AMGEN INC - Quarter Report: 2021 June (Form 10-Q)

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 June 30, 2021


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

Commission File Number: 001-37702

Amgen Inc.

(Exact name of registrant as specified in its charter)


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

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

(805) 447-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	AMGN	The Nasdaq Stock Market LLC
1.250% Senior Notes due 2022	AMGN22	The Nasdaq Stock Market LLC
2.00% Senior Notes due 2026	AMGN26	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☑

As of July 29, 2021, the registrant had 567,852,353 shares of common stock, $0.0001 par value, outstanding.

AMGEN INC.

INDEX


		Page No.
PART I - FINANCIAL INFORMATION		1
Item 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	1
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	2
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
Item 4.	CONTROLS AND PROCEDURES	40
PART II - OTHER INFORMATION		41
Item 1.	LEGAL PROCEEDINGS	41
Item 1A.	RISK FACTORS	41
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	48
Item 6.	EXHIBITS	48
INDEX TO EXHIBITS		49
SIGNATURES		55

PART I — FINANCIAL INFORMATION


Item 1.			FINANCIAL STATEMENTS

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share data)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Revenues:
Product sales	$	6,114	$	5,908	$	11,706	$	11,802
Other revenues	412		298		721		565
Total revenues	6,526		6,206		12,427		12,367

Operating expenses:
Cost of sales	1,637		1,488		3,127		3,001
Research and development	1,082		964		2,049		1,916
Acquired in-process research and development	1,505		—		1,505		—
Selling, general and administrative	1,384		1,295		2,638		2,611
Other	90		136		151		161
Total operating expenses	5,698		3,883		9,470		7,689

Operating income	828		2,323		2,957		4,678

Other income (expense):
Interest expense, net	(281)		(296)		(566)		(642)
Other income, net	11		3		24		14

Income before income taxes	558		2,030		2,415		4,050

Provision for income taxes	94		227		305		422

Net income	$	464	$	1,803	$	2,110	$	3,628

Earnings per share:
Basic	$	0.81	$	3.07	$	3.67	$	6.16
Diluted	$	0.81	$	3.05	$	3.65	$	6.12

Shares used in calculation of earnings per share:
Basic	573		588		575		589
Diluted	576		592		578		593

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Net income	$	464	$	1,803	$	2,110	$	3,628
Other comprehensive (loss) income, net of reclassification adjustments and taxes:
Gains (losses) on foreign currency translation	14		(3)		(25)		(55)
(Losses) gains on cash flow hedges	(48)		(116)		142		(177)
Losses on available-for-sale securities	—		(2)		—		(21)
Other	(1)		—		—		(2)
Other comprehensive (loss) income, net of taxes	(35)		(121)		117		(255)
Comprehensive income	$	429	$	1,682	$	2,227	$	3,373

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share data)


	June 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,630	$	6,266
Marketable securities	1,452		4,381
Trade receivables, net	4,479		4,525
Inventories	4,115		3,893
Other current assets	2,423		2,079
Total current assets	19,099		21,144

Property, plant and equipment, net	4,906		4,889
Intangible assets, net	15,308		16,587
Goodwill	14,676		14,689
Other noncurrent assets	5,784		5,639
Total assets	$	59,773	$	62,948

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,277	$	1,421
Accrued liabilities	8,984		10,141
Current portion of long-term debt	4,324		91
Total current liabilities	14,585		11,653

Long-term debt	28,458		32,895
Long-term tax liabilities	6,428		6,968
Other noncurrent liabilities	2,055		2,023

Contingencies and commitments

Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—569.6 shares in 2021 and 578.3 shares in 2020	31,877		31,802
Accumulated deficit	(22,762)		(21,408)
Accumulated other comprehensive loss	(868)		(985)
Total stockholders’ equity	8,247		9,409
Total liabilities and stockholders’ equity	$	59,773	$	62,948

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per-share data)

(Unaudited)


	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2020	578.3	$	31,802	$	(21,408)	$	(985)	$	9,409

Net income	—	—		1,646		—		1,646
Other comprehensive income, net of taxes	—	—		—		152		152
Dividends declared on common stock ($1.76 per share)	—	—		(1,012)		—		(1,012)
Issuance of common stock in connection with the Company’s equity award programs	0.7	6		—		—		6
Stock-based compensation expense	—	57		—		—		57
Tax impact related to employee stock-based compensation expense	—	(59)		—		—		(59)
Repurchases of common stock	(3.7)	—		(865)		—		(865)
Balance as of March 31, 2021	575.3	31,806		(21,639)		(833)		9,334

Net income	—	—		464		—		464
Other comprehensive loss, net of taxes	—	—		—		(35)		(35)

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

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(In millions, except per-share data)

(Unaudited)


	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2019	591.4	$	31,531	$	(21,330)	$	(528)	$	9,673
Cumulative effect of changes in accounting principles, net of taxes	—	—		(2)		—		(2)
Net income	—	—		1,825		—		1,825
Other comprehensive loss, net of taxes	—	—		—		(134)		(134)
Dividends declared on common stock ($1.60 per share)	—	—		(938)		—		(938)
Issuance of common stock in connection with the Company’s equity award programs	0.9	10		—		—		10
Stock-based compensation expense	—	52		—		—		52
Tax impact related to employee stock-based compensation expense	—	(68)		—		—		(68)
Repurchases of common stock	(4.3)	—		(933)		—		(933)
Balance as of March 31, 2020	588.0	$	31,525	$	(21,378)	$	(662)	$	9,485

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

Issuance of common stock in connection with the Company’s equity award programs	1.0	65		—		—		65
Stock-based compensation expense	—	101		—		—		101
Tax impact related to employee stock-based compensation expense	—	(81)		—		—		(81)
Repurchases of common stock	(2.6)	—		(591)		—		(591)
Other	—	—		(2)		—		(2)
Balance as of June 30, 2020	586.4	$	31,610	$	(20,168)	$	(783)	$	10,659

See accompanying notes.

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six months ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	2,110	$	3,628
Depreciation, amortization and other	1,696		1,827
Deferred income taxes	(137)		(261)
Acquired in-process research and development	1,505		—
Other items, net	170		245
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net	35		(1,177)
Inventories	(167)		(226)
Other assets	(258)		143
Accounts payable	(156)		(216)
Accrued income taxes, net	(930)		452
Long-term tax liabilities	47		106
Other liabilities	120		455
Net cash provided by operating activities	4,035		4,976
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(1,626)		—
Purchases of marketable securities	(8,000)		(2,229)
Proceeds from sales of marketable securities	4,404		2,598
Proceeds from maturities of marketable securities	6,528		238

Purchases of property, plant and equipment	(351)		(300)
Purchases of equity method investments	(3)		(2,648)
Other	(62)		(48)
Net cash provided by (used in) investing activities	890		(2,389)
Cash flows from financing activities:
Net proceeds from issuance of debt	—		9,002
Repayment of debt	—		(5,000)

Repurchases of common stock	(2,452)		(1,516)
Dividends paid	(2,024)		(1,887)

Other	(85)		(78)
Net cash (used in) provided by financing activities	(4,561)		521
Increase in cash and cash equivalents	364		3,108
Cash and cash equivalents at beginning of period	6,266		6,037
Cash and cash equivalents at end of period	$	6,630	$	9,145

See accompanying notes.

AMGEN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

(Unaudited)

1. Summary of significant accounting policies

Business

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

Basis of presentation

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

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

Principles of consolidation

The condensed consolidated financial statements include the accounts of Amgen as well as its majority-owned subsidiaries. We do not have any significant interests in any variable interest entities. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

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

Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $9.1 billion and $9.0 billion as of June 30, 2021 and December 31, 2020, respectively.

Recent accounting pronouncements

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

2. Acquisitions

On April 16, 2021, Amgen completed its acquisition of Five Prime Therapeutics, Inc. (Five Prime) for total consideration of $1.6 billion, net of cash acquired. The purchase price was funded with cash on hand. This transaction was accounted for as an asset acquisition because substantially all the value of the assets acquired was concentrated in the intellectual property rights of bemarituzumab, a phase 3 trial-ready, first-in-class program for gastric cancer. Five Prime’s operations have been included in our condensed consolidated financial statements commencing after the acquisition date.

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

3. Revenues

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

Revenues were as follows (in millions):


	Three months ended June 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
Enbrel® (etanercept)	$	1,113	$	31	$	1,144	$	1,213	$	33	$	1,246
Prolia® (denosumab)	538		276		814		441		218		659
Otezla® (apremilast)	423		111		534		464		97		561
Neulasta® (pegfilgrastim)	434		52		486		520		73		593
XGEVA® (denosumab)	355		133		488		318		117		435
Aranesp® (darbepoetin alfa)	135		232		367		156		231		387
Repatha® (evolocumab)	143		143		286		115		85		200
KYPROLIS® (carfilzomib)	190		90		280		167		86		253
Other products	1,043		672		1,715		1,034		540		1,574
Total product sales(1)	$	4,374	$	1,740	6,114		$	4,428	$	1,480	5,908
Other revenues					412						298
Total revenues					$	6,526					$	6,206

	Six months ended June 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
ENBREL	$	2,007	$	61	$	2,068	$	2,330	$	69	$	2,399
Prolia®	1,039		533		1,572		863		450		1,313
Otezla®	789		221		1,010		841		199		1,040
Neulasta®	855		113		968		1,054		148		1,202
XGEVA®	689		267		956		673		243		916
Aranesp®	260		462		722		331		478		809
Repatha®	282		290		572		239		190		429
KYPROLIS®	349		182		531		354		179		533
Other products	2,007		1,300		3,307		2,022		1,139		3,161
Total product sales(1)	$	8,277	$	3,429	11,706		$	8,707	$	3,095	11,802
Other revenues					721						565
Total revenues					$	12,427					$	12,367

____________

(1) Hedging gains and losses, which are included in product sales, were not material for the three and six months ended June 30, 2021 and 2020.

4. Income taxes

The effective tax rates for the three and six months ended June 30, 2021, were 16.8% and 12.6%, respectively, compared with 11.2% and 10.4%, respectively, for the corresponding periods of the prior year.

The increase in our effective tax rate for the three and six months ended June 30, 2021, was primarily due to the non-deductible IPR&D expense arising from the acquisition of Five Prime. The effective tax rates differ from the federal statutory rate primarily as a result of foreign earnings from the Company’s operations conducted in Puerto Rico, a territory of the United States that is treated as a foreign jurisdiction for U.S. tax purposes, that are subject to a tax incentive grant through 2035. In addition, the Company’s operations conducted in Singapore are subject to a tax incentive grant through 2034. These earnings are also subject to U.S. tax at a reduced rate of 10.5%.

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

One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely examined by tax authorities in those jurisdictions. Significant disputes may arise with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts. In 2017, we received a Revenue Agent Report (RAR) and a modified RAR from the Internal Revenue Service (IRS) for the years 2010, 2011 and 2012 proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued a resolution with the IRS administrative appeals office. As previously reported, we were unable to reach resolution with the IRS appeals office. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for 2010, 2011 and 2012 that we received in May and July 2021. The duplicate Notices seek to increase our U.S. taxable income by an amount that would result in additional federal tax of approximately $3.6 billion, plus interest. Any additional tax that could be imposed would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings. In any event, we firmly believe that the IRS’s positions in the Notices are without merit and we will vigorously contest the Notices through the judicial process.

In addition, in 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015 also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico, similar to those proposed for the years 2010, 2011 and 2012. We disagree with the proposed adjustments and calculations and are pursuing resolution with the IRS administrative appeals office. We are currently under examination by the IRS for the years 2016, 2017 and 2018. We are also currently under examination by a number of other state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements. We are no longer subject to U.S. federal income tax examinations for the years ended on or before December 31, 2009.

During the three and six months ended June 30, 2021, the gross amounts of our unrecognized tax benefits (UTBs) increased $50 million and $110 million, respectively, as a result of tax positions taken during the current year. Substantially all of the UTBs as of June 30, 2021, if recognized, would affect our effective tax rate.

5. Earnings per share

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

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


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Income (Numerator):
Net income for basic and diluted EPS	$	464	$	1,803	$	2,110	$	3,628

Shares (Denominator):
Weighted-average shares for basic EPS	573		588		575		589
Effect of dilutive securities	3		4		3		4
Weighted-average shares for diluted EPS	576		592		578		593

Basic EPS	$	0.81	$	3.07	$	3.67	$	6.16
Diluted EPS	$	0.81	$	3.05	$	3.65	$	6.12

For the three and six months ended June 30, 2021 and 2020, the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.

6. Investments

Available-for-sale investments

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


Types of securities as of June 30, 2021	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	$	51	$	1	$	—	$	52
U.S. Treasury bills	1,400		—		—		1,400









Money market mutual funds	5,707		—		—		5,707
Other short-term interest-bearing securities	—		—		—		—


Total interest-bearing securities	$	7,158	$	1	$	—	$	7,159


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









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

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


Condensed Consolidated Balance Sheets locations	June 30, 2021		December 31, 2020
Cash and cash equivalents	$	5,707	$	5,464
Marketable securities	1,452		4,381
Total interest-bearing securities	$	7,159	$	9,845

Cash and cash equivalents in the above table excludes bank account cash of $923 million and $802 million as of June 30, 2021 and December 31, 2020, respectively.

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


Contractual maturities	June 30, 2021		December 31, 2020
Maturing in one year or less	$	7,159	$	9,795
Maturing after one year through three years	—		50




Total available-for-sale investments	$	7,159	$	9,845

For the three and six months ended June 30, 2021 and 2020, realized gains and losses on interest-bearing securities were not material. Realized gains and losses on interest-bearing securities are recorded in Other income, net, in the Condensed Consolidated Statements of Income. The cost of securities sold is based on the specific-identification method.

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

Equity securities

We held investments in equity securities with readily determinable fair values (publicly traded securities) of $403 million and $477 million as of June 30, 2021 and December 31, 2020, respectively, which are included in Other assets in the Condensed Consolidated Balance Sheets. For the three months ended June 30, 2021 and 2020, net unrealized gains on publicly traded securities were $25 million and $80 million, respectively. For the six months ended June 30, 2021 and 2020, net unrealized gains and losses on publicly traded securities were a $31 million net loss and a $5 million net gain, respectively. Realized gains and losses on publicly traded securities for the three and six months ended June 30, 2021 and 2020, were not material.

We held investments of $245 million and $203 million in equity securities without readily determinable fair values as of June 30, 2021 and December 31, 2020, respectively, which are included in Other assets in the Condensed Consolidated Balance Sheets. Gains and losses recognized on these securities, including adjustments to the carrying values of these securities, were not material for the three and six months ended June 30, 2021.

Equity method investments

Limited partnerships

We held limited partnership investments of $616 million and $496 million as of June 30, 2021 and December 31, 2020, respectively, which are included in Other assets in the Condensed Consolidated Balance Sheets. These investments, primarily investment funds of early-stage biotechnology companies, are accounted for by using the equity method of accounting and are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships as a practical expedient. These investments are typically redeemable only through distributions upon liquidation of the underlying assets. As of June 30, 2021, unfunded additional commitments to be made for these investments during the next several years were not material. For the three months ended June 30, 2021 and 2020, net unrealized losses from our limited partnership investments were $43 million and $10 million, respectively. For the six months ended June 30, 2021 and 2020, net unrealized gains from our limited partnership investments were $165 million and $10 million, respectively.

BeiGene, Ltd.

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

During the three and six months ended June 30, 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net income of $14 million and net loss of $83 million, respectively, and amortization of the basis difference of $42 million and $84 million, respectively. In addition, during the three and six months ended June 30, 2021, the carrying value increased by $21 million and $38 million, respectively, from the impact of BeiGene ownership transactions. As of June 30, 2021, the carrying value and fair value of our investment in BeiGene totaled $2.8 billion and $6.4 billion, respectively. As of June 30, 2021, we believe the carrying value of our equity investment in BeiGene is fully recoverable.

7. Inventories

Inventories consisted of the following (in millions):


	June 30, 2021		December 31, 2020
Raw materials	$	641	$	486
Work in process	2,443		2,437
Finished goods	1,031		970
Total inventories	$	4,115	$	3,893

8. Goodwill and other intangible assets

Goodwill

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


	Six months ended June 30, 2021
Beginning balance	$	14,689
Currency translation adjustment	(13)
Ending balance	$	14,676

Other intangible assets

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


	June 30, 2021						December 31, 2020
	Gross carrying amounts		Accumulated amortization		Other intangible assets, net		Gross carrying amounts		Accumulated amortization		Other intangible assets, net
Finite-lived intangible assets:
Developed-product-technology rights	$	25,584	$	(11,673)	$	13,911	$	25,591	$	(10,564)	$	15,027
Licensing rights	3,766		(2,886)		880		3,743		(2,791)		952
Marketing-related rights	1,363		(1,079)		284		1,367		(1,041)		326
Research and development technology rights	1,308		(1,105)		203		1,317		(1,065)		252
Total finite-lived intangible assets	32,021		(16,743)		15,278		32,018		(15,461)		16,557
Indefinite-lived intangible assets:
In-process research and development	30		—		30		30		—		30
Total other intangible assets	$	32,051	$	(16,743)	$	15,308	$	32,048	$	(15,461)	$	16,587

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

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

During the three months ended June 30, 2021 and 2020, we recognized amortization associated with our finite-lived intangible assets of $652 million and $713 million, respectively. During the six months ended June 30, 2021 and 2020, we recognized amortization associated with our finite-lived intangible assets of $1.3 billion and $1.4 billion, respectively. Amortization of intangible assets is primarily included in Cost of sales in the Condensed Consolidated Statements of Income. The total estimated amortization for our finite-lived intangible assets for the remaining six months ending December 31, 2021, and the years ending December 31, 2022, 2023, 2024, 2025 and 2026, are $1.2 billion, $2.5 billion, $2.4 billion, $2.4 billion, $2.2 billion and $1.8 billion, respectively.

9. Financing arrangements

Our borrowings consisted of the following (in millions):


	June 30, 2021		December 31, 2020
1.25% €1,250 million notes due 2022 (1.25% 2022 euro Notes)	$	1,482	$	1,527
2.70% notes due 2022 (2.70% 2022 Notes)	500		500
2.65% notes due 2022 (2.65% 2022 Notes)	1,500		1,500
3.625% notes due 2022 (3.625% 2022 Notes)	750		750
0.41% CHF700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)	757		791
2.25% notes due 2023 (2.25% 2023 Notes)	750		750
3.625% notes due 2024 (3.625% 2024 Notes)	1,400		1,400
1.90% notes due 2025 (1.90% 2025 Notes)	500		500
3.125% notes due 2025 (3.125% 2025 Notes)	1,000		1,000
2.00% €750 million notes due 2026 (2.00% 2026 euro Notes)	889		916
2.60% notes due 2026 (2.60% 2026 Notes)	1,250		1,250
5.50% £475 million notes due 2026 (5.50% 2026 pound sterling Notes)	657		649
2.20% notes due 2027 (2.20% 2027 Notes)	1,750		1,750
3.20% notes due 2027 (3.20% 2027 Notes)	1,000		1,000
4.00% £700 million notes due 2029 (4.00% 2029 pound sterling Notes)	968		957
2.45% notes due 2030 (2.45% 2030 Notes)	1,250		1,250
2.30% notes due 2031 (2.30% 2031 Notes)	1,250		1,250
6.375% notes due 2037 (6.375% 2037 Notes)	478		478
6.90% notes due 2038 (6.90% 2038 Notes)	254		254
6.40% notes due 2039 (6.40% 2039 Notes)	333		333
3.15% notes due 2040 (3.15% 2040 Notes)	2,000		2,000
5.75% notes due 2040 (5.75% 2040 Notes)	373		373
4.95% notes due 2041 (4.95% 2041 Notes)	600		600
5.15% notes due 2041 (5.15% 2041 Notes)	729		729
5.65% notes due 2042 (5.65% 2042 Notes)	415		415
5.375% notes due 2043 (5.375% 2043 Notes)	185		185
4.40% notes due 2045 (4.40% 2045 Notes)	2,250		2,250
4.563% notes due 2048 (4.563% 2048 Notes)	1,415		1,415
3.375% notes due 2050 (3.375% 2050 Notes)	2,250		2,250
4.663% notes due 2051 (4.663% 2051 Notes)	3,541		3,541
2.77% notes due 2053 (2.77% 2053 Notes)	940		940
Other notes due 2097	100		100
Unamortized bond discounts, premiums and issuance costs, net	(1,174)		(1,188)
Fair value adjustments	424		566
Other	16		5
Total carrying value of debt	32,782		32,986
Less current portion	(4,324)		(91)
Total long-term debt	$	28,458	$	32,895

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

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

10. Stockholders’ equity

Stock repurchase program

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


	2021			2020
	Shares	Dollars		Shares	Dollars
First quarter	3.7	$	865	4.3	$	933
Second quarter	6.5	1,592		2.6	591

Total stock repurchases	10.2	$	2,457	6.9	$	1,524

In March 2021, our Board of Directors increased the amount authorized under our stock repurchase program by an additional $3.4 billion. As of June 30, 2021, $3.9 billion of authorization remained available under our stock repurchase program.

Dividends

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

Accumulated other comprehensive income (loss)

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


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

Foreign currency translation adjustments	(39)		—		—		—		(39)
Unrealized gains	—		108		—		—		108
Reclassification adjustments to income	—		133		—		—		133
Other	—		—		—		1		1
Income taxes	—		(51)		—		—		(51)
Balance as of March 31, 2021	(748)		(73)		1		(13)		(833)

Foreign currency translation adjustments	14		—		—		—		14
Unrealized losses	—		(31)		—		—		(31)
Reclassification adjustments to income	—		(28)		—		—		(28)
Other	—		—		—		(1)		(1)
Income taxes	—		11		—		—		11
Balance as of June 30, 2021	$	(734)	$	(121)	$	1	$	(14)	$	(868)

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


	Three months ended June 30,
Components of AOCI	2021		2020		Condensed Consolidated Statements of Income locations
Cash flow hedges:
Foreign currency contract (losses) gains	$	(18)	$	68	Product sales
Cross-currency swap contract gains	46		51		Other income, net

	28		119		Income before income taxes
	(6)		(26)		Provision for income taxes
	$	22	$	93	Net income
Available-for-sale securities:
Net realized gains	$	—	$	—	Other income, net
	—		—		Provision for income taxes
	$	—	$	—	Net income

	Six months ended June 30,
Components of AOCI	2021		2020		Condensed Consolidated Statements of Income locations
Cash flow hedges:
Foreign currency contract (losses) gains	$	(19)	$	117	Product sales
Cross-currency swap contract losses	(86)		(82)		Other income, net

	(105)		35		Income before income taxes
	22		(8)		Provision for income taxes
	$	(83)	$	27	Net income
Available-for-sale securities:
Net realized gains	$	—	$	33	Other income, net
	—		(7)		Provision for income taxes
	$	—	$	26	Net income

11. Fair value measurement

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


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

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

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


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

Fair value measurement as of June 30, 2021, using:							Total
Assets:
Available-for-sale securities:
U.S. Treasury notes	$	52	$	—	$	—	$	52
U.S. Treasury bills	1,400		—		—		1,400









Money market mutual funds	5,707		—		—		5,707
Other short-term interest-bearing securities	—		—		—		—
Equity securities	403		—		—		403
Derivatives:
Foreign currency contracts	—		62		—		62
Cross-currency swap contracts	—		182		—		182
Interest rate swap contracts	—		45		—		45

Total assets	$	7,562	$	289	$	—	$	7,851

Liabilities:
Derivatives:
Foreign currency contracts	$	—	$	119	$	—	$	119
Cross-currency swap contracts	—		305		—		305
Interest rate swap contracts	—		90		—		90
Contingent consideration obligations	—		—		48		48
Total liabilities	$	—	$	514	$	48	$	562


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

Fair value measurement as of December 31, 2020, using:							Total
Assets:
Available-for-sale securities:
U.S. Treasury notes	$	130	$	—	$	—	$	130
U.S. Treasury bills	4,948		—		—		4,948









Money market mutual funds	4,765		—		—		4,765
Other short-term interest-bearing securities	—		2		—		2
Equity securities	477		—		—		477
Derivatives:
Foreign currency contracts	—		28		—		28
Cross-currency swap contracts	—		255		—		255
Interest rate swap contracts	—		66		—		66
Total assets	$	10,320	$	351	$	—	$	10,671

Liabilities:
Derivatives:
Foreign currency contracts	$	—	$	237	$	—	$	237
Cross-currency swap contracts	—		318		—		318
Interest rate swap contracts	—		15		—		15
Contingent consideration obligations	—		—		33		33
Total liabilities	$	—	$	570	$	33	$	603

Interest-bearing and equity securities

The fair values of our U.S. Treasury securities, money market mutual funds and equity securities are based on quoted market prices in active markets, with no valuation adjustment.

Derivatives

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

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

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

During the three and six months ended June 30, 2021 and 2020, there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

Summary of the fair values of other financial instruments

Cash equivalents

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

Borrowings

We estimated the fair values of our borrowings by using Level 2 inputs. As of June 30, 2021 and December 31, 2020, the aggregate fair values of our borrowings were $37.9 billion and $39.4 billion, respectively, and the carrying values were $32.8 billion and $33.0 billion, respectively.

12. Derivative instruments

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

Cash flow hedges

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

As of June 30, 2021 and December 31, 2020, we had outstanding foreign currency forward contracts with aggregate notional amounts of $5.2 billion and $5.1 billion, respectively. We have designated these foreign currency forward contracts, which are primarily euro based, as cash flow hedges. Accordingly, we report the unrealized gains and losses on these contracts in AOCI in the Condensed Consolidated Balance Sheets, and we reclassify them to Product sales in the Condensed Consolidated Statements of Income in the same periods during which the hedged transactions affect earnings.

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

The notional amounts and interest rates of our cross-currency swaps as of June 30, 2021, were as follows (notional amounts in millions):


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

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

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

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


	Three months ended June 30,				Six months ended June 30,
Derivatives in cash flow hedging relationships	2021		2020		2021		2020
Foreign currency contracts	$	(46)	$	(101)	$	137	$	138
Cross-currency swap contracts	15		71		(60)		(330)

Total unrealized (losses) gains	$	(31)	$	(30)	$	77	$	(192)

Fair value hedges

To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that qualified for and were designated as fair value hedges. These interest rate swap contracts effectively convert fixed-rate coupons to floating-rate LIBOR-based coupons over the terms of the related hedge contracts. As of June 30, 2021 and December 31, 2020, we had interest rate swap contracts with aggregate notional amounts of $7.4 billion and $5.9 billion, respectively, that hedge certain portions of our long-term debt issuances. During the three months ended June 30, 2021, we entered into $1.5 billion of interest rate swap contracts to hedge portions of our 2.45% 2030 Notes and 2.30% 2031 Notes (see Note 9, Financing arrangements).

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

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


	Carrying amounts of hedged liabilities(1)				Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2)
Condensed Consolidated Balance Sheets locations	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Current portion of long-term debt	$	844	$	89	$	94	$	89
Long-term debt	$	6,857	$	6,258	$	330	$	477

____________

(1) Current portion of long-term debt includes $89 million of carrying value with discontinued hedging relationships as of both June 30, 2021 and December 31, 2020. Long-term debt includes $481 million and $525 million of carrying value with discontinued hedging relationships as of June 30, 2021 and December 31, 2020, respectively.

(2) Current portion of long-term debt includes $89 million of hedging adjustments on discontinued hedging relationships as of both June 30, 2021 and December 31, 2020. Long-term debt includes $381 million and $425 million of hedging adjustments on discontinued hedging relationships as of June 30, 2021 and December 31, 2020, respectively.

Impact of hedging transactions

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



	Three months ended June 30, 2021						Six months ended June 30, 2021
	Product sales		Other income, net		Interest expense, net		Product sales		Other income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	6,114	$	11	$	(281)	$	11,706	$	24	$	(566)
The effects of cash flow and fair value hedging:
(Losses) gains on cash flow hedging relationships reclassified out of AOCI:
Foreign currency contracts	$	(18)	$	—	$	—	$	(19)	$	—	$	—
Cross-currency swap contracts	$	—	$	46	$	—	$	—	$	(86)	$	—

(Losses) gains on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	(34)	$	—	$	—	$	141
Derivatives designated as hedging instruments	$	—	$	—	$	55	$	—	$	—	$	(97)



	Three months ended June 30, 2020						Six months ended June 30, 2020
	Product sales		Other income, net		Interest expense, net		Product sales		Other income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income	$	5,908	$	3	$	(296)	$	11,802	$	14	$	(642)
The effects of cash flow and fair value hedging:
Gains (losses) on cash flow hedging relationships reclassified out of AOCI:
Foreign currency contracts	$	68	$	—	$	—	$	117	$	—	$	—
Cross-currency swap contracts	$	—	$	51	$	—	$	—	$	(82)	$	—

(Losses) gains on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	(30)	$	—	$	—	$	180
Derivatives designated as hedging instruments	$	—	$	—	$	53	$	—	$	—	$	(137)

__________

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

No portions of our cash flow hedge contracts were excluded from the assessment of hedge effectiveness. As of June 30, 2021, the net gains expected to be reclassified on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months are not material.

Derivatives not designated as hedges

To reduce our exposure to foreign currency fluctuations in certain assets and liabilities denominated in foreign currencies, we enter into foreign currency forward contracts that are not designated as hedging transactions. Most of these exposures are hedged on a month-to-month basis. As of June 30, 2021 and December 31, 2020, the total notional amounts of these foreign currency forward contracts were $0.8 billion and $1.0 billion, respectively. Gains and losses recognized in earnings for our derivative instruments not designated as hedging instruments were not material for the three and six months ended June 30, 2021 and 2020.

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


	Derivative assets			Derivative liabilities
June 30, 2021	Condensed Consolidated Balance Sheets locations	Fair values		Condensed Consolidated Balance Sheets locations	Fair values
Derivatives designated as hedging instruments:
Foreign currency contracts	Other current assets/ Other assets	$	62	Accrued liabilities/ Other noncurrent liabilities	$	119
Cross-currency swap contracts	Other current assets/ Other assets	182		Accrued liabilities/ Other noncurrent liabilities	305
Interest rate swap contracts	Other current assets/ Other assets	45		Accrued liabilities/ Other noncurrent liabilities	90

Total derivatives designated as hedging instruments		$	289		$	514


	Derivative assets			Derivative liabilities
December 31, 2020	Condensed Consolidated Balance Sheets locations	Fair values		Condensed Consolidated Balance Sheets locations	Fair values
Derivatives designated as hedging instruments:
Foreign currency contracts	Other current assets/ Other assets	$	28	Accrued liabilities/ Other noncurrent liabilities	$	237
Cross-currency swap contracts	Other current assets/ Other assets	255		Accrued liabilities/ Other noncurrent liabilities	318

Interest rate swap contracts	Other current assets/ Other assets	66		Accrued liabilities/ Other noncurrent liabilities	15
Total derivatives designated as hedging instruments		$	349		$	570

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

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

13. Contingencies and commitments

Contingencies

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

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

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

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

Abbreviated New Drug Application (ANDA) Patent Litigation

Otezla® ANDA Patent Litigation

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

On May 5, 2021, based on a joint request by Amgen and Cipla Limited (Cipla Ltd), the U.S. District Court for the District of New Jersey (the New Jersey District Court) entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of Cipla Ltd’s apremilast product during the term of U.S. Patent Nos. 6,962,940 (the ’940 Patent); 7,427,638 (the ’638 Patent), 7,659,302 (the ’302 Patent), 8,455,536 (the ’536 Patent), 9,724,330 (the ’330 Patent) and 10,092,541 (the ’541 Patent), unless authorized pursuant to a confidential settlement agreement. On May 14, 2021, based on a joint request by Amgen and Torrent Pharmaceuticals Ltd. (Torrent), the New Jersey District Court entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of Torrent’s apremilast product during the term of the U.S. Patent Nos. 7,893,101 (the ’101 Patent), 9,872,854 (the ’854 Patent) and the ’638 and ’541 Patents, unless authorized pursuant to a confidential settlement agreement. On May 19, 2021, based on a joint request by Amgen and Alkem Laboratories Ltd. (Alkem), the New Jersey District Court entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of Alkem’s apremilast product during the term of the ’940, ’638, ’302, ’536, ’330 and ’541 Patents, unless authorized pursuant to a confidential settlement agreement. On May 25, 2021, based on a joint request by Amgen and MSN Laboratories Private Limited (MSN), the New Jersey District Court entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of MSN’s apremilast product during the term of the ’940, ’638, ’302, ’536, ’330 and ’541 Patents, unless authorized pursuant to a confidential settlement agreement. On June 11, 2021, based on a joint request by Amgen and Pharmascience Inc. (Pharmascience), the New Jersey District Court entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of Pharmascience’s apremilast product during the term of U.S. Patent No. 9,018,243 (the ’243 Patent) and the ’940, ’638, ’302, ’101, ’536, ’330 and ’541 Patents, unless authorized pursuant to a confidential settlement agreement. On June 17, 2021, based on a joint request by Amgen and Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, DRL) , the New Jersey District Court entered a consent judgment and injunction prohibiting the making, using, selling, offering to sell, or importing of DRL’s

apremilast product during the term of the ’638, ’101, ’536 and ’541 Patents, unless authorized pursuant to a confidential settlement agreement.

Trial on the consolidated patent infringement action was held at the New Jersey District Court from June 14 to 25, 2021 with closing arguments on July 28, 2021. The remaining defendants are Sandoz Inc. and Zydus Pharmaceuticals (USA) Inc.

ENBREL Patent Litigation

Immunex Corporation, et al. v. Sandoz Inc., et al.

On May 17, 2021, the U.S. Supreme Court denied the petition of Sandoz Inc., Sandoz International GmbH and Sandoz GmbH for certiorari seeking review of the Federal Circuit Court’s affirmance of the validity of U.S. Patent Nos. 8,063,182 and 8,163,522.

Repatha® Patent Litigation

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

On June 21, 2021, the Federal Circuit Court denied our petition for rehearing en banc of the Federal Circuit Court’s ruling that claims 19 and 29 of our U.S. Patent No. 8,829,165 and claim 7 of our U.S. Patent No. 8,859,741 are invalid for failing to meet the enablement requirement.

NEUPOGEN® (filgrastim)/Neulasta® Patent Litigation

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

On June 11, 2021, after having held a claim construction hearing, the U.S. District Court for the District of Delaware (Delaware District Court) determined that the term at issue required no construction, and on July 14, the Delaware District Court set a briefing schedule for summary judgment motions.

Patent Trial and Appeal Board (PTAB) Challenge

Lupin PTAB Challenge

On July 12, 2021, the PTAB of the U.S. Patent and Trademark Office issued a decision denying institution of Lupin Limited’s petition for inter partes review of U.S. Patent No. 9,856,287.

Apotex PTAB Challenge

On June 21, 2021, the U.S. Supreme Court decided United States v. Arthrex, Inc. On June 28, 2021, the Supreme Court granted the government’s pending certiorari petition and vacated and remanded the Federal Circuit Court’s judgment for further consideration under Arthrex.

Breach of Contract Action

Novartis Pharma AG v. Amgen Inc.

On June 2, 2021, the parties executed agreements to settle two claims in the litigation, relating to the 2018 budget overrun dispute and certain counterclaims alleging breaches by Novartis Pharma AG (Novartis) of the 2015 and 2017 collaboration agreements related to the development and commercialization of Aimovig® (erenumab-aooe), and to amend and restate the 2017 collaboration agreement. As part of the agreement, Amgen paid $48 million to Novartis to resolve the 2018 budget dispute, and Novartis is in the process of transitioning U.S. commercial operations to Amgen.

Antitrust Class Action

Sensipar® (cinacalcet) Antitrust Class Actions

On April 27, 2021, plaintiffs filed their oppositions to defendants’ (including Amgen’s) motion to dismiss, and defendants’ reply was filed on May 25, 2021. A hearing on defendants’ motion to dismiss was held in the Delaware District Court on July 13, 2021.

U.S. Tax Litigation

Amgen Inc. & Subsidiaries v. Commissioner of Internal Revenue

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

14. Subsequent events

On June 1, 2021, Amgen and Kyowa Kirin Co., Ltd. (KKC) announced a collaboration and licensing agreement to jointly develop and commercialize KHK4083, an anti-OX40 fully human monoclonal antibody, worldwide, except in Japan. The transaction closed on July 30, 2021, upon expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Amgen will make an upfront payment of $400 million to KKC, to be recognized as R&D expense in the third quarter of 2021.


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

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

Forward-looking statements

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

Overview

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

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

COVID-19 pandemic

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

Since the beginning of the COVID-19 pandemic, we have seen changes in demand for some of our products driven by changes in patient visits to doctors’ offices that has impacted providing treatments to existing patients and reduced diagnoses in new patients. Through the second quarter, there has been gradual recovery in both patients resuming treatments and in new patient starts, although overall these remain below pre-COVID-19 levels. The cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which we expect to continue to impact our business during the second half of the year. We are closely monitoring the effects of the emerging COVID-19 variants on patient behavior and access.

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

At this time, the clinical trials that paused at the onset of the pandemic to ensure subject safety or data integrity have resumed. Study enrollment was most affected negatively in the second quarter of 2020 but by the end of the year resumed to around pre-pandemic levels. We are continuously monitoring COVID-19 infection rates and working to mitigate effects on future study enrollment. We remain focused on supporting our active clinical sites in their providing care for patients and in our providing investigational drug supply. In addition, our organization is supporting efforts to combat the COVID-19 pandemic, including by manufacturing therapeutic antibodies in a supply arrangement with Eli Lilly and Company (Lilly) and joining a public–private partnership between leading companies in our industry and U.S. government health agencies to develop a strategy for a coordinated research response.

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

Significant developments

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

Business Development

Kyowa Kirin Co., Ltd. collaboration

•In June 2021, we and KKC, announced an agreement to jointly develop and commercialize KKC’s potential first-in-class, phase 3-ready anti-OX40 fully human monoclonal antibody in development for the treatment of atopic dermatitis, with potential in other autoimmune diseases. The transaction closed on July 30, 2021, upon expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Teneobio, Inc. acquisition

•In July 2021, we and Teneobio, Inc. (Teneobio), announced an agreement under which Amgen will acquire Teneobio, a privately held, clinical stage biotechnology company developing a new class of biologics called Human Heavy-Chain Antibodies. Under the terms of the agreement, Amgen will acquire all outstanding shares of Teneobio at closing in exchange for a $900 million upfront cash payment, as well as future contingent milestone payments to Teneobio equity holders potentially worth up to an additional $1.6 billion in cash. The acquisition is subject to customary closing conditions, including applicable regulatory approvals. The transaction is expected to close in the second half of 2021.

Products/Pipeline

Inflammation

Otezla®

•In May 2021, we announced that the U.S. Food and Drug Administration (FDA) accepted for review the supplemental New Drug Application for Otezla® for the treatment of adults with mild-to-moderate plaque psoriasis who are candidates for phototherapy or systemic therapy. The FDA has set a Prescription Drug User Fee Act (PDUFA) date of December 19, 2021.

Tezepelumab

•In May 2021, Amgen announced that its partner AstraZeneca had submitted a Biologics License Application to the FDA for tezepelumab, a potential first-in-class medicine in severe asthma. The submission is supported by positive clinical trial results including a phase 3 trial, which demonstrated a statistically significant and clinically meaningful reduction in the annualized asthma exacerbation rate (AAER) in patients with severe, uncontrolled asthma compared to placebo.

•In July 2021, we announced that the FDA had granted Priority Review for tezepelumab in the treatment of asthma. The PDUFA date for a decision by the FDA is during the first quarter of 2022.

Oncology/Hematology

LUMAKRAS™ (sotorasib)

•In May 2021, we announced that the FDA had approved LUMAKRAS™ for the treatment of adult patients with KRAS G12C-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC), as determined by an FDA-approved test, who have received at least one prior systemic therapy. LUMAKRAS™ received accelerated approval based on overall response rate (ORR) and duration of response (DoR). Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial or trials.

Operations

New manufacturing facilities

We announced plans to expand our United States-based manufacturing footprint:

•In June 2021, we announced plans to build an advanced assembly and packaging plant in Ohio. The new facility will assemble and package vials and syringes to support the growing demand for our medicines.

•In August 2021, we announced plans to build a drug substance plant in North Carolina that will increase our manufacturing network capacity to reliably supply more medicines for patients.

We expect that both of these facilities will be built faster and at a lower cost than traditional plants. Once completed, both will also utilize cutting-edge technologies to be more efficient and environmentally friendly than traditional plants.

Selected financial information

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Product sales
U.S.	$	4,374	$	4,428	(1)	%	$	8,277	$	8,707	(5)	%
ROW	1,740		1,480		18	%	3,429		3,095		11	%
Total product sales	6,114		5,908		3	%	11,706		11,802		(1)	%
Other revenues	412		298		38	%	721		565		28	%
Total revenues	$	6,526	$	6,206	5	%	$	12,427	$	12,367	—	%
Operating expenses	$	5,698	$	3,883	47	%	$	9,470	$	7,689	23	%
Operating income	$	828	$	2,323	(64)	%	$	2,957	$	4,678	(37)	%
Net income	$	464	$	1,803	(74)	%	$	2,110	$	3,628	(42)	%
Diluted EPS	$	0.81	$	3.05	(73)	%	$	3.65	$	6.12	(40)	%
Diluted shares	576		592		(3)	%	578		593		(3)	%

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

Total product sales increased for the three months ended June 30, 2021, primarily driven by higher unit demand for certain brands, including Prolia®, Repatha®, XGEVA® and MVASI®, partially offset by declines in the net selling prices of certain products. Total product sales decreased for the six months ended June 30, 2021, primarily driven by declines in the net selling price of certain products, partially offset by higher unit demand for certain brands, including Prolia®, Repatha® and MVASI®. There has been gradual recovery through the second quarter of 2021 in patients resuming their treatments and in new patient starts, although overall both remain below pre-COVID-19 levels.

During the initial stages of the COVID-19 pandemic in early 2020, we experienced changes in demand for some of our products. The pandemic interrupted many physician–patient interactions, which led to delays in diagnoses and treatments, with varying degrees of impact across our portfolio. In general, sales of negatively affected products fell the most in the early part of the second quarter of 2020, with product demand beginning to show some recovery in the second half of 2020. In the first half of the current year, demand has been recovering compared with pre-pandemic levels as patients return to doctors’ offices. The cumulative decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which we expect to continue to impact our business during the second half of the year. Given the unpredictable nature of the pandemic, we expect there could be ongoing intermittent disruptions in physician–patient interactions, and as a result, we continue to expect quarter-to-quarter variability. See Risk Factors in Part II, Item 1A. of this Form 10-Q and Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020, and in Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the period ended March 31, 2021.

In addition, other changes in the healthcare ecosystem have the potential to introduce variability into product sales trends. For example, we expect changes in U.S. employment to lead to changes to the insured population. Growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product demand and sales. Overall, uncertainty remains around the timing and magnitude of our sales during the COVID-19 pandemic.

Other revenues increased for the three and six months ended June 30, 2021, primarily driven by the sale of COVID-19 antibody material.

Operating expenses increased for the three and six months ended June 30, 2021, primarily driven by IPR&D expense related to the bemarituzumab program acquired as part of the Five Prime acquisition.

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

Results of operations

Product sales

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
ENBREL	$	1,144	$	1,246	(8)	%	$	2,068	$	2,399	(14)	%
Prolia®	814		659		24	%	1,572		1,313		20	%
Otezla®	534		561		(5)	%	1,010		1,040		(3)	%
Neulasta®	486		593		(18)	%	968		1,202		(19)	%
XGEVA®	488		435		12	%	956		916		4	%
Aranesp®	367		387		(5)	%	722		809		(11)	%
Repatha®	286		200		43	%	572		429		33	%
KYPROLIS®	280		253		11	%	531		533		—	%
Other products	1,715		1,574		9	%	3,307		3,161		5	%
Total product sales	$	6,114	$	5,908	3	%	$	11,706	$	11,802	(1)	%

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

ENBREL

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
ENBREL — U.S.	$	1,113	$	1,213	(8)	%	$	2,007	$	2,330	(14)	%
ENBREL — Canada	31		33		(6)	%	61		69		(12)	%
Total ENBREL	$	1,144	$	1,246	(8)	%	$	2,068	$	2,399	(14)	%

The decrease in ENBREL sales for the three and six months ended June 30, 2021, was primarily driven by lower net selling price and unfavorable changes to estimated sales deductions. For the remainder of 2021, we expect the trend of net selling price declines to continue compared with the prior year.

We are involved in patent litigation with a company seeking to market its FDA-approved biosimilar version of ENBREL. See Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report. Companies with approved biosimilar versions of ENBREL may seek to enter the U.S. market if we are not ultimately successful in our litigations, or even earlier. Other companies are also developing proposed biosimilar versions of ENBREL.

Prolia®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Prolia® — U.S.	$	538	$	441	22	%	$	1,039	$	863	20	%
Prolia® — ROW	276		218		27	%	533		450		18	%
Total Prolia®	$	814	$	659	24	%	$	1,572	$	1,313	20	%

The increase in global Prolia® sales for the three and six months ended June 30, 2021, was primarily driven by higher unit demand. Although disruptions from the effects of the COVID-19 pandemic on new and repeat patient visits have decreased, we anticipate that such disruptions will continue to affect demand in 2021—but to a lesser degree than that experienced in 2020.

Otezla®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Otezla® — U.S.	$	423	$	464	(9)	%	$	789	$	841	(6)	%
Otezla® — ROW	111		97		14	%	221		199		11	%
Total Otezla®	$	534	$	561	(5)	%	$	1,010	$	1,040	(3)	%

The decrease in global Otezla® sales for the three and six months ended June 30, 2021, was primarily driven by lower net selling price and unfavorable changes to estimated sales deductions, partially offset by higher unit demand.

For a discussion of ongoing litigation related to Otezla®, see Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, and Note 12, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2021, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

Neulasta®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Neulasta® — U.S.	$	434	$	520	(17)	%	$	855	$	1,054	(19)	%
Neulasta® — ROW	52		73		(29)	%	113		148		(24)	%
Total Neulasta®	$	486	$	593	(18)	%	$	968	$	1,202	(19)	%

The decrease in global Neulasta® sales for the three and six months ended June 30, 2021, was driven by the impact of biosimilar competition on net selling price and unit demand, partially offset by favorable changes to estimated sales deductions.

Increased competition in the United States and Europe as a result of biosimilar versions of Neulasta® has had and will continue to have a significant adverse impact on brand sales, including additional net price erosion. We also expect other biosimilar versions to be approved in the future. For a discussion of ongoing patent litigations related to these and other biosimilars, see Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, Note 12, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2021, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

XGEVA®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
XGEVA® — U.S.	$	355	$	318	12	%	$	689	$	673	2	%
XGEVA® — ROW	133		117		14	%	267		243		10	%
Total XGEVA®	$	488	$	435	12	%	$	956	$	916	4	%

The increase in global XGEVA® sales for the three months ended June 30, 2021, was driven by higher unit demand. The increase in global XGEVA® sales for the six months ended June 30, 2021, was primarily driven by higher unit demand, partially offset by lower net selling price.

Aranesp®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Aranesp® — U.S.	$	135	$	156	(13)	%	$	260	$	331	(21)	%
Aranesp® — ROW	232		231		—	%	462		478		(3)	%
Total Aranesp®	$	367	$	387	(5)	%	$	722	$	809	(11)	%

The decrease in global Aranesp® sales for the three months ended June 30, 2021, was driven by lower net selling price due to competition. The decrease in global Aranesp® sales for the six months ended June 30, 2021, was primarily driven by lower net selling price and unit demand due to competition.

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

Repatha®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
Repatha® — U.S.	$	143	$	115	24	%	$	282	$	239	18	%
Repatha® — ROW	143		85		68	%	290		190		53	%
Total Repatha®	$	286	$	200	43	%	$	572	$	429	33	%

The increase in global Repatha® sales for the three and six months ended June 30, 2021, was driven by higher unit demand, partially offset by lower net selling price. We expect further reduction in the net selling price on a sequential basis as the number of Medicare Part D patients receiving Repatha® increases.

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

KYPROLIS®

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
KYPROLIS® — U.S.	$	190	$	167	14	%	$	349	$	354	(1)	%
KYPROLIS® — ROW	90		86		5	%	182		179		2	%
Total KYPROLIS®	$	280	$	253	11	%	$	531	$	533	—	%

The increase in global KYPROLIS® sales for the three months ended June 30, 2021, was primarily driven by higher unit demand and an increase in net selling price. Global KYPROLIS® sales for the six months ended June 30, 2021 remained relatively flat compared with the prior period.

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

Other products

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


	Three months ended June 30,						Six months ended June 30,
	2021		2020		Change		2021		2020		Change
MVASI® — U.S.	$	206	$	149	38	%	$	430	$	257	67	%
MVASI® — ROW	88		23		*		158		30		*
Nplate® — U.S.	136		107		27	%	248		234		6	%
Nplate® — ROW	109		86		27	%	224		177		27	%
Vectibix® — U.S.	92		79		16	%	171		159		8	%
Vectibix®— ROW	147		116		27	%	259		238		9	%
KANJINTI® — U.S.	132		101		31	%	262		197		33	%
KANJINTI® — ROW	24		22		9	%	55		45		22	%
EPOGEN® — U.S.	130		161		(19)	%	255		316		(19)	%
EVENITY® — U.S.	79		40		98	%	136		77		77	%
EVENITY®— ROW	52		61		(15)	%	102		124		(18)	%
BLINCYTO® — U.S.	62		56		11	%	127		113		12	%
BLINCYTO® — ROW	46		37		24	%	88		74		19	%
AMGEVITA™ — ROW	107		62		73	%	213		148		44	%
Parsabiv® — U.S.	37		160		(77)	%	83		306		(73)	%
Parsabiv® — ROW	34		26		31	%	67		55		22	%
Aimovig® — U.S.	82		98		(16)	%	148		169		(12)	%
NEUPOGEN® — U.S.	36		28		29	%	54		73		(26)	%
NEUPOGEN® — ROW	15		21		(29)	%	31		41		(24)	%
Sensipar® — U.S.	4		32		(88)	%	4		74		(95)	%
Sensipar®/Mimpara™ — ROW	20		49		(59)	%	43		130		(67)	%
Other — U.S.	47		23		*		89		47		89	%
Other — ROW	30		37		(19)	%	60		77		(22)	%
Total other products	$	1,715	$	1,574	9	%	$	3,307	$	3,161	5	%
Total U.S. — other products	$	1,043	$	1,034	1	%	$	2,007	$	2,022	(1)	%
Total ROW — other products	672		540		24	%	1,300		1,139		14	%
Total other products	$	1,715	$	1,574	9	%	$	3,307	$	3,161	5	%

* Change in excess of 100%.

Operating expenses

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


	Three months ended June 30,								Six months ended June 30,
	2021			2020			Change		2021			2020			Change
Operating expenses:
Cost of sales	$	1,637		$	1,488		10	%	$	3,127		$	3,001		4	%
% of product sales	26.8		%	25.2		%			26.7		%	25.4		%
% of total revenues	25.1		%	24.0		%			25.2		%	24.3		%
Research and development	$	1,082		$	964		12	%	$	2,049		$	1,916		7	%
% of product sales	17.7		%	16.3		%			17.5		%	16.2		%
% of total revenues	16.6		%	15.5		%			16.5		%	15.5		%
Acquired in-process research and development	$	1,505		$	—		NM		$	1,505		$	—		NM
% of product sales	24.6		%	—		%			12.9		%	—		%
% of total revenues	23.1		%	—		%			12.1		%	—		%
Selling, general and administrative	$	1,384		$	1,295		7	%	$	2,638		$	2,611		1	%
% of product sales	22.6		%	21.9		%			22.5		%	22.1		%
% of total revenues	21.2		%	20.9		%			21.2		%	21.1		%
Other	$	90		$	136		(34)	%	$	151		$	161		(6)	%

NM - Not meaningful

Cost of sales

Cost of sales increased to 25.1% and 25.2% of total revenues for the three and six months ended June 30, 2021, respectively, primarily driven by unfavorable product mix and by higher profit share and royalty expenses, partially offset by lower amortization expense from acquisition-related assets.

Research and development

The increases in R&D expense for the three and six months ended June 30, 2021, were primarily driven by higher research and early pipeline spend and late-stage program support, including recent business development activities.

Acquired in-process research and development

Acquired IPR&D expense for the three and six months ended June 30, 2021, is related to the bemarituzumab program acquired as part of the Five Prime acquisition.

Selling, general and administrative

The increase in Selling, general and administrative (SG&A) expense for the three months ended June 30, 2021, was driven by higher marketed-product support.

The increase in SG&A expense for the six months ended June 30, 2021, was driven by higher marketed-product support, partially offset by favorable adjustments to estimated U.S. healthcare reform federal excise fees.

Other

Other operating expenses for the three and six months ended June 30, 2021, consisted primarily of expenses related to cost savings initiatives. Other operating expenses for the three and six months ended June 30, 2020, consisted of legal settlement expenses.

Nonoperating expense/income and income taxes

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


	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Interest expense, net	$	(281)		$	(296)		$	(566)		$	(642)
Other income, net	$	11		$	3		$	24		$	14
Provision for income taxes	$	94		$	227		$	305		$	422
Effective tax rate	16.8		%	11.2		%	12.6		%	10.4		%

Interest expense, net

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

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

Other income, net

The increase in Other income, net, for the three months ended June 30, 2021, was primarily due to lower losses in connection with our BeiGene investment, partially offset by gains recognized on our investments in limited partnerships in the prior year period.

The increase in Other income, net, for the six months ended June 30, 2021, was primarily due to higher gains recognized on our investments in limited partnerships in the current year, partially offset by gains recognized in the prior year period on our interest-bearing securities.

Income taxes

The increase in our effective tax rate for the three and six months ended June 30, 2021, was primarily due to the non-deductible IPR&D expense arising from the acquisition of Five Prime.

The Administration and Congress are considering significant changes to existing tax law, including an increase in the corporate tax rate and the tax rate on foreign earnings. These changes could substantially increase U.S. taxation of our operations both in and outside the United States, including the U.S. territory of Puerto Rico. In addition, the Organization for Economic Co-operation and Development (OECD) recently reached agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. If enacted, this agreement could result in tax increases in both the United States and foreign jurisdictions.

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

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

See Note 4, Income taxes, to the condensed consolidated financial statements for further discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):


	June 30, 2021		December 31, 2020
Cash, cash equivalents and marketable securities	$	8,082	$	10,647
Total assets	$	59,773	$	62,948
Current portion of long-term debt	$	4,324	$	91
Long-term debt	$	28,458	$	32,895
Stockholders’ equity	$	8,247	$	9,409

Cash, cash equivalents and marketable securities

Our balance of cash, cash equivalents and marketable securities was $8.1 billion at June 30, 2021. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

Capital allocation

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

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

We also returned capital to stockholders through our stock repurchase program. During the six months ended June 30, 2021, we executed trades to repurchase $2.5 billion of common stock. As of June 30, 2021, $3.9 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 June 30, 2021 and December 31, 2020. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our continuing profitability and strong financial position.

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

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

Cash flows

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


	Six months ended June 30,
	2021		2020
Net cash provided by operating activities	$	4,035	$	4,976
Net cash provided by (used in) investing activities	$	890	$	(2,389)
Net cash (used in) provided by financing activities	$	(4,561)	$	521

Operating

Cash provided by operating activities is expected to be our primary recurring source of funds. Cash provided by operating activities during the six months ended June 30, 2021, decreased primarily due to a difference in the timing of payments to tax authorities and the monetization of interest rate swaps in the prior year, partially offset by the timing of collections from customers, in part, as a result of the impact of the Otezla® acquisition in the prior year.

Investing

Cash provided by investing activities during the six months ended June 30, 2021, was primarily due to net cash inflows related to marketable securities of $2.9 billion, partially offset by the acquisition of Five Prime for $1.6 billion and capital expenditures of $351 million. Cash used in investing activities during the six months ended June 30, 2020, was primarily due to our $2.6 billion equity investment in BeiGene and capital expenditures of $300 million, partially offset by net cash inflows related to marketable securities of $607 million. We currently estimate 2021 spending on capital projects to be approximately $900 million.

Financing

Cash used in financing activities during the six months ended June 30, 2021, was primarily due to payments to repurchase our common stock of $2.5 billion and the payment of dividends of $2.0 billion. Cash provided by financing activities during the six months ended June 30, 2020, was primarily due to net proceeds from the issuance of debt of $9.0 billion, partially offset by the repayment of debt of $5.0 billion, the payment of dividends of $1.9 billion and payments to repurchase our common stock of $1.5 billion. See Note 9, Financing arrangements, and Note 10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

Critical accounting policies

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 is presented in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2020.


Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest rate sensitive financial instruments

To achieve a desired mix of fixed and floating interest rate debt, we entered into additional interest rate swap contracts with an aggregate notional amount of $1.5 billion during the three months ended June 30, 2021. As of June 30, 2021, an aggregate notional amount of $7.4 billion of interest rate swap contracts was outstanding. These interest rate swap contracts effectively converted a fixed interest rate coupon to a floating-rate LIBOR-based coupon over the life of the respective notes. A hypothetical 100 basis point increase in interest rates relative to interest rates at June 30, 2021, would have resulted in a reduction in fair value of approximately $390 million on our interest rate swap contracts on that date. The analysis for the interest rate swap contracts does not consider the impact that hypothetical changes in interest rates would have on the related fair value of debt that these interest-rate-sensitive instruments were designed to offset.


Item 4.			CONTROLS AND PROCEDURES

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

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

PART II — OTHER INFORMATION


Item 1.			LEGAL PROCEEDINGS

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


Item 1A.			RISK FACTORS

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

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

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

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

The novel coronavirus identified in late 2019, SARS-CoV-2, which causes the disease known as COVID-19, is an ongoing global pandemic that has resulted in public and governmental efforts to contain or slow the spread of the disease, including widespread shelter-in-place orders, social distancing interventions, quarantines, travel restrictions and various forms of operational shutdowns. The COVID-19 pandemic and the resulting measures implemented in response to the pandemic are adversely affecting, and are expected to continue to adversely affect, our business (including our R&D, clinical trials, operations, manufacturing, supply chains, distribution systems, product development and sales activities), the business activities of our suppliers, customers, third-party payers and our patients. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1A. Risk Factors—The COVID-19 pandemic, and the public and governmental effort to mitigate against the spread of the disease, have had, and are expected to continue to have, an adverse effect, and may have a material adverse effect, on our clinical trials, operations, supply chains, distribution systems, product development, product sales, business and results of operations; see also Our current products and products in development cannot be sold without regulatory approval; and see also We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications. Due to the pandemic and these measures and their effects, we have experienced, and expect to continue to experience, unpredictable reductions in demand for certain of our products, exacerbated by COVID-19 surges resulting in repeated shut-downs and/or disruptions in certain geographies.

Federal, state and local, and international governmental policies and initiatives designed to reduce the transmission of COVID-19 also have resulted in the cancellation or delay of diagnostic, elective, specialty and other procedures and appointments to avoid non-essential patient exposure to medical environments and potential infection with COVID-19 and to focus limited resources and personnel capacity toward the treatment of COVID-19. These measures and challenges will likely continue to varying degrees for the duration of the pandemic and have significantly reduced patient access to, and administration of, certain of our drugs. For example, Prolia® requires administration by a healthcare provider in doctors’ offices or other healthcare settings that are affected by COVID-19. The U.S. label for Prolia® instructs healthcare professionals who discontinue Prolia® to transition the patient to an alternative antiresorptive, including oral treatments that do not require administration by a healthcare provider. Further, as a result of COVID-19, oncology patients, in consultation with their doctors, may be selecting therapies that are less immunosuppressive or therapies that do not require administration in a hospital setting, potentially adversely affecting certain of our products. Also, new patients have been, and are expected to continue to be, less likely to be diagnosed and/or to start therapeutics during the pandemic, and these effects, together with the lower treatment rates

during the pandemic, have had, and are expected to continue to have, a cumulative negative effect on the commercial performance of our business. The decrease in diagnoses over the course of the pandemic has suppressed the volume of new patients starting treatment, which we expect to continue to impact our business during the second half of the year. Once the pandemic subsides, we anticipate there could be a backlog of patients seeking appointments with physicians relating to a variety of medical conditions, and as a result, patients seeking treatment with certain of our products may have to navigate lower provider capacity, and this lower provider capacity could have a continued adverse effect on our sales following the opening up of various geographies and/or the end of the pandemic. Further, the effects of the COVID-19 pandemic may result in long-term shifts in preferences among healthcare professionals and patients toward treatments that do not require administration by healthcare professionals or visits to medical facilities.

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

The COVID-19 pandemic and the volatile global economic conditions stemming from it may precipitate or amplify the other risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020, which could materially adversely affect our business, operations and financial conditions and results. For example, if a natural disaster or other potentially disruptive event occurs concurrently with the COVID-19 pandemic, such disaster or event could deplete our inventory levels and we could experience a disruption to our manufacturing or ability to supply our products. Further, the global pandemic has exacerbated geopolitical tensions, and some countries, such as China, may be especially vulnerable to such dynamics. If relations between the United States and China or other governments deteriorates, our business and investments in China or other such markets may also be adversely affected. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1A. Risk Factors—Our sales and operations are subject to the risks of doing business internationally, including in emerging markets.

The rapid development and fluidity of the pandemic preclude any prediction as to the ultimate effect of COVID-19 on us. The duration of the measures being taken by the authorities to mitigate against the spread of COVID-19 (including the distribution and/or availability of vaccines), and the extent to which such measures are effective, if at all, remain highly uncertain. The magnitude and degree of COVID-19’s adverse effect on our business (including our product development, product sales, operating results and resulting cash flows) and financial condition will be driven by the severity and duration of the pandemic, the pandemic’s effect on the United States and global economies and the timing, scope and effectiveness of federal, state, local and international governmental responses to the pandemic. If mitigation of the pandemic continues to require further shelter-in-place and shut-down orders and/or restrictions on individual and/or group conduct, any adverse effects of the COVID-19 pandemic will likely grow and could be enduring and our business and financial position could be materially

adversely affected.

A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation.

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

Our information technology systems are highly integrated into our business, including our R&D efforts, our clinical and commercial manufacturing processes and our product sales and distribution processes. Further, as the majority of our employees are working remotely, our reliance on our and third-party information technology systems has increased substantially and is expected to continue to increase. The complexity and interconnected nature of our systems makes them potentially vulnerable to breakdown or other service interruptions. Our systems are also subject to frequent cyberattacks. As the cyber-threat landscape evolves, these attacks are growing in frequency, sophistication and intensity and are becoming increasingly difficult to detect. Such attacks could include the use of harmful and virulent malware, including ransomware or other denials of service, that can be deployed through various means, including the software supply chain, e-mail, malicious websites and/or the use of social engineering. We have also experienced unsuccessful denial of service attacks against our network, and although such attacks did not succeed, there can be no assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful in the future. Attacks such as those experienced by governmental entities (including those that approve and/or regulate our products, such as the European Medicines Agency (EMA)) and other multi-national companies, including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and could have a material adverse effect on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing, selling and/or distributing our products. For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines and vaccines. As a result of the cyberattack, its orders and sales for certain products in certain markets were negatively affected. In December 2020, SolarWinds Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1A. Risk Factors—The COVID-19 pandemic, and the public and governmental effort to mitigate against the spread of the disease, have had, and are expected to continue to have, an adverse effect, and may have a material adverse effect, on our clinical trials, operations, supply chains, distribution systems, product development, product sales, business and results of operations for a discussion of the cyberattack on the EMA.

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

Domestic and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our partners with business services and companies we may acquire may face similar risks, and security breaches of their systems could adversely affect our security, leave us without access to important systems, products, raw materials, components, services or information or expose our confidential data or sensitive personal information. For example, in 2019, two vendors that perform testing and analytical services that we use in developing and manufacturing our products have experienced cyberattacks, and in April and September of 2020, vendors that provide us with information technology services and clinical data services, respectively, each experienced ransomware attacks. Although there was no breach of our systems,

each of these incidents required us to disconnect our systems from those vendors’ systems. While we were able to reconnect our systems following restoration of these vendor’s capabilities without significantly affecting product availability, a more extended service outage affecting these or other vendors, particularly where such vendor is the single source from which we obtain the services, could have a material adverse effect on our business or results of operations. In addition, we distribute our products in the United States primarily through three pharmaceutical wholesalers, and a security breach that impairs the distribution operations of our wholesalers could significantly impair our ability to deliver our products to healthcare providers and patients.

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

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

RISKS RELATED TO GOVERNMENT REGULATIONS AND THIRD-PARTY POLICIES

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

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

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

A substantial portion of our U.S. business relies on reimbursement from federal government healthcare programs and commercial insurance plans regulated by federal and state governments. See our Annual Report on Form 10-K for the year ended December 31, 2020, Part I, Item 1. Business—Reimbursement. Our business has been and will continue to be affected by legislative actions changing U.S. federal reimbursement policy. Congress has been focused on drug pricing reforms and oversight since 2018, and that activity continues today. For example, in 2020, Amgen participated in House Oversight and Reform Committee hearings on drug pricing practices. Additionally, in 2019 and 2020, a number of other Congressional committees debated drug pricing reform proposals. For example, in 2019, the Senate Finance Committee advanced a bill that would, among other things, penalize pharmaceutical manufacturers for raising prices on drugs covered by Medicare Parts B

and/or D faster than the rate of inflation, cap out-of-pocket expenses for Medicare Part D beneficiaries and require higher/additional manufacturer discounts in Medicare Part D. Additionally, in late 2019, a drug-pricing bill, H.R. 3, passed the House of Representatives, which would, among other things, enable direct price negotiations by the federal government on certain drugs (with the maximum price paid by Medicare capped by prices derived from an international index), includes a penalty for failing to reach agreement with the government and requires that manufacturers offer these negotiated prices to other payers. We expect H.R. 3 to again be debated by Congress in the coming months. Most recently, Congress passed the American Rescue Plan Act of 2021 to provide additional stimulus money and support for COVID relief. As part of that legislation, a provision that is expected to be implemented in 2024 was included that has the effect of increasing the Medicaid rebate liability for some medicines that increase prices in excess of inflation. There are other outstanding proposals that have been introduced by the prior Administration that, if enacted and implemented in whole or in part, could also affect access to and sales of our products, including, but not limited to, proposals to allow importation of prescription medications from Canada or other countries and to set Medicare payment rates using international price referencing. Further, in mid-2020, the prior Administration announced a number of Executive Orders intended to reduce the cost of biopharmaceuticals for patients, including a most favored nation (MFN) policy for Medicare Parts B and D, under which the Health & Human Services (HHS) was directed to take steps to implement payment models that set Medicare purchase prices based on the lowest price available in economically comparable countries for certain Part B and Part D medicines. In September 2020, in response to the corresponding Executive Order, HHS released a final rule to allow states (or other nonfederal government entities) to submit proposals to the FDA allowing for the importation of certain nonbiologic prescription drugs from Canada. Currently, the rule is being challenged by litigation, however, should such litigation be unsuccessful and should the Secretary of HHS authorize state proposals for importation, this rule could allow the importation of Canadian versions of certain of Amgen’s products (including Otezla®), that could have a material adverse effect on Amgen’s business. Further, in November 2020, also in response to the corresponding Executive Order, HHS released an interim final rule to implement the MFN pricing approach. If implemented, the MFN rule would set the reimbursement rate for 50 Medicare Part B drugs (including our products, such as Prolia®, XGEVA®, KYPROLIS®, Neulasta®, Nplate®, EPOGEN® and Aranesp®) equal to the lowest adjusted price for such products of the 22 OECD nations. Lawsuits have been filed by certain trade groups challenging the implementation of this MFN rule based on, among other things, procedural defects. Late in 2020, in the case filed by the Biotechnology Innovation Organization (BIO) and others, the U.S. District Court for the Northern District of California issued a preliminary injunction preventing the rule from taking effect nationwide, pending the government’s completion of required administrative procedures. The case was subsequently stayed by the court. On July 29, 2021, the court granted the parties’ request for the stay to remain in place and ordered the parties to file their joint status report by September 27, 2021. Another case, filed by the Pharmaceutical Research and Manufacturers of America and others in the U.S. District Court for the District of Maryland, was also stayed until either a final rule based on the MFN interim rule is published in the Federal Register, or until the court orders a lifting of the stay based on, among other things, the status of the nationwide preliminary injunction issued in the BIO case. Notwithstanding these stays, the MFN rule’s approach to drug pricing and other similar approaches, remain of interest. Further, despite the change in Administration, we expect continued significant focus on healthcare and similar drug pricing proposals for the foreseeable future, including proposals similar to the MFN rule or other proposals that would grant the HHS secretary the authority to negotiate drug prices directly with manufacturers.

Our business has been, and is expected to continue to be, affected by changes in U.S. federal reimbursement policy resulting from federal regulations and federal demonstration projects. Over the past three years, federal agencies, including the Centers for Medicare & Medicaid Services (CMS), announced a number of recommendations, policies, proposals and demonstration projects addressing drug pricing. CMS is the federal agency responsible for administering Medicare and overseeing state Medicaid programs and Health Insurance Marketplaces and has substantial power to implement policy changes or demonstration projects that can quickly and significantly affect how drugs, including our products, are covered and reimbursed. CMS issued guidance to allow certain Medicare plans offered by private insurance companies to require that patients receiving Medicare Part B drugs first try a drug preferred by the plan before covering another therapy (Step Therapy) and lowered reimbursement rates for new Medicare Part B drugs. Further, HHS issued a final rule under Medicare Part D revising the regulations under the federal antikickback statute to encourage Pharmacy Benefit Managers (PBMs) to use rebates received from biopharmaceutical manufacturers to reduce patient cost-sharing at the point of sale. While the implementation date for the rule is January 1, 2023, the rule remains subject to litigation, there are numerous logistical hurdles to overcome before it can be effectively implemented, and it is unclear how PBMs will respond and what the current Administration’s position is on such rule. Further, while the prior Administration finalized a rule (effective January 1, 2022) mandating price and cost-sharing transparency for almost all health plans and insurers in the individual and group commercial markets, it also is unclear how the current Administration views this rule and how plans and PBMs may respond when it goes into effect. Separately, the Administration is seeking information on how best to implement new reporting requirements relating to the cost of pharmacy benefits, including premiums for drug coverage, manufacturer rebates and the most utilized drugs under group health plans. Such reporting requirements begin no later than December 27, 2021. It is unclear how group health plans and health insurers may respond. The Administration also could develop and seek to advance a range of policy proposals that could impact U.S. federal reimbursement policy for drugs and biologics, including changes to Medicare Part B.

CMS policy changes and demonstration projects to test new care, delivery and payment models can significantly affect how drugs, including our products, are covered and reimbursed. In end-stage renal disease (ESRD), CMS uses bundled payment rates. Between 2018 and 2020, Sensipar® and Parsabiv®, our calcimimetics that are used in dialysis clinics, were eligible for temporary drug add-on payment adjustments (TDAPA) to the bundled rate. In November 2020, CMS released its final rule ending the TDAPA for calcimimetics and adjusting ESRD Prospective Payment System bundled rates on January 1, 2021 by $9.93 per dialysis treatment for calcimimetics. As a result, sales of Parsabiv® have been materially adversely affected by this rule change. Additionally, CMS created a new mandatory payment model, effective January 1, 2021, focused on encouraging greater use of home dialysis and kidney transplants for ESRD patients that could result in changes to treatment of dialysis patients, including reduction of the use of our ESAs. Further, in November 2019, CMS announced additional voluntary payment models for nephrologists and dialysis facility partners that also seek to encourage home dialysis and preemptive transplantation through increased risk sharing, but the start date of such programs has been pushed back to January 1, 2022. CMS has also solicited suggestions regarding other potential care models. In 2016, CMS initiated the Oncology Care Model demonstration, which provides participating physician practices with performance-based financial incentives that aim to manage or reduce Medicare costs without negatively affecting the efficacy of care, that has been extended by one year (to 2022) due to COVID-19. We believe the Oncology Care Model has reduced utilization of certain of our oncology products by participating physician practices and expect it to continue to do so in the future. Additionally, in late 2019, CMS announced a request for information on the Oncology Care First model, a new voluntary model that builds on the Oncology Care Model. CMS has indicated a continued interest in exploring demonstrations of mandatory models, and may propose both new mandatory payment models in the future that could adversely affect our business. CMS recently finalized a rule that, starting January 1, 2023, unless a manufacturer can ensure that the full amount of manufacturer patient assistance programs is passed on to the patient, such amount will be treated as a price reduction that will be taken into account when reporting our Best Price and/or Average Manufacturer Price. Given the use by PBMs and insurers of copay accumulator adjustment programs to apply such patient assistance for the benefit of such companies and not to defray costs to patients, it could be difficult to impossible for manufacturers to ensure that the full value of such amounts is being passed on to the patient. This new policy, if implemented, would have significant implications for our ability to offer copay assistance programs.

In this dynamic environment, particularly in light of the pressures on healthcare budgets as a result of the pandemic, we are unable to predict which or how many federal policy, legislative, regulatory, executive or administrative changes may ultimately be, or effectively estimate the consequences to our business if, enacted and implemented. However, to the extent that these or other federal government initiatives further decrease or modify the coverage or reimbursement available for our products, require that we pay increased rebates or shift other costs to us, limit or affect our decisions regarding the pricing of or otherwise reduce the use of our U.S. products, or limit our ability to offer co-pay payment assistance to commercial patients, such actions could have a material adverse effect on our business and results of operations.

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

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

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

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

process. See Note 4, Income taxes, to the condensed consolidated financial statements.

In addition, in 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015 also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010, 2011 and 2012. We disagree with the 2013, 2014 and 2015 proposed adjustments and calculations and are pursuing resolution with the IRS administrative appeals office. We are currently under examination by the IRS for the years 2016, 2017 and 2018. We are also currently under examination by a number of other state and foreign tax jurisdictions.

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

Our provision for income taxes and results of operations in the future could be adversely affected by changes to our operating structure, changes in the mix of income and expenses in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities and changes in applicable tax laws, regulations or administrative interpretations thereof. The Tax Cuts and Jobs Act (the 2017 Tax Act) is complex and a large volume of regulations and guidance has been issued and could be subject to different interpretations. We could face audit challenges to our application of the 2017 Tax Act. The Administration and Congress are considering significant changes to existing tax law, including an increase in the corporate tax rate and the tax rate on foreign earnings. These changes could substantially increase U.S. taxation of our operations both in and outside the United States, including the U.S. territory of Puerto Rico. Further, the OECD recently reached agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. If enacted, this agreement could result in tax increases in both the United States and foreign jurisdictions. Changes to existing tax law in the U.S., the U.S. territory of Puerto Rico, or other jurisdictions that would likely result in tax increases where we do business and could have a material adverse effect on the results of our operations.


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

During the three months ended June 30, 2021, we had one outstanding stock repurchase program, under which the repurchase activity was as follows:


Period	Total number of shares purchased	Average price paid per share (1)		Total number of shares purchased as part of publicly announced program	Maximum dollar value that may yet be purchased under the program(2)
April 1 - 30	1,912,921	$	244.13	1,912,921	$	5,044,280,273
May 1 - 31	2,425,697	$	248.21	2,425,697	$	4,442,191,440
June 1 - 30	2,180,367	$	239.80	2,180,367	$	3,919,349,391
Total	6,518,985	$	244.20	6,518,985

___________

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

(2) In March 2021, our Board of Directors increased the amount authorized under our stock repurchase program by an additional $3.4 billion.


Item 6.			EXHIBITS

Reference is made to the Index to Exhibits included herein.

INDEX TO EXHIBITS


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


4.12						Officers’ Certificate of Amgen Inc., dated March 12, 2010, including form of the Company’s 5.75% Senior Notes due 2040. (Filed as exhibit to Form 8-K on March 12, 2010 and incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

4.31						Officer’s Certificate of Amgen Inc., dated as of August 17, 2020, including forms of the Company’s 2.770% Senior Notes due 2053. (Filed as an exhibit to Form 8-K on August 18, 2020 and incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.15+						Amended and Restated Amgen Change of Control Severance Plan. (As Amended and Restated effective December 9, 2010 and subsequently amended effective March 2, 2011.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 on May 10, 2011 and incorporated herein by reference.)



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

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

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

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

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

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

10.22+						Agreement between Amgen Inc. and Murdo Gordon, dated July 25, 2018. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2018 on October 31, 2018 and incorporated herein by reference.)

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

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

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

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

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

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

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

10.30						Amendment to Collaboration Agreement, dated February 1, 1999, by and between Bayer Corporation and Onyx Pharmaceuticals, Inc. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2006 by Onyx Pharmaceuticals, Inc. on May 10, 2006 and incorporated herein by reference.)

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


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

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

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

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

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

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

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

10.39*						Amended and Restated Collaboration Agreement, dated June 2, 2021, by and between Amgen Inc. and Novartis Pharma AG (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed).

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

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

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

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

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

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

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


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

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

10.49*						License and Collaboration Agreement, dated June 1, 2021, by and between Amgen Inc. and Kyowa Kirin Co., Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed).

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

32**						Section 1350 Certifications.

101.INS						Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document.

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

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

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

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

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

____________________________

(* = filed herewith)

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

(+ = management contract or compensatory plan or arrangement)

SIGNATURES

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

Amgen Inc.

(Registrant)

Date:

August 3, 2021

By:

/S/ PETER H. GRIFFITH

Peter H. Griffith

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)