35)		38		(3)
Available-for-sale debt securities:
Net unrealized gain, net of tax impact of $0, $0, $0 and $0, respectively	—		4		—		10
Reclassifications to net income (loss), net of tax impact of $0, $0, $0 and $0, respectively	—		—		5		2
Net change	—		5		5		11
Cash flow hedges:
Net unrealized (loss) gain, net of tax impact of $(9), $9, $3 and $9, respectively	(61)		66		20		65
Reclassifications to net income (loss), net of tax impact of $2, $2, $2 and $6, respectively	(12)		(14)		(17)		(44)
Net change	(74)		51		3		21
Other comprehensive (loss) income, net	(20)		21		45		30
Comprehensive income (loss), net	1,233		2,193		(1,258)		4,226
Comprehensive loss attributable to noncontrolling interest, net	—		(8)		—		(40)
Comprehensive income (loss) attributable to Gilead, net	$	1,233	$	2,201	$	(1,258)	$	4,265

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


		Three Months Ended September 30, 2024
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings
	Shares		Amount
Balance as of June 30, 2024		1,246		$	1		$	7,022		$	93		$	11,165	$	(84)	$	18,197
Net income		—		—			—			—			1,253		—		1,253
Other comprehensive loss, net		—		—			—			(20)			—		—		(20)
Issuances under employee stock purchase plan		1		—			58			—			—		—		58
Issuances under equity incentive plans		4		—			45			—			—		—		45
Stock-based compensation		—		—			216			—			—		—		216
Repurchases of common stock under repurchase programs ($76.30 average price per share)		(4)		—			(15)			—			(285)		—		(300)
Repurchases of common stock for employee tax withholding under equity incentive plans and other		(1)		—			—			—			(82)		—		(82)
Dividends declared ($0.77)		—		—			—			—			(977)		—		(977)
Balance as of September 30, 2024		1,246		$	1		$	7,327		$	73		$	11,073	$	(84)	$	18,390


		Nine Months Ended September 30, 2024
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings
	Shares		Amount
Balance as of December 31, 2023		1,246		$	1		$	6,500		$	28		$	16,304	$	(84)	$	22,749
Net loss		—		—			—			—			(1,303)		—		(1,303)
Other comprehensive income, net		—		—			—			45			—		—		45
Issuances under employee stock purchase plan		2		—			139			—			—		—		139
Issuances under equity incentive plans		12		—			115			—			—		—		115
Stock-based compensation		—		—			613			—			—		—		613
Repurchases of common stock under repurchase programs ($75.23 average price per share)		(11)		—			(40)			—			(760)		—		(800)
Repurchases of common stock for employee tax withholding under equity incentive plans and other		(3)		—			—			—			(232)		—		(232)
Dividends declared ($2.31 per share)		—		—			—			—			(2,935)		—		(2,935)
Balance as of September 30, 2024		1,246		$	1		$	7,327		$	73		$	11,073	$	(84)	$	18,390

See accompanying notes.


		Three Months Ended September 30, 2023
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings
	Shares		Amount
Balance as of June 30, 2023		1,247		$	1		$	6,008		$	10		$	15,138	$	(64)	$	21,094
Net income (loss)		—		—			—			—			2,180		(8)		2,172
Other comprehensive income, net		—		—			—			21			—		—		21
Issuances under employee stock purchase plan		1		—			62			—			—		—		62
Issuances under equity incentive plans		4		—			21			—			—		—		21
Stock-based compensation		—		—			202			—			—		—		202
Repurchases of common stock under repurchase programs ($77.08 average price per share)		(4)		—			(14)			—			(286)		—		(300)
Repurchases of common stock for employee tax withholding under equity incentive plans and other		(1)		—			—			—			(77)		—		(77)
Dividends declared ($0.75 per share)		—		—			—			—			(953)		—		(953)
Balance as of September 30, 2023		1,247		$	1		$	6,279		$	31		$	16,002	$	(72)	$	22,242


		Nine Months Ended September 30, 2023
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings
	Shares		Amount
Balance as of December 31, 2022		1,247		$	1		$	5,550		$	2		$	15,687	$	(31)	$	21,209
Net income (loss)		—		—			—			—			4,236		(40)		4,196
Other comprehensive income, net		—		—			—			30			—		—		30
Issuances under employee stock purchase plan		2		—			129			—			—		—		129
Issuances under equity incentive plans		11		—			71			—			—		—		71
Stock-based compensation		—		—			566			—			—		—		566
Repurchases of common stock under repurchase programs ($79.92 average price per share)		(11)		—			(38)			—			(812)		—		(850)
Repurchases of common stock for employee tax withholding under equity incentive plans		(3)		—			—			—			(245)		—		(245)
Dividends declared ($2.25 per share)		—		—			—			—			(2,864)		—		(2,864)
Balance as of September 30, 2023		1,247		$	1		$	6,279		$	31		$	16,002	$	(72)	$	22,242

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended
	September 30,
(in millions)	2024		2023
Operating Activities:
Net (loss) income	$	(1,303)	$	4,196
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation expense	286		263
Amortization expense	1,788		1,742
Stock-based compensation expense	613		565
Deferred income taxes	(1,465)		(592)
Net loss from equity securities	148		356
Acquired in-process research and development expenses	4,674		808
In-process research and development impairment	4,180		—
Other	294		260
Changes in operating assets and liabilities:
Accounts receivable, net	67		(63)
Inventories	(200)		(535)
Prepaid expenses and other	(113)		71
Accounts payable	348		(304)
Income tax assets and liabilities, net	(1,268)		(1,070)
Accrued and other liabilities	(197)		141
Net cash provided by operating activities	7,853		5,837
Investing Activities:
Purchases of marketable debt securities	(244)		(1,474)
Proceeds from sales of marketable debt securities	2,265		412
Proceeds from maturities of marketable debt securities	327		985
Acquisitions, including in-process research and development, net of cash acquired	(4,765)		(873)
Purchases of equity securities	(453)		(218)
Capital expenditures	(376)		(370)
Other	23		—
Net cash used in investing activities	(3,224)		(1,538)
Financing Activities:
Proceeds from debt financing, net of issuance costs	—		1,979
Proceeds from issuances of common stock	249		206
Repurchases of common stock under repurchase programs	(800)		(850)
Repayments of debt and other obligations	(1,963)		(2,250)
Payments of dividends	(2,945)		(2,866)
Other	(234)		(245)
Net cash used in financing activities	(5,693)		(4,026)
Effect of exchange rate changes on cash and cash equivalents	15		20
Net change in cash and cash equivalents	(1,049)		293
Cash and cash equivalents at beginning of period	6,085		5,412
Cash and cash equivalents at end of period	$	5,037	$	5,705

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with U.S. Securities and Exchange Commission. There have been no material changes to our organization or summary of significant accounting policies as disclosed in that filing.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and include all adjustments consisting of normal recurring adjustments that the management of Gilead believes are necessary for a fair presentation of the periods presented and are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. We plan to adopt this guidance beginning with our 2027 annual report to be filed in early 2028 and all quarterly and annual reports thereafter. We expect the adoption of this standard to result in increased disclosures in our Notes to Consolidated Financial Statements.

2. REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:


	Three Months Ended September 30, 2024								Three Months Ended September 30, 2023
(in millions)	U.S.		Europe		Rest of World		Total		U.S.		Europe		Rest of World		Total
Product sales:
HIV
Biktarvy	$	2,826	$	375	$	272	$	3,472	$	2,504	$	313	$	268	$	3,085
Descovy	534		24		28		586		460		25		26		511
Genvoya	384		44		21		449		433		47		23		503
Odefsey	248		69		9		326		257		74		11		343
Symtuza - Revenue share(1)	103		33		3		139		96		32		3		131
Other HIV(2)	65		26		9		100		56		28		9		94
Total HIV	4,161		570		342		5,073		3,807		519		341		4,667

Liver Disease
Sofosbuvir/Velpatasvir(3)	222		67		96		385		215		76		85		377
Vemlidy	126		11		95		232		112		9		106		228
Other Liver Disease(4)	45		54		17		116		49		33		20		102
Total Liver Disease	393		132		207		733		376		119		211		706

Veklury	393		81		219		692		258		65		313		636

Oncology
Cell Therapy
Tecartus	63		29		6		98		64		27		4		96
Yescarta	145		182		60		387		197		154		40		391
Total Cell Therapy	208		211		66		485		261		181		45		486

Trodelvy	226		80		26		332		201		62		21		283
Total Oncology	433		291		92		816		462		243		65		769

Other
AmBisome	6		71		52		130		12		63		39		115
Other(5)	47		8		16		71		69		9		23		101
Total Other	53		80		68		201		82		72		62		216
Total product sales	5,433		1,154		928		7,515		4,985		1,017		992		6,994
Royalty, contract and other revenues	17		13		1		30		32		23		1		56
Total revenues	$	5,450	$	1,167	$	929	$	7,545	$	5,017	$	1,040	$	993	$	7,051


	Nine Months Ended September 30, 2024								Nine Months Ended September 30, 2023
(in millions)	U.S.		Europe		Rest of World		Total		U.S.		Europe		Rest of World		Total
Product sales:
HIV
Biktarvy	$	7,726	$	1,110	$	814	$	9,649	$	7,104	$	920	$	717	$	8,741
Descovy	1,339		75		82		1,496		1,314		75		86		1,475
Genvoya	1,088		138		66		1,292		1,305		157		81		1,544
Odefsey	705		217		30		952		754		223		33		1,011
Symtuza - Revenue share(1)	338		101		9		448		278		101		10		390
Other HIV(2)	190		96		36		322		192		91		38		321
Total HIV	11,386		1,737		1,038		14,160		10,949		1,568		965		13,482

Liver Disease
Sofosbuvir/Velpatasvir(3)	737		230		299		1,266		643		250		266		1,159
Vemlidy	338		33		328		699		295		28		322		645
Other Liver Disease(4)	134		148		55		337		113		112		64		289
Total Liver Disease	1,210		411		682		2,302		1,051		390		652		2,093

Veklury	784		204		473		1,461		607		227		630		1,465

Oncology
Cell Therapy
Tecartus	181		102		22		305		179		83		11		272
Yescarta	502		509		170		1,181		624		408		99		1,130
Total Cell Therapy	683		611		192		1,485		802		491		109		1,402

Trodelvy	655		217		88		960		551		169		44		764
Total Oncology	1,338		828		280		2,446		1,354		660		153		2,167

Other
AmBisome	37		210		176		424		39		192		150		381
Other(5)	203		26		52		281		197		31		49		277
Total Other	241		236		228		705		236		224		199		658
Total product sales	14,958		3,416		2,700		21,074		14,196		3,069		2,599		19,864
Royalty, contract and other revenues	66		43		2		111		57		77		4		138
Total revenues	$	15,024	$	3,459	$	2,703	$	21,185	$	14,253	$	3,146	$	2,603	$	20,002

(1) Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited Company (“Janssen”).

(2) Includes Atripla, Complera/Eviplera, Emtriva, Sunlenca, Stribild, Truvada and Tybost.

(3) Includes Epclusa and the authorized generic version of Epclusa sold by Gilead’s separate subsidiary, Asegua Therapeutics LLC (“Asegua”).

(4) Includes ledipasvir/sofosbuvir (Harvoni and the authorized generic version of Harvoni sold by Asegua), Hepcludex, Hepsera, Livdelzi, Sovaldi, Viread and Vosevi.

(5) Includes Cayston, Jyseleca, Letairis, Ranexa and Zydelig.

Revenues Recognized from Performance Obligations Satisfied in Prior Years

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2024		2023		2024		2023
Revenue share with Janssen and royalties for licenses of intellectual property	$	173	$	166	$	545	$	517
Changes in estimates	$	146	$	111	$	388	$	347

Contract Balances

The following table summarizes our contract balances:


(in millions)	September 30, 2024		December 31, 2023
Contract assets	$	184	$	117
Contract liabilities	$	68	$	109

3. FAIR VALUE MEASUREMENTS

The following table summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy:


	September 30, 2024								December 31, 2023
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale debt securities(1):
U.S. treasury securities	$	—	$	—	$	—	$	—	$	426	$	—	$	—	$	426
U.S. government agencies securities	—		—		—		—		—		127		—		127
Non-U.S. government securities	—		—		—		—		—		10		—		10
Certificates of deposit	—		—		—		—		—		45		—		45
Corporate debt securities	—		—		—		—		—		1,451		—		1,451
Residential mortgage and asset-backed securities	—		—		—		—		—		367		—		367
Equity securities:
Money market funds	3,502		—		—		3,502		4,465		—		—		4,465
Publicly traded equity securities(2)	1,665		—		—		1,665		1,458		—		—		1,458
Deferred compensation plan	343		—		—		343		284		—		—		284
Foreign currency derivative contracts	—		7		—		7		—		7		—		7
Total	$	5,510	$	7	$	—	$	5,517	$	6,633	$	2,007	$	—	$	8,639
Liabilities:
Liability for MYR GmbH (“MYR”) contingent consideration	$	—	$	—	$	222	$	222	$	—	$	—	$	228	$	228
Deferred compensation plan	343		—		—		343		283		—		—		283
Foreign currency derivative contracts	—		49		—		49		—		59		—		59
Total	$	343	$	49	$	222	$	615	$	283	$	59	$	228	$	570

(1) During the three months ended March 31, 2024, we sold all of our available-for-sale debt securities and used the proceeds to partially fund our acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) discussed in Note 6. Acquisitions, Collaborations and Other Arrangements.

(2) Publicly traded equity securities include our investment in Arcellx, Inc. (“Arcellx”) of $561 million as of September 30, 2024, which is subject to contractual sale restrictions until June 2025.

Level 2 Inputs

Available-for-Sale Debt Securities

For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of the measurement date and by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate the fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

Foreign Currency Derivative Contracts

Our foreign currency derivative contracts have maturities of 18 months or less and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. We estimate the fair values of these contracts by utilizing an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency exchange rates, Secured Overnight Financing Rate (“SOFR”) and swap rates. These inputs, where applicable, are observable at commonly quoted intervals.

Senior Unsecured Notes

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


(in millions)	September 30, 2024		December 31, 2023
Fair value	$	20,931	$	22,567
Carrying value	$	22,094	$	23,834

Level 3 Inputs

Contingent Consideration Liability

In connection with our first quarter 2021 acquisition of MYR, we are subject to a potential contingent consideration payment of up to €300 million, subject to customary adjustments, which is revalued each reporting period using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of Hepcludex until the related contingency is resolved.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2024		2023		2024		2023
Beginning balance	$	208	$	288	$	228	$	275
Changes in valuation assumptions(1)	5		(2)		(6)		3
Effect of foreign exchange remeasurement(2)	9		(11)		1		(4)
Ending balance(3)	$	222	$	275	$	222	$	275

(1) Included in Research and development expenses on our Condensed Consolidated Statements of Operations. The changes in 2024 and 2023 primarily related to changes in discount rates and assumptions around probability and timing of regulatory approval.

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

(3) Included in Other long-term obligations on our Condensed Consolidated Balance Sheets.

Liability Related to Future Royalties

We recorded a liability related to future royalties as part of our 2020 acquisition of Immunomedics, Inc. (“Immunomedics”), which is subsequently amortized using the effective interest method over the remaining estimated life. The fair value of the liability related to future royalties was approximately $1.0 billion and $1.2 billion as of September 30, 2024 and December 31, 2023, respectively, and the carrying value was $1.2 billion as of September 30, 2024 and December 31, 2023.

Nonrecurring Fair Value Measurements

During the three and nine months ended September 30, 2024, we recorded partial impairment charges of $1.8 billion and $4.2 billion, respectively, related to certain acquired in-process research and development (“IPR&D”) assets. See Note 7. Intangible Assets for additional information.

Fair Value Level Transfers

There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

4. AVAILABLE-FOR-SALE DEBT SECURITIES AND EQUITY SECURITIES

Available-for-Sale Debt Securities

During the three months ended March 31, 2024, we sold all of our available-for-sale debt securities and used the proceeds to partially fund our acquisition of CymaBay discussed in Note 6. Acquisitions, Collaborations and Other Arrangements. As such, there are no balances as of September 30, 2024 in the following tables.

The following table summarizes our available-for-sale debt securities as of December 31, 2023:


	December 31, 2023
(in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury securities		$	427	$	—	$	(1)	$	426
U.S. government agencies securities		127		—		—		127
Non-U.S. government securities		10		—		—		10
Certificates of deposit		45		—		—		45
Corporate debt securities		1,455		4		(8)		1,451
Residential mortgage and asset-backed securities		366		1		—		367
Total		$	2,430	$	5	$	(10)	$	2,426

The following table summarizes information related to available-for-sale debt securities that have been in a continuous unrealized loss position, classified by length of time, as of December 31, 2023:


	December 31, 2023
	Less Than 12 Months				12 Months or Longer				Total
(in millions)	Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury securities	$	—	$	161	$	(1)	$	48	$	(1)	$	209
U.S. government agencies securities	—		106		—		2		—		108
Non-U.S. government securities	—		5		—		5		—		10
Corporate debt securities	(1)		333		(7)		546		(8)		878
Residential mortgage and asset-backed securities	—		123		—		24		—		147
Total	$	(2)	$	727	$	(8)	$	624	$	(10)	$	1,351

The following table summarizes the classification of our available-for-sale debt securities in our Condensed Consolidated Balance Sheets as of December 31, 2023:


(in millions)	December 31, 2023
Cash and cash equivalents	$	83
Short-term marketable debt securities	1,179
Long-term marketable debt securities	1,163
Total	$	2,426

Equity Securities

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


(in millions)	September 30, 2024		December 31, 2023
Equity securities measured at fair value:
Cash and cash equivalents	$	3,502	$	4,465
Prepaid and other current assets	1,660		1,086
Other long-term assets	348		656
Equity method investments and other equity investments without readily determinable fair values:
Other long-term assets	382		$	340
Total	$	5,892	$	6,547

For our equity method investments in Galapagos NV (“Galapagos”) and Arcus Biosciences, Inc. (“Arcus”), we elected and applied the fair value option as we believe it best reflects the underlying economics of these investments. Our investment in Galapagos was classified in Prepaid and other current assets as of September 30, 2024 and December 31, 2023 at $483 million and $686 million, respectively. Our investment in Arcus was classified in Prepaid and other current assets as of September 30, 2024 and December 31, 2023 at $460 million and $283 million, respectively.

Unrealized Gains and Losses

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2024		2023		2024		2023
Unrealized (gain) loss, net	$	(257)	$	128	$	155	$	249

5. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations in foreign countries expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, primarily the Euro. To manage this risk, we hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes.

The derivative instruments we use to hedge our exposures for certain monetary assets and liabilities that are denominated in a non-functional currency are not designated as hedges. The derivative instruments we use to hedge our exposures for forecasted product sales are designated as cash flow hedges and have maturities of 18 months or less.

We held foreign currency exchange contracts with outstanding notional amounts of $2.3 billion and $2.5 billion as of September 30, 2024 and December 31, 2023, respectively.

While all our derivative contracts allow us the right to offset assets and liabilities, we have presented amounts in our Condensed Consolidated Balance Sheets on a gross basis. The following table summarizes the classification and fair values of derivative instruments, including the potential effect of offsetting:


	September 30, 2024
(in millions)	Prepaid and other current assets		Other long-term assets		Total Derivative Assets		Other current liabilities		Other long-term obligations		Total Derivative Liabilities
Foreign currency exchange contracts designated as hedges	$	4	$	—	$	4	$	34	$	6	$	40
Foreign currency exchange contracts not designated as hedges	3		—		3		9		—		9
Total derivatives presented gross on the Condensed Consolidated Balance Sheets					$	7					$	49

Gross amounts not offset on the Condensed Consolidated Balance Sheets:
Derivative financial instruments					$	(7)					$	(7)
Cash collateral received / pledged					—						—
Net amount (legal offset)					$	—					$	42


	December 31, 2023
(in millions)	Prepaid and other current assets		Other long-term assets		Total Derivative Assets		Other current liabilities		Other long-term obligations		Total Derivative Liabilities
Foreign currency exchange contracts designated as hedges	$	6	$	—	$	6	$	38	$	7	$	45
Foreign currency exchange contracts not designated as hedges	1		—		1		15		—		15
Total derivatives presented gross on the Condensed Consolidated Balance Sheets					$	7					$	59

Gross amounts not offset on the Condensed Consolidated Balance Sheets:
Derivative financial instruments					$	(7)					$	(7)
Cash collateral received / pledged					—						—
Net amount (legal offset)					$	—					$	52

The following table summarizes the effect of our derivative contracts on our Condensed Consolidated Financial Statements:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2024		2023		2024		2023
Derivatives designated as hedges:
Net (loss) gain recognized in Accumulated other comprehensive income	$	(70)	$	75	$	23	$	74
Net gain reclassified from Accumulated other comprehensive income into Product sales	$	14	$	16	$	19	$	50
Derivatives not designated as hedges:
Net (loss) gain recognized in Other (income) expense, net	$	(2)	$	(4)	$	51	$	46

The majority of gains and losses related to the hedged forecasted transactions reported in Accumulated other comprehensive income as of September 30, 2024 are expected to be reclassified to Product sales within 12 months. There were no discontinuances of cash flow hedges for the three and nine months ended September 30, 2024 and 2023.

The cash flow effects of our derivative contracts for the nine months ended September 30, 2024 and 2023 were included within Net cash provided by operating activities on our Condensed Consolidated Statements of Cash Flows.

6. ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS

We enter into acquisitions, licensing and strategic collaborations and other similar arrangements with third parties for the research, development and commercialization of certain products and product candidates. The collaborations involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities. The financial terms of these arrangements may include non-refundable upfront payments, expense reimbursements or payments by us for options to acquire certain rights, contingent obligations by us for potential development and regulatory milestone payments and/or sales-based milestone payments, royalty payments, revenue or profit-sharing arrangements, cost-sharing arrangements and equity investments.

Acquisitions

CymaBay

In March 2024, we completed the acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) for total consideration of $3.9 billion, net of cash acquired. Upon closing, CymaBay became our wholly-owned subsidiary.

We accounted for this transaction as an asset acquisition since the lead asset, seladelpar, an investigational, oral, peroxisome proliferator-activated receptor delta agonist shown to regulate critical metabolic and liver disease pathways, represented substantially all of the fair value of the gross assets acquired. During the three months ended March 31, 2024, we recorded a $3.9 billion charge, representing an acquired IPR&D asset with no alternative future use, to Acquired in-process research and development expenses, as well as share-based compensation expense of $133 million related to the cash settlement of unvested CymaBay employee stock awards attributable to post-acquisition services, with $67 million being recorded in Research and development expenses and $67 million in Selling, general and administrative expenses on our Condensed Consolidated Statements of Operations. In connection with this acquisition, we recorded $263 million of assets acquired, primarily consisting of deferred tax assets, and $228 million of liabilities assumed, primarily related to an assumed financing arrangement.

During the three months ended June 30, 2024, we paid $101 million towards the assumed financing arrangement related to a change-of-control provision, and in August 2024, we paid $108 million to settle the remaining liability.

In July 2024, we paid $320 million to Janssen Pharmaceutica NV to extinguish a future royalty obligation related to seladelpar, which was recorded to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations for the three months ended September 30, 2024.

In August 2024, FDA granted accelerated approval for Livdelzi (seladelpar) for the treatment of primary biliary cholangitis in combination with ursodeoxycholic acid (“UDCA”) in adults who have had an inadequate response to UDCA, or as monotherapy in patients unable to tolerate UDCA.

XinThera

In May 2023, we closed an agreement to acquire XinThera, Inc. (“XinThera”), a privately held biotechnology company focused on small molecule drugs to treat cancer and immunologic diseases, for approximately $200 million in cash consideration, net of cash acquired. As a result, XinThera became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $170 million charge to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations during the three months ended June 30, 2023. The remaining purchase price relates to various other assets acquired and liabilities assumed. Under the agreement, the former shareholders of XinThera are eligible to receive performance-based development and regulatory milestone payments of up to approximately $760 million, with the first $50 million of such milestones paid and charged primarily to Acquired in-process research and development expenses in October 2023.

Tmunity

In February 2023, we closed an agreement to acquire Tmunity Therapeutics, Inc. (“Tmunity”), a clinical-stage, private biotechnology company focused on next-generation chimeric antigen receptor (“CAR”) T-therapies and technologies. Under the terms of the agreement, we acquired all outstanding shares of Tmunity other than those already owned by Gilead for approximately $300 million in cash consideration. As a result, Tmunity became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $244 million charge to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations during the three months ended March 31, 2023. The remaining purchase price relates to various other assets acquired and liabilities assumed, consisting primarily of deferred tax assets. Under the agreement, the former shareholders of Tmunity and the University of Pennsylvania are eligible to receive a mix of up to approximately $1.0 billion in potential future payments upon achievement of certain development, regulatory and sales-based milestones, as well as royalty payments on sales, with the first $25 million of milestones charged to Acquired in-process research and development expenses in 2023 and paid in January 2024. During the three months ended September 30, 2024, we paid an additional $47 million for development milestones met, which was charged to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations.

Collaborations and Other Arrangements

Arcellx

In January 2023, we closed an agreement to enter into a global strategic collaboration with Arcellx, a public company, to co-develop and co-commercialize Arcellx’s lead late-stage product candidate, CART-ddBCMA, for the treatment of patients with relapsed or refractory multiple myeloma, and potential future next-generation autologous and non-autologous products. In December 2023, we expanded the scope of the collaboration to include lymphomas and exercised our option to negotiate a license for Arcellx’s ARC-SparX program, ACLX-001, in multiple myeloma. In conjunction with these collaboration agreements, we recorded a $212 million charge and a $101 million charge to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and December 31, 2023, respectively, primarily related to upfront payments, as well as a combined equity investment of $299 million. Our equity investment is subject to lock-up provisions until June 2025 and is included in Prepaid and other current assets as of September 30, 2024. The companies will share development, clinical trial and commercialization costs for CART-ddBCMA and will jointly commercialize the product and split U.S. profits 50/50. Outside the U.S., we will commercialize the product and Arcellx will receive royalties on sales. Arcellx is eligible to receive performance-based development and regulatory milestone payments of up to $1.5 billion related to CART-ddBCMA, a potential future next-generation autologous product and a potential future non-autologous product, with further commercial milestone payments, profit split payments on co-promoted products and royalties on at least a portion of worldwide net sales, depending on whether Arcellx opts in to co-promote the future products. During the three months ended September 30, 2024, we paid $68 million for development milestones met, which was charged to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations. If additional future products are developed, Arcellx would be eligible to receive additional milestone payments, profit split payments on co-promoted products and royalties on at least a portion of worldwide net sales, depending on whether Arcellx opts in to co-promote these additional future products as well.

Arcus

In January 2024, we amended our collaboration agreement with Arcus whereby we acquired approximately 15.2 million additional shares of Arcus common stock at a premium for $320 million, increasing our ownership to 30.1 million shares, or 33% of the issued and outstanding voting stock of Arcus immediately following the closing of the transaction. We recorded $233 million for the fair value of the equity investment in Prepaid and other current assets on our Condensed Consolidated Balance Sheets and $87 million for the premium in Other (income) expense, net on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2024. We also recorded a charge for the $100 million fourth anniversary option continuation fee under the amended agreement to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2024. During the three months ended September 30, 2024, we paid the continuation fee, which was included in Net cash used in investing activities on our Condensed Consolidated Statements of Cash Flows. Our number of designees on Arcus’ board of directors was also increased to three.

7. INTANGIBLE ASSETS

The following table summarizes our Intangible assets, net:


	September 30, 2024								December 31, 2023
(in millions)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount
Finite-lived assets:
Intangible asset – sofosbuvir	$	10,720	$	(7,574)	$	—	$	3,146	$	10,720	$	(7,050)	$	—	$	3,670
Intangible asset – axicabtagene ciloleucel	7,110		(2,619)		—		4,491		7,110		(2,314)		—		4,796
Intangible asset – Trodelvy	11,730		(2,813)		—		8,917		11,730		(2,002)		—		9,728
Intangible asset – Hepcludex	845		(308)		—		537		845		(243)		—		602
Other	1,474		(911)		1		565		1,414		(827)		1		588
Total finite-lived assets	31,879		(14,224)		1		17,656		31,819		(12,436)		1		19,384
Indefinite-lived assets – IPR&D(1)	2,890		—		—		2,890		7,070		—		—		7,070
Total intangible assets	$	34,769	$	(14,224)	$	1	$	20,546	$	38,889	$	(12,436)	$	1	$	26,454

(1) The Indefinite-lived assets – IPR&D balance as of December 31, 2023 was comprised of $5.9 billion related to sacituzumab govitecan-hziy (“SG”) for non-small cell lung cancer (“NSCLC”) and $1.1 billion related to bulevirtide. See “2024 IPR&D Impairments” below for 2024 activity. The Indefinite-lived assets – IPR&D balance as of September 30, 2024 was comprised of $1.8 billion related to SG for NSCLC and $1.1 billion related to bulevirtide.

Impairment Assessments

No intangible asset-related indicators of impairment were noted for the three and nine months ended September 30, 2024 and 2023, except as described under “2024 IPR&D Impairments” below. In October 2024, we announced plans to voluntarily withdraw the U.S. accelerated approval for Trodelvy for treatment of adult patients with locally advanced or metastatic urothelial cancer who have previously received a platinum-containing chemotherapy and either programmed death receptor-1 (PD-1) or programmed death-ligand 1 (PD-L1) inhibitor. We have analyzed the implications of this and determined that it will not have an impact on the carrying amount of our finite-lived intangible asset related to Trodelvy.

2024 IPR&D Impairments

In January 2024, we received data from our Phase 3 EVOKE-01 study of Trodelvy evaluating SG indicating that the study did not meet its primary endpoint of overall survival in previously treated metastatic NSCLC, thus triggering a review for potential impairment of the NSCLC IPR&D intangible asset. Based on our evaluation of the study results and all other data currently available, and in connection with the preparation of the financial statements for the first quarter, we performed an interim impairment test and determined that the revised estimated fair value of the NSCLC IPR&D intangible asset was below its carrying value. As a result, we recognized a partial impairment charge of $2.4 billion in In-process research and development impairment on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

In September 2024, based on discussions with regulators and external opinion leaders and the completed evaluation of the Phase 3 EVOKE-01 study data, we made a strategic decision to discontinue our clinical development program in metastatic NSCLC for Trodelvy in the second-line indication. This decision triggered a review for potential impairment of the NSCLC IPR&D intangible asset. Based on our evaluation, and in connection with the preparation of the financial statements for the third quarter, we performed an interim impairment test and determined that the revised estimated fair value of the NSCLC IPR&D intangible asset was below its carrying value. As a result, we recognized a partial impairment charge of $1.8 billion in In-process research and development impairment on our Condensed Consolidated Statements of Operations for the three months ended September 30, 2024.

To arrive at the revised estimated fair values as of March 31, 2024 and September 30, 2024, we used a probability-weighted income approach that discounts expected future cash flows to present value, which requires the use of Level 3 fair value measurements and inputs, and requires the use of critical estimated inputs, including: revenues and operating profits related to the planned utilization of SG in NSCLC, which includes inputs such as addressable patient population, projected market share, treatment duration, and the life of the potential commercialized product; the probability of technical and regulatory success; the time and resources needed to complete the development and approval of SG in NSCLC; an appropriate discount rate based on the estimated weighted-average cost of capital for companies with profiles similar to our profile; and risks related to the viability of and potential alternative treatments in any future target markets. We used a discount rate of 7.00% which is based on the estimated weighted-average cost of capital for companies with profiles similar to ours. The revised estimated fair value of the NSCLC IPR&D intangible asset was $3.5 billion as of March 31, 2024 and $1.8 billion as of September 30, 2024.

8. OTHER FINANCIAL INFORMATION

Accounts Receivable, Net

The following table summarizes our Accounts receivable, net:


(in millions)	September 30, 2024		December 31, 2023
Accounts receivable	$	5,462	$	5,495
Less: allowances for chargebacks	722		679
Less: allowances for cash discounts and other	89		101
Less: allowances for credit losses	65		56
Accounts receivable, net	$	4,587	$	4,660

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

Inventories

The following table summarizes our Inventories:


(in millions)	September 30, 2024		December 31, 2023
Raw materials	$	1,332	$	1,246
Work in process	684		847
Finished goods	1,419		1,272
Total	$	3,435	$	3,366
Reported as:
Inventories	$	1,869	$	1,787
Other long-term assets(1)	1,566		1,578
Total	$	3,435	$	3,366

(1) Amounts primarily consist of raw materials.

Other Current Liabilities

The following table summarizes the components of Other current liabilities:


(in millions)	September 30, 2024		December 31, 2023
Compensation and employee benefits	$	1,051	$	1,201
Income taxes payable	1,536		1,208
Allowance for sales returns	321		387
Other	1,988		2,334
Other current liabilities	$	4,896	$	5,130

Accumulated Other Comprehensive Income

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


(in millions)	Foreign Currency Translation		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance as of December 31, 2023	$	62	$	(5)	$	(29)	$	28
Net unrealized gain	38		—		20		58
Reclassifications to net income	—		5		(17)		(12)
Net current period other comprehensive income	38		5		3		45
Balance as of September 30, 2024	$	100	$	—	$	(27)	$	73


(in millions)	Foreign Currency Translation		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance as of December 31, 2022	$	2	$	(33)	$	33	$	2
Net unrealized (loss) gain	(3)		10		65		72
Reclassifications to net income	—		2		(44)		(42)
Net current period other comprehensive (loss) income	(3)		11		21		30
Balance as of September 30, 2023	$	(1)	$	(22)	$	54	$	31

Restructuring

During the three and nine months ended September 30, 2024, we incurred restructuring charges of $28 million and $112 million, respectively, primarily related to the initiation of reductions in our commercial and research and development workforce. We recorded $5 million and $68 million of these charges in Research and development expenses and $23 million and $45 million of these charges in Selling, general and administrative expenses on our Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2024, respectively.

9. DEBT AND CREDIT FACILITIES

The following table summarizes the carrying amount of our borrowings under various financing arrangements:


(in millions)				Carrying Amount
Type of Borrowing	Issue Date	Maturity Date	Interest Rate	September 30, 2024		December 31, 2023
Senior Unsecured	March 2014	April 2024	3.70%	$	—	$	1,750
Senior Unsecured	November 2014	February 2025	3.50%	1,750		1,749
Senior Unsecured	September 2015	March 2026	3.65%	2,746		2,744
Senior Unsecured	September 2016	March 2027	2.95%	1,248		1,248
Senior Unsecured	September 2020	October 2027	1.20%	748		747
Senior Unsecured	September 2020	October 2030	1.65%	995		994
Senior Unsecured	September 2023	October 2033	5.25%	993		992
Senior Unsecured	September 2015	September 2035	4.60%	994		993
Senior Unsecured	September 2016	September 2036	4.00%	743		743
Senior Unsecured	September 2020	October 2040	2.60%	989		988
Senior Unsecured	December 2011	December 2041	5.65%	996		996
Senior Unsecured	March 2014	April 2044	4.80%	1,737		1,737
Senior Unsecured	November 2014	February 2045	4.50%	1,735		1,734
Senior Unsecured	September 2015	March 2046	4.75%	2,223		2,222
Senior Unsecured	September 2016	March 2047	4.15%	1,730		1,729
Senior Unsecured	September 2020	October 2050	2.80%	1,479		1,478
Senior Unsecured	September 2023	October 2053	5.55%	988		988
Total senior unsecured notes				22,094		23,834
Liability related to future royalties				1,155		1,153
Total debt, net				23,249		24,987
Less: Current portion of long-term debt, net				1,812		1,798
Total Long-term debt, net				$	21,437	$	23,189

Senior Unsecured Notes

In April 2024, we repaid at maturity $1.75 billion of principal balance related to our senior unsecured notes. We are required to comply with certain covenants under our note indentures governing our senior unsecured notes. As of September 30, 2024, we were not in violation of any covenants.

Credit Facilities

In June 2024, we terminated our $2.5 billion revolving credit facility maturing in June 2025 (the “2020 Revolving Credit Facility”) and entered into a new $2.5 billion revolving credit facility maturing in June 2029 (the “2024 Revolving Credit Facility”), which has terms substantially similar to the 2020 Revolving Credit Facility. The 2024 Revolving Credit Facility can be used for working capital requirements and for general corporate purposes, including, without limitation, acquisitions. As of September 30, 2024 and December 31, 2023, there were no amounts outstanding under these revolving credit facilities.

The 2024 Revolving Credit Facility contains customary representations, warranties, affirmative and negative covenants and events of default. At September 30, 2024, we were in compliance with all covenants. Loans under the 2024 Revolving Credit Facility bear interest at either (i) Term SOFR plus the Applicable Percentage, (ii) the Alternative Currency Term Rate plus the Applicable Percentage, or (iii) the Base Rate plus the Applicable Percentage, each as defined in the 2024 Revolving Credit Facility agreement. We may terminate or reduce the commitments and may prepay any loans under the 2024 Revolving Credit Facility in whole or in part at any time without premium or penalty.

10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are a party to various legal actions. Certain significant matters are described below. We recognize accruals for such actions to the extent that we conclude that a loss is both probable and reasonably estimable. We accrue for the best estimate of a loss within a range; however, if no estimate in the range is better than any other, then we accrue the minimum amount in the range. If we determine that a material loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss. Unless otherwise noted, the outcome of these matters either is not expected to be material or is not possible to determine such that we cannot reasonably estimate the maximum potential exposure or the range of possible loss. We did not have any material accruals for the matters described herein on our Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023.

Litigation Relating to Pre-Exposure Prophylaxis

In August 2019, we filed petitions requesting inter partes review of U.S. Patent Nos. 9,044,509, 9,579,333, 9,937,191 and 10,335,423 (collectively, “HHS Patents”) by the Patent Trial and Appeal Board (“PTAB”). The HHS Patents are assigned to the U.S. Department of Health and Human Services (“HHS”) and purport to claim a process of protecting a primate host from infection by an immunodeficiency retrovirus by administering a combination of FTC and tenofovir disoproxil fumarate (“TDF”) or TAF prior to exposure of the host to the immunodeficiency retrovirus, a process commonly known as pre-exposure prophylaxis (“PrEP”). In November 2019, the U.S. Department of Justice filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the use of Truvada and Descovy for PrEP infringes the HHS Patents. In February 2020, PTAB declined to institute our petitions for inter partes review of the HHS Patents. In April 2020, we filed a lawsuit against the U.S. federal government in the U.S. Court of Federal Claims (“CFC”), alleging breach of three material transfer agreements (“MTAs”) related to the research underlying the HHS Patents and two clinical trial agreements (“CTAs”) by the U.S. Centers for Disease Control and Prevention related to PrEP research. A trial for the bifurcated portion of the lawsuit in the CFC was held in June 2022, and in November 2022, the CFC determined that the government breached the MTAs. In January 2024, the CFC found the government liable for breach of both CTAs. A separate trial at the CFC to determine the damages we are owed based on the government’s breaches has been scheduled for March 2025. In May 2023, the District Court held a trial regarding the government’s patent infringement claims, and the jury rendered a full defense verdict in favor of Gilead, finding that the asserted claims of the HHS Patents are invalid and the HHS patents are not infringed. In March 2024, the District Court upheld the jury’s verdict that the government’s patents are invalid, denied the government’s request for a new trial and then entered final judgment. In July 2024, the government filed a notice of appeal. Although we cannot predict with certainty the ultimate outcome of each of these litigation matters, we believe that the U.S. federal government breached its contracts with Gilead, that Truvada and Descovy do not infringe the HHS Patents and that the HHS Patents are invalid over prior art descriptions of Truvada’s use for PrEP and post-exposure prophylaxis because physicians and patients were using the claimed methods years before HHS filed the applications for the patents.

Litigation with Generic Manufacturers

As part of the approval process for some of our products, FDA granted us a New Chemical Entity (“NCE”) exclusivity period during which other manufacturers’ applications for approval of generic versions of our products will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (“ANDA”), the application form typically used by manufacturers seeking approval of a generic drug. The sale of generic versions of our products prior to their patent expiration would have a significant negative effect on our revenues and results of operations. To seek approval for a generic version of a product having NCE status, a generic company may submit its ANDA to FDA four years after the branded product’s approval.

In October 2021, we received a letter from Lupin Ltd. (“Lupin”) indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Symtuza, a product commercialized by Janssen and for which Gilead shares in revenues. In November 2021, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Lupin as co-plaintiffs in the U.S. District Court of Delaware. In September 2022, we received a letter from Apotex Inc. and Apotex Corp. (“Apotex”) stating that they have submitted an ANDA for a generic version of Symtuza. In October 2022, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Apotex as co-plaintiffs in the U.S. District Court of Delaware. The cases against Lupin and Apotex have been consolidated into a single trial scheduled for February 2025.

Starting in March 2022, we received letters from Lupin, Laurus Labs (“Laurus”) and Cipla Ltd. (“Cipla”), indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of the adult dosage strength of Biktarvy. Lupin, Laurus, and Cipla have challenged the validity of four of the six patents listed in the Orange Book as associated with Biktarvy. We filed a lawsuit against Lupin, Laurus and Cipla in May 2022 in the U.S. District Court of Delaware and intend to enforce and defend our intellectual property. Additionally, in November 2023, we received a letter from Cipla indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of the pediatric dosage strength of Biktarvy. Cipla challenged the validity of two of the patents listed in the Orange Book as associated with Biktarvy. We filed a separate lawsuit against Cipla in December 2023 in the U.S. District Court of Delaware. This lawsuit has been consolidated with the first lawsuit, with a single trial scheduled for October 2025. In October 2024, Cipla separately filed a petition at the U.S. Patent & Trademark Office (USPTO) for Inter Partes Review (IPR) of one of the patents at issue in District Court litigation. We intend to defend this patent at the USPTO.

In June 2023, we received a letter from Apotex indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Genvoya. In July 2023, we filed a patent infringement lawsuit against Apotex in the U.S. District Court of Delaware and intend to enforce and defend our intellectual property. This case has been consolidated with the Symtuza matters discussed above, and a trial has been scheduled for February 2025.

Antitrust and Consumer Protection

We, along with Bristol-Myers Squibb Company (“BMS”), Johnson & Johnson, Inc. (“Johnson & Johnson”), and Teva Pharmaceutical Industries Ltd. (“Teva”) have been named as defendants in class action lawsuits filed in 2019 and 2020 related to various drugs used to treat HIV, including drugs used in combination antiretroviral therapy. Plaintiffs allege that we (and the other defendants) engaged in various conduct to restrain competition in violation of federal and state antitrust laws and state consumer protection laws. The lawsuits, which have been consolidated, are pending in the U.S. District Court for the Northern District of California. The lawsuits seek to bring claims on behalf of direct purchasers consisting largely of wholesalers and indirect or end-payor purchasers, including health insurers and individual patients. Plaintiffs seek damages, permanent injunctive relief and other relief. In the second half of 2021 and first half of 2022, several plaintiffs consisting of retail pharmacies, individual health plans and United Healthcare, filed separate lawsuits effectively opting out of the class action cases, asserting claims that are substantively the same as the classes. These cases have been coordinated with the class actions. In March 2023, the District Court granted our motion to hold separate trials as to (i) the allegations against us and Teva seeking monetary damages relating to Truvada and Atripla (“Phase I”) and (ii) the allegations against us and, in part, Johnson & Johnson, seeking monetary damages and injunctive relief relating to Complera (“Phase II”). In May 2023, we settled claims with the direct purchaser class and the retailer opt-out plaintiffs for $525 million, which we paid in the second half of 2023. The settlement agreements are not an admission of liability or fault by us. In June 2023, the jury returned a complete verdict in Gilead’s favor on the remaining plaintiffs’ Phase I allegations. In November 2023, the court denied plaintiffs’ motion to set aside the verdict, and in February 2024, the court entered final judgment on the Phase I verdict and certain summary judgment rulings. In September 2024, plaintiffs filed their opening appellate briefs challenging the Phase I verdict and those summary judgment rulings. The court has stayed Phase II pending the appeal of Phase I. While we intend to vigorously oppose the appeal and defend against the Phase II claims, we cannot predict the ultimate outcome. If plaintiffs are successful in their appeal or Phase II claims, we could be required to pay monetary damages or could be subject to permanent injunctive relief in favor of plaintiffs.

In January 2022, we, along with BMS and Janssen Products, L.P., were named as defendants in a lawsuit filed in the Superior Court of the State of California, County of San Mateo, by Aetna, Inc. on behalf of itself and its affiliates and subsidiaries that effectively opts the Aetna plaintiffs out of the above class actions. The allegations are substantively the same as those in the class actions. The Aetna plaintiffs seek damages, permanent injunctive relief and other relief. In March 2024, the court denied our motion for judgment on the pleadings to preclude Aetna from re-litigating claims that were dismissed at summary judgment in the above class action cases. We filed a writ petition appealing the denial of our motion for judgment on the pleadings, which the appellate court denied in May 2024. In April 2024, the court granted our motion to bifurcate the case to adjudicate the issue of preclusion before litigating the merits of the case. In July 2024, Aetna filed a request to voluntarily dismiss two of its claims with prejudice, which the court subsequently granted, leaving only the claims related to Truvada and Atripla. In September 2024, Aetna filed an amended complaint with respect to these claims.

In February 2021, we, along with BMS and Teva, were named as defendants in a lawsuit filed in the First Judicial District Court for the State of New Mexico, County of Santa Fe by the New Mexico Attorney General. The New Mexico Attorney General alleges that we (and the other defendants) restrained competition in violation of New Mexico antitrust and consumer protection laws. The New Mexico Attorney General seeks damages, permanent injunctive relief and other relief. We moved to dismiss the case based on lack of personal jurisdiction and, in July 2023, the New Mexico Supreme Court remanded the case back to the trial court for limited jurisdictional discovery.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages or could be subject to permanent injunctive relief awarded in favor of plaintiffs, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Product Liability

We have been named as a defendant in one putative class action lawsuit and various product liability lawsuits related to Viread, Truvada, Atripla, Complera and Stribild. Plaintiffs allege that Viread, Truvada, Atripla, Complera and/or Stribild caused them to experience kidney, bone and/or tooth injuries. The lawsuits, which are pending in state or federal court in California and Missouri, involve approximately 25,000 active plaintiffs. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. The first bellwether trial in California state court was scheduled to begin in October 2022 but is currently stayed pending the conclusion of appellate proceedings in the California Supreme Court. A bellwether trial date in California federal court has been vacated following a settlement agreement in principle. Specifically, Gilead reached an agreement to make a one-time payment of up to $40 million to a group of eligible plaintiffs (approximately 2,625 plaintiffs). The agreement is subject to certain conditions, including that at least 98% of eligible plaintiffs elect to participate in the settlement. The putative class action in Missouri is currently awaiting decision from the court whether to certify the proposed class. We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Government Investigation

In 2017, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents related to our promotional speaker programs for HIV. We are cooperating with this inquiry.

Qui Tam Litigation

A former sales employee filed a qui tam lawsuit against Gilead in March 2017 in U.S. District Court for the Eastern District of Pennsylvania. Following the government’s decision not to intervene in the suit, the case was unsealed in December 2020. The lawsuit alleges that certain of Gilead’s HCV sales and marketing activities violated the federal False Claims Act and various state false claims acts. The lawsuit seeks all available relief under these statutes.

Health Choice Advocates, LLC (“Health Choice”) filed a qui tam lawsuit against Gilead in May 2020 in Texas state court. The lawsuit alleged that Gilead violated the Texas Medicare Fraud Prevention Act (“TMFPA”) through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient support programs. The lawsuit sought all available relief under the TMFPA. Health Choice voluntarily dismissed the case without prejudice in August 2023, and commenced a new action in October 2023, asserting largely identical allegations and claims. In the newly filed action, the Texas Attorney General has intervened as a plaintiff.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcomes. If any of these plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Other Matters

We are a party to various legal actions that arose in the ordinary course of our business. We do not believe that it is probable or reasonably possible that these other legal actions will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

11. EARNINGS (LOSS) PER SHARE

The following table shows the calculation of Basic and Diluted earnings (loss) per share attributable to Gilead:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions, except per share amounts)	2024		2023		2024		2023
Net income (loss) attributable to Gilead	$	1,253	$	2,180	$	(1,303)	$	4,236
Shares used in basic earnings (loss) per share attributable to Gilead calculation	1,247		1,248		1,247		1,249
Dilutive effect of stock options and equivalents	7		8		—		10
Shares used in diluted earnings (loss) per share attributable to Gilead calculation	1,254		1,257		1,247		1,259

Basic earnings (loss) per share attributable to Gilead	$	1.00	$	1.75	$	(1.04)	$	3.39
Diluted earnings (loss) per share attributable to Gilead	$	1.00	$	1.73	$	(1.04)	$	3.37

Potential shares of common stock excluded from the computation of Diluted earnings (loss) per share attributable to Gilead because their effect would have been antidilutive were 7 million and 14 million for the three and nine months ended September 30, 2024, respectively, and 6 million and 4 million for the three and nine months ended September 30, 2023, respectively.

12. INCOME TAXES

The following table summarizes our Income tax (benefit) expense:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions, except percentages)	2024			2023			2024			2023
Income (loss) before income taxes	$	956		$	2,318		$	(1,477)		$	5,206
Income tax (benefit) expense	$	(297)		$	146		$	(174)		$	1,010
Effective tax rate	(31.1)		%	6.3		%	11.8		%	19.4		%

Our effective income tax rate of (31.1)% for the three months ended September 30, 2024 differed from the U.S. federal statutory rate of 21% primarily due to a non-recurring tax benefit associated with a legal entity restructuring and a decrease in state deferred tax liabilities associated with the $1.8 billion NSCLC IPR&D intangible asset impairment charge.

Our effective income tax rate of 11.8% for the nine months ended September 30, 2024 differed from the U.S. federal statutory rate of 21% primarily due to $3.9 billion of non-deductible acquired IPR&D expense recorded in connection with our acquisition of CymaBay, partially offset by a non-recurring tax benefit associated with a legal entity restructuring, a decrease in state deferred tax liabilities associated with the $4.2 billion NSCLC IPR&D intangible asset impairment charge, and settlements with tax authorities.

Our effective income tax rate of 6.3% for the three months ended September 30, 2023 differed from the U.S. federal statutory rate of 21% primarily due to a decrease in unrecognized tax benefits as a result of reaching agreement with a tax authority on certain tax positions.

Our effective income tax rate of 19.4% for the nine months ended September 30, 2023 differed from the U.S. federal statutory rate of 21% primarily due to the above-mentioned reason for the three months ended September 30, 2023, partially offset by remeasurement of certain deferred tax liabilities related to acquired intangible assets and non-deductible acquired IPR&D expenses recorded associated with our acquisitions of XinThera and Tmunity.

Our income tax returns are subject to audit by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for our 2019 to 2021 tax years. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues on the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

During the nine months ended September 30, 2024, our unrecognized tax benefits balance as of December 31, 2023 increased by approximately $200 million. This net increase was primarily due to an increase of approximately $700 million for current year unrecognized tax benefits, partially offset by a decrease of approximately $500 million for reductions to prior year tax positions and settlements.

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