Bristol Myers Squibb Co 10-Q for FY2023 Q3
Bristol Myers Squibb Co (BMY)
10-Q
2023-10-26
For: 2023-09-30
View Original
Added on
April 02, 2026
About this 10-Q
Bristol Myers Squibb Co filed this 10-Q on October 26, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.97B
- down 2.2% from $11.22B a year earlier
- Net income
- $1.93B
- up 20.0% from net income of $1.61B a year earlier
- Diluted EPS
- $0.93
- up 24.0% from $0.75 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 001-01136
___________________________
(Exact name of registrant as specified in its charter)
___________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
(609 ) 252-4621
(Registrant’s telephone number, including area code)
___________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer ,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐ | ||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At October 20, 2023, there were 2,034,757,742 shares outstanding of the Registrant’s $0.10 par value common stock.
BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
September 30, 2023
| PART I—FINANCIAL INFORMATION | |||||
| Item 1. | |||||
| Item 2. | |||||
| Item 3. | |||||
| Item 4. | |||||
| PART II—OTHER INFORMATION | |||||
| Item 1. | |||||
| Item 1A. | |||||
| Item 2. | |||||
| Item 5. | |||||
| Item 6. | |||||
* Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index at the end of this Quarterly Report on Form 10-Q.
PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
Dollars in millions, except per share data
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| EARNINGS | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
| Alliance and other revenues | |||||||||||||||||||||||
| Total Revenues | |||||||||||||||||||||||
Cost of products sold(a) | |||||||||||||||||||||||
| Marketing, selling and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Acquired IPRD | |||||||||||||||||||||||
| Amortization of acquired intangible assets | |||||||||||||||||||||||
| Other (income)/expense, net | ( | ( | ( | ||||||||||||||||||||
| Total Expenses | |||||||||||||||||||||||
| Earnings before income taxes | |||||||||||||||||||||||
Income tax provision | |||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Noncontrolling interest | |||||||||||||||||||||||
| Net earnings attributable to BMS | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | |||||||||||||||||||||||
(a) Excludes amortization of acquired intangible assets .
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| COMPREHENSIVE INCOME | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income/(loss), net of taxes and reclassifications to earnings: | |||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges | ( | ||||||||||||||||||||||
| Pension and postretirement benefits | ( | ||||||||||||||||||||||
| Marketable debt securities | ( | ( | ( | ||||||||||||||||||||
| Foreign currency translation | ( | ( | ( | ||||||||||||||||||||
| Total Other comprehensive income/(loss) | ( | ||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income attributable to BMS | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in millions
(UNAUDITED)
| ASSETS | September 30, 2023 | December 31, 2022 | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable debt securities | |||||||||||
| Receivables | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total Current assets | |||||||||||
| Property, plant and equipment | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Deferred income taxes | |||||||||||
Marketable debt securities | |||||||||||
| Other non-current assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt obligations | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Other current liabilities | |||||||||||
| Total Current liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Long-term debt | |||||||||||
| Other non-current liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| EQUITY | |||||||||||
| BMS Shareholders’ equity: | |||||||||||
| Preferred stock | |||||||||||
| Common stock | |||||||||||
| Capital in excess of par value of stock | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Less cost of treasury stock | ( | ( | |||||||||
| Total BMS Shareholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total Equity | |||||||||||
| Total Liabilities and Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(UNAUDITED)
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash Flows From Operating Activities: | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization, net | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Impairment charges | |||||||||||
| Divestiture gains and royalties | ( | ( | |||||||||
| Acquired IPRD | |||||||||||
| Equity investment losses | |||||||||||
| Other adjustments | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Receivables | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Rebates and discounts | |||||||||||
| Income taxes payable | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows From Investing Activities: | |||||||||||
| Sale and maturities of marketable debt securities | |||||||||||
| Purchase of marketable debt securities | ( | ( | |||||||||
| Proceeds from sales of equity investments | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Divestiture and other proceeds | |||||||||||
| Acquisition and other payments, net of cash acquired | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows From Financing Activities: | |||||||||||
| Short-term debt obligations, net | |||||||||||
| Issuance of long-term debt | |||||||||||
| Repayment of long-term debt | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Dividends | ( | ( | |||||||||
| Stock option proceeds and other, net | |||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS
Basis of Consolidation
Bristol-Myers Squibb Company ("BMS", "we", "our", "us" or "the Company") prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position of the Company as of September 30, 2023 and December 31, 2022, the results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. All intercompany balances and transactions have been eliminated. These consolidated financial statements and the related footnotes should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2022 included in the 2022 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.
Business Segment Information
BMS operates in a single segment engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative medicines that help patients prevail over serious diseases. A global research and development organization and supply chain organization are responsible for the discovery, development, manufacturing and supply of products. Regional commercial organizations market, distribute and sell the products. The business is also supported by global corporate staff functions. Consistent with BMS's operational structure, the Chief Executive Officer ("CEO"), as the chief operating decision maker, manages and allocates resources at the global corporate level. Managing and allocating resources at the global corporate level enables the CEO to assess both the overall level of resources available and how to best deploy these resources across functions, therapeutic areas, regional commercial organizations and research and development projects in line with our overarching long-term corporate-wide strategic goals, rather than on a product or franchise basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CEO for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional revenue, see "—Note 2. Revenue".
Use of Estimates and Judgments
Revenues, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results and trends in these unaudited consolidated financial statements may not be indicative of full year operating results. The preparation of financial statements requires the use of management estimates, judgments and assumptions. The most significant assumptions are estimates used in determining accounting for acquisitions; impairments of intangible assets; charge-backs, cash discounts, sales rebates, returns and other adjustments; legal contingencies; and income taxes. Actual results may differ from estimates.
Reclassifications
Certain reclassifications were made to conform the prior period consolidated financial statements to the current period presentation.
Recently Adopted Accounting Standards
Fair Value Measurements
In June 2022, the FASB issued amended guidance on measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendment requires the following disclosures for equity securities subject to contractual sale restrictions: the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; the nature and remaining duration of the restriction(s); and the circumstances that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early adoption is permitted. The guidance was adopted on January 1, 2023 and the adoption did not have an impact on our consolidated financial statements.
6
Business Combinations
In October 2021, the FASB issued amended guidance on accounting for contract assets and contract liabilities from contracts with customers in a business combination. The guidance is intended to address inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized. At the acquisition date, an entity should account for the related revenue contracts in accordance with existing revenue recognition guidance generally by assessing how the acquiree applied recognition and measurement in their financial statements. The guidance was adopted on January 1, 2023 and the adoption did not have an impact on our consolidated financial statements.
Note 2. REVENUE
The following table summarizes the disaggregation of revenue by nature:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
| Alliance revenues | |||||||||||||||||||||||
| Other revenues | |||||||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||
The following table summarizes GTN adjustments:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Gross product sales | $ | $ | $ | $ | |||||||||||||||||||
GTN adjustments (a) | |||||||||||||||||||||||
| Charge-backs and cash discounts | ( | ( | ( | ( | |||||||||||||||||||
| Medicaid and Medicare rebates | ( | ( | ( | ( | |||||||||||||||||||
| Other rebates, returns, discounts and adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Total GTN adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
(a) Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $18 million and $116 million for the three and nine months ended September 30, 2023 and $10 million and $207 million for the three and nine months ended September 30, 2022, respectively.
7
The following table summarizes the disaggregation of revenue by product and region:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| In-Line Products | |||||||||||||||||||||||
| Eliquis | $ | $ | |||||||||||||||||||||
| Opdivo | |||||||||||||||||||||||
| Pomalyst/Imnovid | |||||||||||||||||||||||
| Orencia | |||||||||||||||||||||||
| Sprycel | |||||||||||||||||||||||
| Yervoy | |||||||||||||||||||||||
| Mature and other products | |||||||||||||||||||||||
| Total In-Line Products | |||||||||||||||||||||||
| New Product Portfolio | |||||||||||||||||||||||
| Reblozyl | |||||||||||||||||||||||
| Abecma | |||||||||||||||||||||||
| Opdualag | |||||||||||||||||||||||
| Zeposia | |||||||||||||||||||||||
| Breyanzi | |||||||||||||||||||||||
| Onureg | |||||||||||||||||||||||
| Inrebic | |||||||||||||||||||||||
| Camzyos | |||||||||||||||||||||||
| Sotyktu | |||||||||||||||||||||||
| Total New Product Portfolio | |||||||||||||||||||||||
| Total In-Line Products and New Product Portfolio | |||||||||||||||||||||||
Recent LOE Products(a) | |||||||||||||||||||||||
| Revlimid | |||||||||||||||||||||||
| Abraxane | |||||||||||||||||||||||
| Total Recent LOE Products | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| International | |||||||||||||||||||||||
Other(b) | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
(a) Recent LOE Products include products with significant decline in revenue from the prior reporting period as a result of a loss of exclusivity.
(b) Other revenues include royalties and alliance-related revenues for products not sold by BMS's regional commercial organizations.
Revenue recognized from performance obligations satisfied in prior periods was $114 million and $355 million for the three and nine months ended September 30, 2023 and $119 million and $450 million for the three and nine months ended September 30, 2022, respectively, consisting primarily of royalties for out-licensing arrangements and revised estimates for GTN adjustments related to prior period sales.
Note 3. ALLIANCES
BMS enters into collaboration arrangements with third parties for the development and commercialization of certain products. Although each of these arrangements is unique in nature, both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. BMS refers to these collaborations as alliances and its partners as alliance partners.
8
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Revenues from alliances | |||||||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
| Alliance revenues | |||||||||||||||||||||||
| Total alliance revenues | $ | $ | $ | $ | |||||||||||||||||||
| To/(from) alliance partners | |||||||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | |||||||||||||||||||
| Marketing, selling and administrative | ( | ( | ( | ( | |||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Acquired IPRD | |||||||||||||||||||||||
| Other (income)/expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Selected alliance balance sheet information | |||||||||||
| Receivables – from alliance partners | $ | $ | |||||||||
| Accounts payable – to alliance partners | |||||||||||
Deferred income – from alliances(a) | |||||||||||
The nature, purpose, significant rights and obligations of the parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 2022 Form 10-K. Significant developments and updates related to alliances during the nine months ended September 30, 2023 and 2022 are set forth below.
BridgeBio
During the second quarter of 2022, BMS and BridgeBio commenced a collaboration to develop and commercialize BBP-398, a SHP2 inhibitor, in oncology. The transaction included an upfront payment of $90 million expensed to Acquired IPRD during the second quarter of 2022. BridgeBio is eligible to receive contingent development, regulatory and sales-based milestones up to $815 million, as well as royalties on global net sales, excluding certain markets. BridgeBio is responsible for funding and completing ongoing BBP-398 Phase I monotherapy and combination therapy trials. BMS is responsible for leading and funding all other development and commercial activities. BridgeBio has an option to co-develop BBP-398 and receive higher royalties in the U.S.
Note 4. ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS
Acquisitions
Mirati
In October 2023, BMS entered into a definitive merger agreement to acquire Mirati, a commercial stage targeted oncology company with a pipeline of clinical and commercial oncology medicines. The acquisition will provide BMS with rights to Krazati* (adagrasib) and MRTX1719, among other assets. Krazati* is a best-in-class inhibitor of KRASG12C mutation, which was approved by the FDA as a second-line treatment for patients with NSCLC and is in clinical development in combination with a PD-1 inhibitor as a first-line therapy for patients with NSCLC, as well as in other indications. MRTX1719, is a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase 1 development. BMS also will gain access to several other promising clinical and pre-clinical stage assets, including additional KRAS inhibitors and enabling programs.
BMS will acquire all of the issued and outstanding shares of Mirati's common stock for $58.00 per share in an all-cash transaction for a total consideration of $4.8 billion, including cash settlements of equity stock awards. Mirati shareholders will also receive one non-tradeable contingent value right for each share of Mirati common stock held, potentially worth $12.00 per share in cash for a total value of approximately $1.0 billion. The payout of the contingent value right is subject to the FDA acceptance of an NDA for MRTX1719 for the treatment of specific indications within seven years of the closing of the transaction. The transaction is expected to be accounted for as a business combination and is anticipated to close by the first half of 2024, subject to fulfillment of customary closing conditions, including approval of Mirati's shareholders and receipt of required regulatory approvals. The acquisition will be funded through a combination of cash-on-hand and debt proceeds.
9
Turning Point
In the third quarter of 2022, BMS acquired Turning Point for $4.1 billion of cash (or $3.3 billion net of cash acquired). Turning Point was a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the common mutations and alterations that drive cancer growth. The acquisition provided BMS rights to Turning Point's lead asset, repotrectinib, and other clinical and pre-clinical stage assets.
Divestitures
The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Net Proceeds | Divestiture (Gains)/Losses | Royalty Income | |||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
Diabetes business - royalties | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Mature products and other | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | ( | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Net Proceeds | Divestiture (Gains)/Losses | Royalty Income | |||||||||||||||||||||||||||||||||
| Dollars in Millions | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
| Diabetes business - royalties | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||
Mature products and other (a) | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||
(a) Includes cash proceeds of $221 million and a divestiture gain of $211 million related to the sale of several mature products to Cheplapharm in the first quarter of 2022.
Mature Products and Other
Manufacturing Operations
During the second quarter of 2022, BMS agreed to sell its manufacturing facility in Syracuse, New York to LOTTE Corporation and accounted for the business as held-for-sale resulting in a $43 million impairment charge recorded to Cost of products sold. Assets and liabilities reclassified to held-for-sale were included within Other current assets and Other current liabilities and were $172 million and $20 million, respectively, as of December 31, 2022. In January 2023, BMS completed the sale resulting in cash proceeds of $159 million, which was received in December 2022.
Licensing and Other Arrangements
The following table summarizes the financial impact of Keytruda* royalties, Tecentriq* royalties, upfront licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Keytruda* royalties | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Tecentriq* royalties | ( | ( | ( | ( | |||||||||||||||||||
| Contingent milestone income | ( | ( | |||||||||||||||||||||
| Amortization of deferred income | ( | ( | ( | ( | |||||||||||||||||||
| Biohaven sublicense income | ( | ( | |||||||||||||||||||||
| Other royalties and licensing income | ( | ( | ( | ( | |||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
10
LianBio
During October 2023, BMS reacquired the rights for mavacamten in China and certain other Asian territories from LianBio for $350 million in cash. The cost for the reacquired rights will be reflected in Acquired IPRD during the fourth quarter of 2023 as mavacamten is currently in development and not approved for commercial use in China.
Keytruda* Patent License Agreement
In 2017, BMS and Ono entered a global patent license agreement with Merck related to Merck's PD-1 antibody Keytruda*. In accordance with the agreement, Merck is obligated to pay ongoing royalties on global sales of Keytruda* of 6.5 % from January 1, 2017 through December 31, 2023, and 2.5 % from January 1, 2024 through December 31, 2026. The companies also granted certain rights to each other under their respective patent portfolios pertaining to PD-1. Payments and royalties are shared between BMS and Ono on a 75 /25 percent allocation, respectively after adjusting for each party's legal fees.
Immatics
During the first quarter of 2022, BMS obtained a global exclusive license to Immatics' TCR bispecific IMA401 program, which is being studied in oncology. BMS and Immatics collaborate on the development and BMS will be responsible for the commercialization of IMA401 worldwide, including strategic decisions, regulatory responsibilities, funding and manufacturing. Immatics has the option to co-fund U.S. development in exchange for enhanced U.S. royalty payments and/or to co-promote IMA401 in the U.S. The transaction included an upfront payment of $150 million which was expensed to Acquired IPRD in the first quarter of 2022. Immatics is eligible to receive contingent development, regulatory and sales-based milestones of up to $770 million as well as royalties on global net sales.
Dragonfly
During the first quarter of 2022, a Phase I development milestone for interleukin-12 ("IL-12") was achieved resulting in a $175 million payment to Dragonfly and an Acquired IPRD charge. During the first quarter of 2023, BMS notified Dragonfly of its termination of the global exclusive license related to Dragonfly’s IL-12. All rights to IL-12 were reverted back to Dragonfly effective April 2023.
Other
Nimbus Change of Control Income
During the first quarter of 2022, BMS and Nimbus Therapeutics ("Nimbus") entered into a settlement resolving all legal claims and business interests pertaining to Nimbus' TYK2 inhibitor resulting in $40 million of income included in Other (income)/expense. The settlement also provides for BMS to receive additional amounts for contingent development, regulatory approval and sales-based milestones and 10 % of any change in control proceeds received by Nimbus related to its TYK2 inhibitor. In February 2023, Takeda acquired 100 % ownership of Nimbus' TYK2 inhibitor for approximately $4.0 billion in upfront proceeds plus contingent sales-based milestones aggregating up to $2.0 billion. As a result, $400 million of income related to the change of control provision was included in Other (income)/expense during the first quarter of 2023.
Royalty Extinguishment
During the second quarter of 2022, BMS amended the terms of a license arrangement and paid a third party $295 million, which was expensed to Acquired IPRD, to extinguish a future royalty obligation related to mavacamten prior to its FDA approval in April 2022.
11
Note 5. OTHER (INCOME)/EXPENSE, NET
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Interest expense (Note 10) | $ | $ | $ | $ | |||||||||||||||||||
| Royalty and licensing income (Note 4) | ( | ( | ( | ( | |||||||||||||||||||
| Royalty income - divestiture (Note 4) | ( | ( | ( | ( | |||||||||||||||||||
| Equity investment losses (Note 9) | |||||||||||||||||||||||
| Integration expenses (Note 6) | |||||||||||||||||||||||
| Loss on debt redemption (Note 10) | |||||||||||||||||||||||
| Divestiture gains (Note 4) | ( | ||||||||||||||||||||||
Litigation and other settlements | ( | ( | |||||||||||||||||||||
| Investment income | ( | ( | ( | ( | |||||||||||||||||||
| Provision for restructuring (Note 6) | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Other (income)/expense, net | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
Litigation and Other Settlements
BeiGene Settlement
In August 2023, BMS and BeiGene, Ltd. ("BeiGene") entered into an agreement that settled all on-going disputes and claims between the parties, including those related to the Abraxane license and supply agreements and related arbitration proceedings as further described in "—Note 18. Legal Proceedings and Contingencies".
The agreement also provided for the termination of all contractual relationships between the parties, including the license and supply arrangements pertaining to Revlimid and Vidaza effective as of December 31, 2023, subject to BeiGene’s right to continue to sell all remaining inventory beyond that date. In consideration for the above, BMS agreed to transfer 23.3 million of BeiGene ordinary shares of common stock held under a share subscription agreement back to BeiGene resulting in $322 million of expense that was included in Other (income)/expense, net during the three months ended September 30, 2023. The expense was determined based on the closing price of the shares on the date of the transfer. In addition, the remaining BeiGene ordinary shares owned by BMS under the share subscription agreement were converted to American Depository Shares, which were subsequently sold during the three months ended September 30, 2023.
AstraZeneca Settlement
In July 2023, BMS entered into an agreement with AZ to settle all outstanding claims between the parties in the CTLA-4 litigation and the two PD-L1 antibody litigations, as further described in "—Note 18. Legal Proceedings and Contingencies". AZ will pay an aggregate of $560 million to BMS in four payments through September 2026, which will be subject to sharing arrangements with Ono and Dana-Farber. BMS's share is approximately $418 million, of which the net present value of $384 million was reflected in Other (income)/expense during the three months ended September 30, 2023.
Nimbus Change of Control Income
During the nine months ended September 30, 2023, $400 million of income was recorded in Other (income)/expense in connection with Nimbus' TYK2 program change of control provision. Refer to "—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for further information.
Note 6. RESTRUCTURING
2023 Restructuring Plan
In 2023, BMS commenced a restructuring plan to accelerate the delivery of medicines to patients by evolving and streamlining its enterprise operating model in key areas, such as R&D, manufacturing, commercial and other functions, to ensure its operating model supports and is appropriately aligned with the Company’s strategy to invest in key priorities. These changes primarily include (i) transforming R&D operations to accelerate pipeline delivery (ii) enhancing our commercial operating model, and (iii) establishing a more responsive manufacturing network and expansion of cell therapy manufacturing capabilities. Charges of approximately $1.0 billion are expected to be incurred through 2025, consisting primarily of employee termination costs and to a lesser extent site exit costs, including impairment and accelerated depreciation of property, plant and equipment.
12
Celgene and Other Acquisition Plans
Restructuring and integration plans were initiated to realize expected cost synergies resulting from cost savings and avoidance from the acquisition of Celgene (2019), MyoKardia (2020) and Turning Point (2022). As part of these plans, the Company expects to incur charges of approximately $3.8 billion. Cumulative charges of approximately $3.5 billion have been recognized to date including integration planning and execution expenses, employee termination benefit costs and accelerated stock-based compensation, contract termination costs and other shutdown costs associated with site exits. The remaining charges related to the acquisition of Celgene are primarily related to IT system integration which are expected to be incurred through 2024.
The following provides the charges related to restructuring initiatives by type of cost:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| 2023 Restructuring Plan | $ | $ | $ | $ | |||||||||||||||||||
| Celgene and Other Acquisition Plans | |||||||||||||||||||||||
| Total charges | $ | $ | $ | $ | |||||||||||||||||||
| Employee termination costs | $ | $ | $ | $ | |||||||||||||||||||
| Other termination costs | |||||||||||||||||||||||
| Provision for restructuring | |||||||||||||||||||||||
| Integration expenses | |||||||||||||||||||||||
| Accelerated depreciation | |||||||||||||||||||||||
Asset impairments (a) | |||||||||||||||||||||||
| Total charges | $ | $ | $ | $ | |||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | |||||||||||||||||||
| Marketing, selling and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Other (income)/expense, net | |||||||||||||||||||||||
| Total charges | $ | $ | $ | $ | |||||||||||||||||||
(a) Includes $65 million impairment charge for a facility lease that commenced during the three months ended September 2023.
The following summarizes the charges and spending related to restructuring plan activities:
| Nine Months Ended September 30, | |||||||||||
| Dollars in millions | 2023 | 2022 | |||||||||
| Beginning balance | $ | $ | |||||||||
Provision for restructuring(a) | |||||||||||
| Foreign currency translation and other | ( | ( | |||||||||
| Payments | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
Note 7. INCOME TAXES
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Earnings before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Effective tax rate | % | % | % | % | |||||||||||||||||||
13
Provision for income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The reduction in the effective tax rate during the three months ended September 30, 2023 was primarily due to recently issued Section 174 guidance regarding deductibility of certain non-U.S. research and development expenses. The revised guidance resulted in a reduction of previously estimated income taxes attributed to 2022 which was reflected in the current quarter as well as a reduction in the estimated annual effective rates for 2023. Previously estimated income taxes for 2022 were reduced by approximately $240 million upon finalization of the U.S. Federal tax return primarily due to the aforementioned revised Section 174 guidance that was issued during the third quarter of 2023. In addition, the effective tax rate during the first nine months of 2023 was impacted by a $656 million deferred income tax benefit following the receipt of a non-U.S. tax ruling regarding the deductibility of a statutory impairment of subsidiary investments, jurisdictional earnings mix resulting from amortization of acquired intangible assets, equity investment losses, litigation and other settlements, as well as releases of income tax reserves of $89 million related to the resolution of Celgene's 2009-2011 IRS audits, partially offset by the impact of changes in the Puerto Rico tax decree that eliminated a previously creditable excise tax. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code. Income tax payments were $4.1 billion and $3.9 billion for the nine months ended September 30, 2023 and 2022, respectively.
BMS is currently under examination by a number of tax authorities that proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax issues for the 2008 to 2012 tax years. BMS disagrees with the IRS's positions and continues to work cooperatively with the IRS to resolve these issues. In the fourth quarter of 2022, BMS entered the IRS administrative appeals process to resolve these matters. Timing of the final resolution of these complex matters is uncertain and could have a material impact on BMS's consolidated financial statements.
It is reasonably possible that the amount of unrecognized tax benefits as of September 30, 2023 could decrease in the range of approximately $40 million to $60 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits.
It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits, however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by jurisdiction.
Note 8. EARNINGS PER SHARE
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net earnings attributable to BMS | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average common shares outstanding – basic | |||||||||||||||||||||||
| Incremental shares attributable to share-based compensation plans | |||||||||||||||||||||||
| Weighted-average common shares outstanding – diluted | |||||||||||||||||||||||
| Earnings per common share | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The total number of potential shares of common stock excluded from the diluted earnings per common share computation because of the antidilutive impact was not material for the three and nine months ended September 30, 2023 and 2022.
14
Note 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
| September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
| Dollars in millions | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||||||||
| Money market and other securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Marketable debt securities | |||||||||||||||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | |||||||||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||||||||
| Equity investments | |||||||||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||||||||
| Contingent consideration liability | |||||||||||||||||||||||||||||||||||
| Contingent value rights | |||||||||||||||||||||||||||||||||||
| Other acquisition related contingent consideration | |||||||||||||||||||||||||||||||||||
As further described in "Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements" in the Company's 2022 Form 10-K, the Company's fair value estimates use inputs that are either (1) quoted prices for identical assets or liabilities in active markets (Level 1 inputs); (2) observable prices for similar assets or liabilities in active markets or for identical or similar assets or liabilities in markets that are not active (Level 2 inputs); or (3) unobservable inputs (Level 3 inputs). The fair value of Level 2 equity investments is adjusted for characteristics specific to the security and is not adjusted for contractual sale restrictions. Equity investments subject to contractual sale restrictions were not material as of December 31, 2022 and the restrictions expired in April 2023.
Marketable Debt Securities
The following table summarizes marketable debt securities:
| September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | Amortized Cost | Gross Unrealized | Amortized Cost | Gross Unrealized | |||||||||||||||||||||||||||||||||||||||||||
| Gains | Losses | Fair Value | Gains | Losses | Fair Value | ||||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | |||||||||||||||||||||||||||||||||||||||||||||||
Total marketable debt securities(a) | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
15
Equity Investments
The following summarizes the carrying amount of equity investments:
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Equity investments with readily determinable fair values | $ | $ | |||||||||
| Equity investments without readily determinable fair values | |||||||||||
| Limited partnerships and other equity method investments | |||||||||||
| Total equity investments | $ | $ | |||||||||
The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Equity investments with readily determinable fair values | |||||||||||||||||||||||
| Net loss recognized | |||||||||||||||||||||||
Less: net (gain) loss recognized on investments sold | ( | ( | ( | ||||||||||||||||||||
| Net unrealized loss recognized on investments still held | |||||||||||||||||||||||
| Equity investments without readily determinable fair values | |||||||||||||||||||||||
| Upward adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Impairments and downward adjustments | |||||||||||||||||||||||
Equity in net (income)/loss of affiliates | ( | ||||||||||||||||||||||
| Total equity investment losses | |||||||||||||||||||||||
Cumulative upwards adjustments and cumulative impairments and downward adjustments based on observable price changes in equity investments without readily determinable fair values still held as of September 30, 2023 were $189 million and $67 million, respectively.
Qualifying Hedges and Non-Qualifying Derivatives
Cash Flow Hedges
BMS enters into foreign currency forward and purchased local currency put option contracts (foreign exchange contracts) to hedge certain forecasted intercompany inventory sales and certain other foreign currency transactions. The objective of these foreign exchange contracts is to reduce variability caused by changes in foreign exchange rates that would affect the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro and Japanese yen. The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the consolidated balance sheets. Changes in fair value for these foreign exchange contracts, which are designated as cash flow hedges, are temporarily recorded in Accumulated other comprehensive loss ("AOCL") and reclassified to net earnings when the hedged item affects earnings (typically within the next 24 months). As of September 30, 2023, assuming market rates remain constant through contract maturities, we expect to reclassify pre-tax gains of $179 million into Cost of products sold for our foreign exchange contracts out of AOCL during the next 12 months. The notional amount of outstanding foreign currency exchange contracts was primarily $5.0 billion for the euro contracts and $1.1 billion for Japanese yen contracts as of September 30, 2023.
16
BMS also enters into cross-currency swap contracts to hedge exposure to foreign currency exchange rate risk associated with its long-term debt denominated in euros. These contracts convert interest payments and principal repayment of the long-term debt to U.S. dollars from euros and are designated as cash flow hedges. The unrealized gains and losses on these contracts are reported in AOCL and reclassified to Other (income)/expense, net, in the same periods during which the hedged debt affects earnings. The notional amount of cross-currency swap contracts associated with long-term debt denominated in euros was $1.2 billion as of September 30, 2023.
Cash flow hedge accounting is discontinued when the forecasted transaction is no longer probable of occurring within 60 days after the originally forecasted date or when the hedge is no longer effective. Assessments to determine whether derivatives designated as qualifying hedges are highly effective in offsetting changes in the cash flows of hedged items are performed at inception and on a quarterly basis. The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not material during all periods presented. Foreign currency exchange contracts not designated as a cash flow hedge offset exposures in certain foreign currency denominated assets, liabilities and earnings. Changes in the fair value of these derivatives are recognized in earnings as they occur.
Net Investment Hedges
Cross-currency swap contracts and foreign currency forward contracts of $1.8 billion as of September 30, 2023 are designated to hedge currency exposure of BMS's net investment in its foreign subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of AOCL with a related offset in derivative asset or liability in the consolidated balance sheets. The notional amount of outstanding cross-currency swap and foreign currency forward contracts was primarily attributed to the Japanese yen of $650 million and euro of $794 million as of September 30, 2023.
During the first quarter of 2023, the Company de-designated its remaining net investment hedge in debt denominated in euros of €375 million. The related net investment hedge was entered into to hedge euro currency exposures of the net investment in certain foreign affiliates and was recognized in Long-term debt. The effective portion of foreign exchange gain or loss on the remeasurement of debt denominated in euros was included in the foreign currency translation component of AOCL with the related offset in Long-term debt.
During the three and nine months ended September 30, 2023, the amortization of gains related to the portion of our net investment hedges that was excluded from the assessment of effectiveness was not material.
Fair Value Hedges
Fixed to floating interest rate swap contracts are designated as fair value hedges and used as an interest rate risk management strategy to create an appropriate balance of fixed and floating rate debt. The contracts and underlying debt for the hedged benchmark risk are recorded at fair value. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to align with the debt being hedged, all changes in fair value of the swap are recorded in interest expense with an associated offset to the derivative asset or liability in the consolidated balance sheets. As a result, there was no net impact in earnings. If the underlying swap is terminated prior to maturity, then the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.
Derivative cash flows, with the exception of net investment hedges, are principally classified in the operating section of the consolidated statements of cash flows, consistent with the underlying hedged item. Cash flows related to net investment hedges are classified in investing activities.
17
The following table summarizes the fair value and the notional values of outstanding derivatives:
| September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Asset(a) | Liability(b) | Asset(a) | Liability(b) | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | Notional | Fair Value | Notional | Fair Value | Notional | Fair Value | Notional | Fair Value | |||||||||||||||||||||||||||||||||||||||
| Designated as cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | $ | $ | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
| Cross-currency swap contracts | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Designated as net investment hedges | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross-currency swap contracts | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Designated as fair value hedges | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swap contracts | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Not designated as hedges | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency exchange contracts | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Total return swap contracts (c) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
(a) Included in Other current assets and Other non-current assets.
(b) Included in Other current liabilities and Other non-current liabilities.
(c) Total return swap contracts hedge changes in fair value of certain deferred compensation liabilities.
18
The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedges:
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||||||||||||||
| Dollars in millions | Cost of products sold | Other (income)/expense, net | Cost of products sold | Other (income)/expense, net | |||||||||||||||||||
| Foreign currency exchange contracts | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Cross-currency swap contracts | ( | ||||||||||||||||||||||
| Interest rate swap contracts | ( | ||||||||||||||||||||||
| Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||
| Dollars in millions | Cost of products sold | Other (income)/expense, net | Cost of products sold | Other (income)/expense, net | |||||||||||||||||||
| Foreign currency exchange contracts | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Cross-currency swap contracts | |||||||||||||||||||||||
| Interest rate swap contracts | ( | ( | |||||||||||||||||||||
The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Derivatives designated as cash flow hedges | |||||||||||||||||||||||
| Foreign exchange contracts gain/(loss): | |||||||||||||||||||||||
| Recognized in Other comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| Reclassified to Cost of products sold | ( | ( | ( | ( | |||||||||||||||||||
| Cross-currency swap contracts gain/(loss): | |||||||||||||||||||||||
| Recognized in Other comprehensive income | ( | ( | ( | ||||||||||||||||||||
| Reclassified to Other (income)/expense, net | |||||||||||||||||||||||
| Forward starting interest rate swap contract loss: | |||||||||||||||||||||||
| Reclassified to Other (income)/expense, net | ( | ||||||||||||||||||||||
| Derivatives designated as net investment hedges | |||||||||||||||||||||||
| Cross-currency swap contracts gain/(loss): | |||||||||||||||||||||||
| Recognized in Other comprehensive income | |||||||||||||||||||||||
| Foreign exchange contracts gain/(loss): | |||||||||||||||||||||||
| Recognized in Other comprehensive income | |||||||||||||||||||||||
| Non-derivatives designated as net investment hedges | |||||||||||||||||||||||
Non-U.S. dollar borrowings gain/(loss): | |||||||||||||||||||||||
| Recognized in Other comprehensive income | ( | ||||||||||||||||||||||
Note 10. FINANCING ARRANGEMENTS
Short-term debt obligations include:
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Non-U.S. short-term debt obligations | $ | $ | |||||||||
| Current portion of Long-term debt | |||||||||||
| Other | |||||||||||
| Total | $ | $ | |||||||||
19
Long-term debt and the current portion of Long-term debt include:
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Principal value | $ | $ | |||||||||
| Adjustments to principal value: | |||||||||||
| Fair value of interest rate swap contracts | ( | ( | |||||||||
| Unamortized basis adjustment from swap terminations | |||||||||||
| Unamortized bond discounts and issuance costs | ( | ( | |||||||||
| Unamortized purchase price adjustments of Celgene debt | |||||||||||
| Total | $ | $ | |||||||||
| Current portion of Long-term debt | $ | $ | |||||||||
| Long-term debt | |||||||||||
| Total | $ | $ | |||||||||
The fair value of Long-term debt was $31.7 billion as of September 30, 2023 and $34.9 billion as of December 31, 2022 valued using Level 2 inputs, which are based upon the quoted market prices for the same or similar debt instruments. The fair value of Short-term debt obligations approximates the carrying value due to the short maturities of the debt instruments.
During the nine months ended September 30, 2023, $1.9 billion of debt matured and was repaid including $750 million 2.750 % Notes, $890 million 3.250 % Notes and $239 million 7.150 % Notes.
During the nine months ended September 30, 2022, $4.8 billion of debt matured and was repaid including $1.5 billion 2.600 % Notes, $500 million Floating Rate Notes, $750 million 2.000 % Notes, $1.0 billion 3.250 % Notes and $1.0 billion 3.550 % Notes.
During the nine months ended September 30, 2022, BMS issued an aggregate principal amount of $6.0 billion of debt with net proceeds of $5.9 billion. The notes rank equally in right of payment with all of BMS's existing and future senior unsecured indebtedness and are redeemable at any time, in whole, or in part, at varying specified redemption prices plus accrued and unpaid interest. In addition, BMS purchased an aggregate principal amount of $6.0 billion of certain of its debt securities for $6.6 billion of cash in tender offers and "make-whole" redemptions. In connection with these transactions, a $266 million net loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net.
Interest payments were $932 million and $1.1 billion for the nine months ended September 30, 2023 and 2022, respectively, net of amounts related to interest rate swap contracts.
Credit Facilities
As of September 30, 2023, BMS had a five-year $5.0 billion revolving credit facility expiring in January 2028, which is extendable annually by one year with the consent of the lenders. This facility provides for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for our commercial paper borrowings. No
Note 11. RECEIVABLES
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Trade receivables | $ | $ | |||||||||
| Less: charge-backs and cash discounts | ( | ( | |||||||||
| Less: allowance for expected credit loss | ( | ( | |||||||||
| Net trade receivables | |||||||||||
| Alliance, royalties, VAT and other | |||||||||||
| Receivables | $ | $ | |||||||||
Non-U.S. receivables sold on a nonrecourse basis were $769 million and $809 million for the nine months ended September 30, 2023 and 2022, respectively. Receivables from the three largest customers in the U.S. represented 71 % and 66 % of total trade receivables as of September 30, 2023 and December 31, 2022, respectively.
20
Note 12. INVENTORIES
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Finished goods | $ | $ | |||||||||
| Work in process | |||||||||||
| Raw and packaging materials | |||||||||||
| Total inventories | $ | $ | |||||||||
| Inventories | $ | $ | |||||||||
| Other non-current assets | |||||||||||
The fair value adjustment related to the Celgene acquisition was $84 million as of December 31, 2022 and was fully amortized in the second quarter of 2023.
Note 13. PROPERTY, PLANT AND EQUIPMENT
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Machinery, equipment and fixtures | |||||||||||
| Construction in progress | |||||||||||
| Gross property, plant and equipment | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment | $ | $ | |||||||||
Depreciation expense was $151 million and $448 million for the three and nine months ended September 30, 2023 and $148 million and $434 million for the three and nine months ended September 30, 2022, respectively.
Note 14. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The changes in the carrying amounts in Goodwill were as follows:
| Dollars in millions | |||||||||||
| Balance at December 31, 2022 | $ | ||||||||||
| Currency translation and other adjustments | ( | ||||||||||
Balance at September 30, 2023 | $ | ||||||||||
Other Intangible Assets
Other intangible assets consisted of the following:
| Estimated Useful Lives | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||||
Dollars in millions | Gross carrying amounts | Accumulated amortization | Other intangible assets, net | Gross carrying amounts | Accumulated amortization | Other intangible assets, net | |||||||||||||||||||||||||||||||||||
| Licenses | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Acquired marketed product rights | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Capitalized software | ( | ( | |||||||||||||||||||||||||||||||||||||||
| IPRD | — | — | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Amortization expense of Other intangible assets was $2.3 billion and $6.9 billion during the three and nine months ended September 30, 2023 and $2.5 billion and $7.4 billion for the three and nine months ended September 30, 2022, respectively.
21
The other intangible assets impairments were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
IPRD | $ | $ | $ | $ | |||||||||||||||||||
Licenses | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
IPRD impairment charges were recognized following decisions to discontinue development of investigational compounds in connection with the prioritization of pipeline opportunities and were recorded in Research and development expense. Licenses impairment charges were recognized for out-licensed assets following assessments of future economic benefits and were included in Other Income/(expense), net. The impairments represented full write-downs.
Note 15. SUPPLEMENTAL FINANCIAL INFORMATION
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Income taxes | $ | $ | |||||||||
| Research and development | |||||||||||
| Contract assets | |||||||||||
Restricted cash(a) | |||||||||||
| Other | |||||||||||
| Other current assets | $ | $ | |||||||||
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Equity investments (Note 9) | $ | $ | |||||||||
| Operating leases | |||||||||||
| Inventories | |||||||||||
| Pension and postretirement | |||||||||||
| Research and development | |||||||||||
Restricted cash(a) | |||||||||||
Receivables and convertible notes | |||||||||||
| Other | |||||||||||
| Other non-current assets | $ | $ | |||||||||
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Rebates and discounts | $ | $ | |||||||||
| Income taxes | |||||||||||
| Employee compensation and benefits | |||||||||||
| Research and development | |||||||||||
| Dividends | |||||||||||
| Interest | |||||||||||
| Royalties | |||||||||||
| Operating leases | |||||||||||
| Other | |||||||||||
| Other current liabilities | $ | $ | |||||||||
22
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Income taxes | $ | $ | |||||||||
| Pension and postretirement | |||||||||||
| Operating leases | |||||||||||
| Deferred income | |||||||||||
| Deferred compensation | |||||||||||
| Other | |||||||||||
| Other non-current liabilities | $ | $ | |||||||||
Note 16. EQUITY
The following table summarizes changes in equity for the nine months ended September 30, 2023:
| Common Stock | Capital in Excess of Par Value of Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||
| Dollars and shares in millions | Shares | Par Value | Shares | Cost | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Share repurchase program | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Share repurchase program | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net Earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock repurchase program | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
Convertible debt | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
23
The following table summarizes changes in equity for the nine months ended September 30, 2022:
| Common Stock | Capital in Excess of Par Value of Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||
| Dollars and shares in millions | Shares | Par Value | Shares | Cost | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Share repurchase program | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock repurchase program | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net Earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared $ | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock repurchase program | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
During the third quarter of 2023, BMS entered into accelerated share repurchase ("ASR") agreements to repurchase an aggregate amount of $4.0 billion of the Company's common stock. The ASR agreements were funded with cash on-hand and are expected to settle in the fourth quarter of 2023. Approximately 56 million shares of common stock (85 % of the $4.0 billion aggregate repurchase price) were received by BMS and included in treasury stock as of September 30, 2023. The total number of shares to be repurchased under the ASR agreements will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. In addition, as part of its share repurchase program, BMS repurchased 17 million shares of its common stock for $1.2 billion during the nine months ended September 30, 2023. The remaining share repurchase capacity under the BMS share repurchase program was approximately $2.0 billion as of September 30, 2023.
During the first quarter of 2022, BMS entered into ASR agreements to repurchase an aggregate amount of $5.0 billion of the Company's common stock. The ASR agreements were funded with cash on-hand and 65 million shares of common stock (85 % of the $5.0 billion aggregate repurchase price) were received by BMS and included in treasury stock. The remaining amounts in the ASR agreements were settled in two 4
24
The following table summarizes the changes in Other comprehensive income by component:
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||
| Dollars in millions | Pretax | Tax | After Tax | Pretax | Tax | After Tax | |||||||||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges | |||||||||||||||||||||||||||||||||||
| Recognized in Other comprehensive income/(loss) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Reclassified to net earnings(a) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Pension and postretirement benefits | |||||||||||||||||||||||||||||||||||
| Actuarial gains/(losses) | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Marketable debt securities | |||||||||||||||||||||||||||||||||||
| Unrealized losses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Foreign currency translation | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | $ | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||
| Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||
| Dollars in millions | Pretax | Tax | After Tax | Pretax | Tax | After Tax | |||||||||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges | |||||||||||||||||||||||||||||||||||
| Recognized in Other comprehensive income | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Reclassified to net earnings(a) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges | ( | ( | |||||||||||||||||||||||||||||||||
| Pension and postretirement benefits | |||||||||||||||||||||||||||||||||||
| Actuarial gains | ( | ( | |||||||||||||||||||||||||||||||||
Amortization(b) | ( | ( | |||||||||||||||||||||||||||||||||
Settlements(b) | ( | ||||||||||||||||||||||||||||||||||
| Pension and postretirement benefits | ( | ( | |||||||||||||||||||||||||||||||||
| Marketable debt securities | |||||||||||||||||||||||||||||||||||
| Unrealized losses | ( | ( | |||||||||||||||||||||||||||||||||
| Foreign currency translation | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Other comprehensive income | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
(a)Included in Cost of products sold and Other (income)/expense, net. Refer to "—Note 9. Financial Instruments and Fair Value Measurements" for further information.
(b)Included in Other (income)/expense, net.
The accumulated balances related to each component of Other comprehensive income/(loss), net of taxes, were as follows:
| Dollars in millions | September 30, 2023 | December 31, 2022 | |||||||||
| Derivatives qualifying as cash flow hedges | $ | $ | |||||||||
| Pension and postretirement benefits | ( | ( | |||||||||
| Marketable debt securities | ( | ||||||||||
Foreign currency translation(a) | ( | ( | |||||||||
| Accumulated other comprehensive loss | $ | ( | $ | ( | |||||||
(a)Includes net investment hedge gains of $205 million and $125 million as of September 30, 2023 and December 31, 2022, respectively.
25
Note 17. EMPLOYEE STOCK BENEFIT PLANS
Stock-based compensation expense was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | |||||||||||||||||||
| Marketing, selling and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Total Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Income tax benefit(a) | $ | $ | $ | $ | |||||||||||||||||||
(a) Income tax benefit excludes excess tax benefits from share-based compensation awards that were vested or exercised of $1 million and $21 million for the three and nine months ended September 30, 2023, and $4 million and $63 million for the three and nine months ended September 30, 2022, respectively.
The number of units granted and the weighted-average fair value on the grant date for the nine months ended September 30, 2023 were as follows:
| Units in millions | Units | Weighted-Average Fair Value | |||||||||
| Restricted stock units | $ | ||||||||||
| Market share units | |||||||||||
| Performance share units | |||||||||||
| Dollars in millions | Restricted Stock Units | Market Share Units | Performance Share Units | ||||||||||||||||||||
| Unrecognized compensation cost | $ | $ | $ | ||||||||||||||||||||
| Expected weighted-average period in years of compensation cost to be recognized | |||||||||||||||||||||||
Note 18. LEGAL PROCEEDINGS AND CONTINGENCIES
BMS and certain of its subsidiaries are involved in various lawsuits, claims, government investigations and other legal proceedings that arise in the ordinary course of business. These claims or proceedings can involve various types of parties, including governments, competitors, customers, partners, suppliers, service providers, licensees, licensors, employees, or shareholders, among others. These matters may involve patent infringement, antitrust, securities, pricing, sales and marketing practices, environmental, commercial, contractual rights, licensing obligations, health and safety matters, consumer fraud, employment matters, product liability and insurance coverage, among others. The resolution of these matters often develops over a long period of time and expectations can change as a result of new findings, rulings, appeals or settlement arrangements. Legal proceedings that are significant or that BMS believes could become significant or material are described below.
While BMS does not believe that any of these matters, except as otherwise specifically noted below, will have a material adverse effect on its financial position or liquidity as BMS believes it has substantial claims and/or defenses in the matters, the outcomes of BMS's legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. There can be no assurance that there will not be an increase in the scope of one or more of these pending matters or any other or future lawsuits, claims, government investigations or other legal proceedings will not be material to BMS's financial position, results of operations or cash flows for a particular period. Furthermore, failure to successfully enforce BMS's patent rights would likely result in substantial decreases in the respective product revenues from generic competition.
Unless otherwise noted, BMS is unable to assess the outcome of the respective matters nor is it able to estimate the possible loss or range of losses that could potentially result for such matters. Contingency accruals are recognized when it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period. For a discussion of BMS’s tax contingencies, see " —Note 7. Income Taxes."
26
INTELLECTUAL PROPERTY
Anti-PD-L1 and CTLA-4 — U.S.
On March 17, 2022, BMS filed a lawsuit in U.S. District Court for the District of Delaware against AstraZeneca Pharmaceuticals LP and AstraZeneca UK Ltd (collectively, "AZ") alleging that AZ's marketing of the PD-L1 antibody Imfinzi infringes certain claims of U.S. Patent Nos. 9,580,505, 9,580,507, 10,138,299, 10,308,714, 10,266,594, 10,266,595, 10,266,596 and 10,323,092. On April 25, 2023, BMS filed an additional lawsuit against AZ in U.S. District Court for the District of Delaware alleging that AZ's marketing of the PD-L1 antibody Imfinzi infringes U.S. Patent No. 9,402,899.
On January 23, 2023, BMS filed a lawsuit in U.S. District Court for the District of Delaware against AstraZeneca Pharmaceuticals LP and AstraZeneca AB (collectively, "AZ AB") alleging that AZ AB's marketing of the CTLA-4 antibody Imjudo infringes certain claims of U.S. Patent Nos. 9,320,811 and 9,273,135.
On July 24, 2023, BMS entered into an agreement with AZ and AZ AB to settle all outstanding claims between them in the CTLA-4 litigation and the two PD-L1 antibody litigations described above. Refer to "—Note 5. Other (Income)/Expense, Net" for further information.
Eliquis - Europe
Lawsuits have been filed by generic companies in various countries in Europe seeking revocation of our composition-of-matter patents and Supplementary Protection Certificates ("SPCs") relating to Eliquis, and trials or preliminary proceedings have been held in certain of those cases.
In Finland, the court granted our request for a preliminary injunction prohibiting Teva from offering, storing or selling generic Eliquis products in Finland that have obtained price and reimbursement. A trial regarding Teva's challenge to the validity of the Finnish composition-of-matter patent and related SPC concluded on July 5, 2023, and a decision is expected sometime in the fourth quarter of 2023.
In France, a trial was held regarding Teva's challenge to the validity of the French composition-of-matter patent and related SPC, and a decision was issued on June 8, 2023, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.
In Ireland, the court granted our request for a preliminary injunction prohibiting Teva from making, offering, putting on the market and/or using and/or importing or stocking for the aforesaid purposes, generic Eliquis products. The trial court's preliminary injunction decision was subsequently upheld by the Irish Court of Appeal. A trial regarding Teva's challenge to the validity of the Irish composition-of-matter patent and related SPC concluded on July 28, 2023, and a decision is expected sometime in the fourth quarter of 2023.
In the Netherlands, our requests for preliminary injunctions to prevent at-risk generic launches by Sandoz, Stada and Teva prior to full trials on the validity of the Dutch composition-of-matter patent and SPC were initially denied by the lower courts. However, in a judgment issued on August 15, 2023, the Dutch Court of Appeal overturned the decisions of the lower court, issued preliminary injunctions against Sandoz, Stada and Teva and ordered those companies to recall any generic Eliquis product from the Dutch market. Full trials regarding challenges to the validity of the Dutch composition-of-matter patent and related SPC by Sandoz began on October 13, 2023, and those related to Teva are scheduled to begin on January 12, 2024.
In Norway, a trial was held regarding Teva's challenge to the validity of the Norwegian composition-of-matter patent and related SPC, and a decision was issued on May 23, 2023, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.
In Portugal, there are patent validity and infringement proceedings pending with multiple companies seeking to market generic versions of Eliquis. A trial regarding Mylan's challenge to the validity of the Portuguese composition-of-matter patent is scheduled to conclude November 29, 2023. In early September, Teva launched a generic Eliquis product on the Portuguese market. On September 15, 2023, BMS filed a request for a preliminary injunction against Teva at the Portuguese Intellectual Property Court.
In Spain, a trial regarding Teva's challenge to the validity of the Spanish composition-of-matter patent and related SPC was held on October 18-19, 2023.
In Sweden, a trial was held regarding Teva's challenge to the validity of the Swedish composition-of-matter patent and related SPC, and a decision was issued on November 2, 2022, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.
In Switzerland, a trial regarding Teva's challenge to the validity of the Swiss composition-of-matter patent and related SPC is scheduled to begin on November 29, 2023.
27
In the UK, Sandoz and Teva filed lawsuits in the United Kingdom seeking revocation of the UK composition-of-matter patent and related SPC. BMS subsequently filed counterclaims for infringement in both actions. A combined trial took place in February 2022, and in a judgment issued on April 7, 2022, the judge found the UK apixaban composition-of-matter patent and related SPC invalid. BMS appealed the judgment and on May 4, 2023, the Court of Appeal upheld the lower court's decision. On June 1, 2023, BMS filed an application to appeal to the UK Supreme Court. Following the first instance decision in the UK, generic manufacturers have begun marketing generic versions of Eliquis in the UK.
In addition to the above, challenges to the validity of the composition-of-matter patent and related SPC are pending in Denmark, Italy, Poland, Czechia, Slovakia, Hungary, Bulgaria, Croatia, Greece and Lithuania.
Generic manufacturers may seek to market generic versions of Eliquis in additional countries in Europe prior to the expiration of our patents, which may lead to additional infringement and invalidity actions involving Eliquis patents being filed in various countries in Europe.
Inrebic - U.S.
In September 2023, BMS received a Notice Letter from Teva notifying BMS that Teva had filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Inrebic in the U.S. and challenging certain patents listed in the Orange Book for Inrebic. In response, in October 2023, BMS filed a patent infringement action against Teva in the U.S. District Court for the District of New Jersey.
Onureg – U.S.
BMS has received Notice Letters from Accord Healthcare, Inc. ("Accord"), MSN Laboratories Private Limited ("MSN"), Teva Pharmaceuticals, Inc. ("Teva") and Natco Pharma Limited ("Natco"), respectively, each notifying BMS that it has filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Onureg in the U.S. and challenging U.S. Patent Nos. 11,571,436 (the "'436 Patent") and 8,846,628 (the "'628 Patent"), FDA Orange Book-listed formulation patents covering Onureg, which expire in 2029 and 2030, respectively. In response, BMS has filed a patent infringement action against Accord, MSN, Teva and Natco in the U.S. District Court for the District of Delaware. In August 2023, the Accord and MSN actions were consolidated, and a trial has been scheduled to begin on September 23, 2024. No trial dates have been scheduled for the Teva or Natco actions.
In February 2023, Apotex Inc. filed a request for inter partes review ("IPR") of the '628 Patent. On July 20, 2023, the USPTO granted Apotex's request to institute an IPR of the '628 Patent.
Plavix* - Australia
Sanofi was notified that, in August 2007, GenRx Proprietary Limited ("GenRx") obtained regulatory approval of an application for clopidogrel bisulfate 75mg tablets in Australia. GenRx, formerly a subsidiary of Apotex Inc., subsequently changed its name to Apotex ("GenRx-Apotex"). In August 2007, GenRx-Apotex filed an application in the Federal Court of Australia seeking revocation of Sanofi's Australian Patent No. 597784 (Case No. NSD 1639 of 2007). Sanofi filed counterclaims of infringement and sought an injunction. On September 21, 2007, the Federal Court of Australia granted Sanofi's injunction. A subsidiary of BMS was subsequently added as a party to the proceedings. In February 2008, a second company, Spirit Pharmaceuticals Pty. Ltd., also filed a revocation suit against the same patent. This case was consolidated with the GenRx-Apotex case. On August 12, 2008, the Federal Court of Australia held that claims of Patent No. 597784 covering clopidogrel bisulfate, hydrochloride, hydrobromide, and taurocholate salts were valid. The Federal Court also held that the process claims, pharmaceutical composition claims, and claim directed to clopidogrel and its pharmaceutically acceptable salts were invalid. BMS and Sanofi filed notices of appeal in the Full Court of the Federal Court of Australia ("Full Court") appealing the holding of invalidity of the claim covering clopidogrel and its pharmaceutically acceptable salts, process claims, and pharmaceutical composition claims. GenRx-Apotex appealed. On September 29, 2009, the Full Court held all of the claims of Patent No. 597784 invalid. In March 2010, the High Court of Australia denied a request by BMS and Sanofi to hear an appeal of the Full Court decision. The case was remanded to the Federal Court for further proceedings related to damages sought by GenRx-Apotex. BMS and GenRx-Apotex settled, and the GenRx-Apotex case was dismissed. The Australian government intervened in this matter seeking maximum damages up to 449 million AUD ($289 million), plus interest, which would be split between BMS and Sanofi, for alleged losses experienced for paying a higher price for branded Plavix* during the period when the injunction was in place. BMS and Sanofi dispute that the Australian government is entitled to any damages. A trial was concluded in September 2017. In April 2020, the Federal Court issued a decision dismissing the Australian government's claim for damages. In May 2020, the Australian government appealed the Federal Court's decision and an appeal hearing concluded in February 2021. On June 26, 2023, the appeal court issued a ruling in BMS and Sanofi's favor, upholding the lower court's decision. The Australian government is seeking leave to appeal the decision to the High Court of Australia.
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Revlimid - U.S.
In April 2023, Celgene received a Notice Letter from Deva Holdings A.S. ("Deva") notifying Celgene that Deva has filed an ANDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, on May 31, 2023, Celgene initiated a patent infringement action against Deva in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book listed patents. On October 23, 2023, BMS entered into a confidential settlement agreement with Deva, settling all outstanding claims in the litigation with Deva. In September 2023, Celgene received a Notice Letter from Accord Healthcare, Inc. ("Accord") notifying Celgene that Accord has filed an ANDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, on October 19, 2023, Celgene initiated a patent infringement action against Accord in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents. On October 19, 2023, BMS entered into a confidential settlement agreement with Accord, settling all outstanding claims in the litigation with Accord.
Sprycel - U.S.
BMS has received Notice Letters from Xspray Pharma AB ("Xspray"), Nanocopoeia, LLC ("Nanocopoeia"), Handa Oncology, LLC ("Handa") and Zydus Pharmaceuticals ("Zydus"), each notifying BMS that it has filed applications containing paragraph IV certifications seeking approval of a dasatinib product in the U.S. and challenging two FDA Orange Book-listed monohydrate form patents expiring in 2025 and 2026. In February 2022, BMS filed a patent infringement action against Xspray in the U.S. District Court for the District of New Jersey. In May 2022, BMS filed a patent infringement action against Nanocopoeia in the U.S. District Court for the District of Minnesota. In November 2022, BMS filed a patent infringement action against Handa in the U.S. District Court for the Northern District of California. On March 24, 2023, the Minnesota court denied a motion that Nanocopoeia had filed seeking a judgment based on the pleadings. On June 16, 2023, BMS entered into a confidential settlement agreement with Handa, settling all outstanding claims in the litigation. On September 13, 2023, BMS entered into a confidential settlement agreement with XSpray, settling all outstanding claims in the litigation. On October 10, 2023, BMS entered into a confidential settlement agreement with Nanocopoeia, settling all outstanding claims in the litigation. In October 2023, BMS filed a patent infringement action against Zydus in the U.S. District Court for the District of New Jersey.
Zeposia - U.S.
On October 15, 2021, Actelion Pharmaceuticals LTD and Actelion Pharmaceuticals US, INC ("Actelion") filed a complaint for patent infringement in the United States District Court for the District of New Jersey against BMS and Celgene for alleged infringement of U.S. Patent No. 10,251,867 (the "'867 Patent"). The Complaint alleges that the sale of Zeposia infringes certain claims of the '867 Patent and Actelion is seeking damages and injunctive relief. No trial date has been scheduled.
PRICING, SALES AND PROMOTIONAL PRACTICES LITIGATION
Plavix* State Attorneys General Lawsuits
BMS and certain Sanofi entities are defendants in a consumer protection action brought by the attorney general of Hawaii relating to the labeling, sales and/or promotion of Plavix*. In February 2021, a Hawaii state court judge issued a decision against Sanofi and BMS, imposing penalties in the total amount of $834 million, with $417 million attributed to BMS. Sanofi and BMS appealed the decision. On March 15, 2023, the Hawaii Supreme Court issued its decision, reversing in part and affirming in part the trial court decision, vacating the penalty award and remanding the case for a new trial and penalty determination. A new bench trial concluded on October 16, 2023.
PRODUCT LIABILITY LITIGATION
BMS is a party to various product liability lawsuits. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. As previously disclosed, in addition to lawsuits, BMS also faces unfiled claims involving its products.
Abilify*
BMS and Otsuka are co-defendants in product liability litigation related to Abilify*. Plaintiffs allege Abilify* caused them to engage in compulsive gambling and other impulse control disorders. Cases were filed in state and federal courts in the United States. Pursuant to a previously disclosed master settlement agreement and settlement related court orders, the vast majority of the cases in the United States were resolved or dismissed. Eleven inactive cases remain pending in state courts in New Jersey. There are also eleven cases pending in Canada (four class actions and seven individual injury claims), two of which are active (the certified class actions in Quebec and Ontario).
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Onglyza*
BMS and AstraZeneca are co-defendants in product liability litigation related to Onglyza*. Plaintiffs assert claims, including claims for wrongful death, as a result of heart failure or other cardiovascular injuries they allege were caused by their use of Onglyza*. In February 2018, the Judicial Panel on Multidistrict Litigation ordered all the federal Onglyza* cases to be transferred to an MDL in the U.S. District Court for the Eastern District of Kentucky. A significant majority of the claims were pending in the MDL, with others pending in a coordinated proceeding in California Superior Court in San Francisco ("JCCP"). The JCCP court granted summary judgment to defendants in March 2022, a decision which was affirmed by the California Court of Appeal. The California Supreme Court declined to review the decision in July 2023. In the MDL, the court granted defendants' motion to exclude plaintiffs' only general causation expert on January 5, 2022 and granted summary judgment on August 2, 2022. Plaintiffs filed their Notice of Appeal on December 2, 2022. The appeal remains pending in the Sixth Circuit. As part of BMS's global diabetes business divestiture, BMS sold Onglyza* to AstraZeneca in February 2014 and any potential liability with respect to Onglyza* is expected to be shared with AstraZeneca.
SECURITIES LITIGATION
Celgene Securities Litigations
Beginning in March 2018, two putative class actions were filed against Celgene and certain of its officers in the U.S. District Court for the District of New Jersey (the "Celgene Securities Class Action"). The complaints allege that the defendants violated federal securities laws by making misstatements and/or omissions concerning (1) trials of GED-0301, (2) Celgene's 2020 outlook and projected sales of Otezla*, and (3) the new drug application for Zeposia. The Court consolidated the two actions and appointed a lead plaintiff, lead counsel, and co-liaison counsel for the putative class. In February 2019, the defendants filed a motion to dismiss plaintiff''s amended complaint in full. In December 2019, the Court denied the motion to dismiss in part and granted the motion to dismiss in part (including all claims arising from alleged misstatements regarding GED-0301). Although the Court gave the plaintiff leave to re-plead the dismissed claims, it elected not to do so, and the dismissed claims are now dismissed with prejudice. In November 2020, the Court granted class certification with respect to the remaining claims. In March 2023, the Court granted the defendants leave to file a motion for summary judgment, the briefing for which was completed in June 2023. On September 8, 2023, the Court granted in part and denied in part defendants' motion for summary judgment.
In April 2020, certain Schwab management investment companies on behalf of certain Schwab funds filed an individual action in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action against the same remaining defendants in that action (the "Schwab Action"). In July 2020, the defendants filed a motion to dismiss the plaintiffs' complaint in full. In March 2021, the Court granted in part and denied in part defendants' motion to dismiss consistent with its decision in the Celgene Securities Class Action.
The California Public Employees' Retirement System in April 2021 (the "CalPERS Action"); DFA Investment Dimensions Group Inc., on behalf of certain of its funds; and American Century Mutual Funds, Inc., on behalf of certain of its funds, in July 2021 (respectively the "DFA Action" and the "American Century Action"), and GIC Private Limited in September 2021 (the "GIC Action"), filed separate individual actions in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action and the Schwab individual action against the same remaining defendants in those actions. In October 2021, these actions were consolidated for pre-trial proceedings with the Schwab Action. The Court also consolidated any future direct actions raising common questions of law and fact with the Schwab Action (the "Consolidated Schwab Action"). On October 2, 2023, defendants filed a motion for partial summary judgment in the Consolidated Schwab Action.
No trial dates have been scheduled in any of the above Celgene Securities Litigations.
Contingent Value Rights Litigations
In June 2021, an action was filed against BMS in the U.S. District Court for the Southern District of New York asserting claims of alleged breaches of a Contingent Value Rights Agreement ("CVR Agreement") entered into in connection with the closing of BMS's acquisition of Celgene Corporation in November 2019. The successor trustee under the CVR Agreement alleges that BMS breached the CVR Agreement by allegedly failing to use "diligent efforts" to obtain FDA approval of liso-cel (Breyanzi) before a contractual milestone date, thereby allegedly avoiding a $6.4 billion potential obligation to holders of the contingent value rights governed by the CVR Agreement and by allegedly failing to permit inspection of records in response to a request by the successor trustee. The successor trustee seeks damages in an amount to be determined at trial and other relief, including interest and attorneys' fees. BMS disputes the successor trustee's allegations. BMS filed a motion to dismiss the successor trustee's complaint, which was denied on June 24, 2022.
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In October 2021, alleged former Celgene stockholders filed a complaint in the U.S. District Court for the Southern District of New York asserting claims on behalf of a putative class of Celgene stockholders who received CVRs in the BMS merger with Celgene for violations of sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") relating to the joint proxy statement. That action later was consolidated with another action filed in the same court, and a consolidated complaint thereafter was filed asserting claims on behalf of a class of CVR acquirers, whether in the BMS merger with Celgene or otherwise, for violations of sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the "Securities Act") and sections 10(b), 14(a) and 20(2) of the Exchange Act. The complaint alleged that the February 22, 2019 joint proxy statement was materially false or misleading because it failed to disclose that BMS allegedly had no intention to obtain FDA approval for liso-cel (Breyanzi) by the applicable milestone date in the CVR Agreement and that certain statements made by BMS or certain BMS officers in periodic SEC filings, earnings calls, press releases, and investor presentations between December 2019 and November 2020 were materially false or misleading for the same reason. Defendants moved to dismiss the complaint. On March 1, 2023, the Court entered an opinion and order granting defendants' motion and dismissed the complaint in its entirety. The claims under Sections 11, 12(a)(2), and 15 of the Securities Act and Section 14(a) of the Exchange Act were dismissed with prejudice. The claims under Sections 10(a) and 20(a) of the Exchange Act were dismissed with leave to file a further amended complaint, which plaintiffs filed on April 14, 2023. Defendants moved to dismiss the amended complaint and briefing on the motion was completed on June 23, 2023. The motion is currently pending before the Court.
In November 2021, an alleged purchaser of CVRs filed a complaint in the Supreme Court of the State of New York for New York County asserting claims on behalf of a putative class of CVR acquirers for violations of sections 11(a) and 12(a)(2) of the Securities Act of 1933. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to disclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its board of directors at the time of the joint proxy statement, and certain BMS officers who signed the registration statement. Defendants have moved to stay the action pending resolution of the federal action or, in the alternative, to dismiss the complaint. In lieu of responding to the motion, the plaintiff filed an amended complaint on June 15, 2023. Defendants again filed a motion to stay or, in the alternative, to dismiss the amended complaint on July 13, 2023. Briefing on that motion was completed on August 24, 2023.
In November 2021, an alleged Celgene stockholder filed a complaint in the Superior Court of New Jersey, Union County asserting claims on behalf of two separate putative classes, one of acquirers of CVRs and one of acquirers of BMS common stock, for violations of sections 11(a), 12(a)(2), and 15 of the Securities Act. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to disclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its board of directors at the time of the joint proxy statement, certain BMS officers who signed the registration statement and Celgene's former chairman and chief executive officer. Defendants moved to stay the action pending resolution of the federal action and, in the alternative, to dismiss the complaint. On February 17, 2023, the Court granted defendants' motion to stay and declined to reach the merits of defendants' motion to dismiss. On October 9, 2023, the plaintiff filed a motion to vacate the stay.
No trial dates have been scheduled in any of the above CVR Litigations.
OTHER LITIGATION
IRA Litigation
On June 16, 2023, BMS filed a lawsuit against the U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services, et al., challenging the constitutionality of the drug-pricing program in the IRA. That program requires pharmaceutical companies, like BMS, under the threat of significant penalties, to sell certain of their medicines at government-dictated prices. On August 29, 2023, the government selected Eliquis for this program. In its lawsuit, BMS argues that this program violates the Fifth Amendment, which requires the government to pay just compensation if it takes property for public use, by requiring pharmaceutical manufacturers to provide medicines to third parties at prices set by the government, without any requirement that those prices reflect fair market value. BMS also argues that this program violates the First Amendment right to free speech by requiring manufacturers to state publicly that the government's price setting is a true negotiation that resulted in a fair price, even if it was not. On August 16, 2023, BMS filed a motion for summary judgment.
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Thalomid and Revlimid Litigations
Beginning in November 2014, certain putative class action lawsuits were filed against Celgene in the U.S. District Court for the District of New Jersey alleging that Celgene violated various antitrust, consumer protection, and unfair competition laws by (a) allegedly securing an exclusive supply contract for the alleged purpose of preventing a generic manufacturer from securing its own supply of thalidomide active pharmaceutical ingredient, (b) allegedly refusing to sell samples of Thalomid and Revlimid brand drugs to various generic manufacturers for the alleged purpose of bioequivalence testing necessary for ANDAs to be submitted to the FDA for approval to market generic versions of these products, (c) allegedly bringing unjustified patent infringement lawsuits in order to allegedly delay approval for proposed generic versions of Thalomid and Revlimid, and/or (d) allegedly entering into settlements of patent infringement lawsuits with certain generic manufacturers that allegedly have had anticompetitive effects. The plaintiffs, on behalf of themselves and putative classes of third-party payers, sought injunctive relief and damages. The various lawsuits were consolidated into a master action for all purposes. In March 2020, Celgene reached a settlement with the class plaintiffs. In October 2020, the Court entered a final order approving the settlement and dismissed the matter. That settlement did not resolve the claims of certain entities that opted out of the settlement, and who have since filed new suits advancing related theories. As described below, those suits, together with a suit by certain specialty pharmacies and a new putative class action suit, are pending.
In March 2019, Humana Inc. ("Humana"), which opted out of the above settlement, filed a lawsuit against Celgene in the U.S. District Court for the District of New Jersey. Humana's complaint makes largely the same claims and allegations as were made in the now settled Thalomid and Revlimid antitrust class action litigation. The complaint purports to assert claims on behalf of Humana and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser, and seeks, among other things, treble and punitive damages, injunctive relief and attorneys' fees and costs. In May 2019, Celgene filed a motion to dismiss Humana's complaint. In April 2022, the Court issued an order denying Celgene's motion to dismiss. That order addressed only Celgene's argument that certain of Humana's claims were barred by the statute of limitations. The Court's order did not address Celgene's other grounds for dismissal and instead directed Celgene to present those arguments in a renewed motion to dismiss following the filing of amended complaints. In May 2022, Humana filed an amended complaint against Celgene and BMS asserting the same claims based on additional factual allegations. Celgene and BMS subsequently filed a motion to dismiss Humana's amended complaint. On August 18, and September 8, 2023, the Court held argument on Celgene and BMS' motion. No trial date has been scheduled.
United HealthCare Services, Inc. ("UHS"), Blue Cross Blue Shield Association ("BCBSA"), BCBSM Inc., Health Care Service Corporation ("HCSC"), Blue Cross and Blue Shield of Florida Inc., Cigna Corporation ("Cigna"), Molina Healthcare, Inc. ("Molina") and several MSP related entities (MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; MAO-MSO Recovery II, LLC, Series PMPI, a segregated series of MAO-MSO Recovery II, LLC; MSP Recovery Claims Series 44, LLC; MSP Recovery Claims PROV, Series LLC; and MSP Recovery Claims CAID, Series LLC (together, "MSP")) filed lawsuits making largely the same claims and allegations as were made in the now-settled class action litigation and in the Humana opt-out action. Certain of the matters have made additional claims related to copay assistance for Thalomid and Revlimid. These cases are now pending in the U.S. District Court for the District of New Jersey. Celgene and BMS's motion to dismiss the Humana amended complaint applies to these other opt‑out actions as well, and these other opt‑out actions will proceed as described above with respect to that Humana opt-out action. No trial dates have been scheduled.
In May 2021, Molina sued Celgene and BMS in San Francisco Superior Court. Molina's complaint makes largely the same claims and allegations as were made in the now settled class action litigation. In June 2022, the San Francisco Superior Court dismissed 63 of Molina’s claims, which Molina later reasserted in the District of New Jersey as described above, and stayed the remaining 4 claims. No activity is expected in this case until disposition of the New Jersey actions.
Certain other entities that opted out of the now‑settled class action have also filed summonses related to two actions in the Philadelphia County Court of Common Pleas in connection with the allegations made by Humana and other opt‑out entities. Those actions have been placed in deferred status pending further developments in the above opt‑out cases.
In November 2022, certain specialty pharmacies filed an action as direct purchasers against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The action makes largely the same claims and allegations against Celgene and BMS as were made with respect to Revlimid in the now settled class action litigation, and seek injunctive relief and damages under the Sherman Antitrust Act. Also in November 2022, a putative class of end-payor plaintiffs filed an action against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The class complaint brings claims based on Celgene's allegedly anticompetitive settlements of Revlimid patent litigation, seeking damages under state antitrust and consumer protection laws and injunctive relief under federal antitrust law. Celgene, BMS and the generic defendants have filed consolidated motions to dismiss these two actions, and the motions were fully briefed in May 2023. No trial dates have been scheduled.
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In October 2023, two healthcare systems—the Mayo Clinic and LifePoint Corporate Services, General Partnership—filed a lawsuit against Celgene, BMS and certain generic manufacturers in the U.S. District Court for the Northern District of California. Plaintiffs pursue claims based on their alleged purchases of and reimbursement for Revlimid and generic lenalidomide, and also claim to proceed based on assignments of claims from their subsidiaries and affiliates. The action makes largely the same claims and allegations against Celgene and BMS as were made with respect to Revlimid in the now-settled class action litigation, and seeks injunctive relief and damages under the Sherman Antitrust Act and parallel state laws. No trial date has been scheduled.
In May 2018, Humana filed a lawsuit against Celgene in the Pike County Circuit Court of the Commonwealth of Kentucky. Humana's complaint alleges Celgene engaged in unlawful off-label marketing in connection with sales of Thalomid and Revlimid and asserts claims against Celgene for fraud, breach of contract, negligent misrepresentation, unjust enrichment and violations of New Jersey's Racketeer Influenced and Corrupt Organizations Act ("NJ RICO"). The complaint seeks, among other things, treble and punitive damages, injunctive relief and attorneys' fees and costs. Humana subsequently dismissed its claims for breach of contract voluntarily. A trial for this matter began on January 31, 2023. On January 25, 2023, the Court granted Celgene's summary judgment motion on Humana's claims for violations of NJ RICO and dismissed those claims. On March 2, 2023, following a multi-week trial, the jury returned a full defense verdict in Celgene's favor on Humana's claims of fraud and negligent misrepresentation. In May 2020, Celgene filed suit against Humana Pharmacy, Inc. ("HPI"), a Humana subsidiary, in Delaware Superior Court. Celgene's complaint alleges that HPI breached its contractual obligations to Celgene by assigning claims to Humana that Humana is now asserting. The complaint seeks damages for HPI's breach as well as a declaratory judgment. On February 14, 2023, the Court granted summary judgment in favor of Celgene on its breach of contract claims. In July 2023, BMS and Humana entered into a settlement agreement settling all outstanding claims in both the Kentucky and HPI litigations.
BeiGene Arbitration Matter
On July 5, 2017, Celgene Logistics Sàrl ("Celgene Logistics") and BeiGene, Ltd. (together with its assignees, "BeiGene"), entered into a License and Supply Agreement (the "LSA") pursuant to which BeiGene was granted, among other things, an exclusive license to distribute and commercialize Revlimid, Vidaza and Abraxane in China.
BeiGene initiated an arbitration proceeding against Celgene Logistics and BMS at the International Chamber of Commerce in June 2020, asserting various claims, including breach of contract under the LSA. In October 2021, Celgene Logistics delivered notice to BeiGene terminating the LSA with respect to Abraxane. On August 1, 2023, BMS, Celgene Logistics, and certain of their affiliates entered into a Settlement and Termination Agreement with BeiGene relating to the termination of the parties' ongoing contractual relationships, the arbitration proceeding, other contracts entered into by the parties, as well as resolving other disputes and potential disputes between the parties. The arbitration was subsequently dismissed.
MSK Contract Litigation
On April 1, 2022, Memorial Sloan Kettering Cancer Center and Eureka Therapeutics, Inc. (collectively, "Plaintiffs") filed a complaint against BMS, Celgene and Juno (collectively, "Defendants"). In June 2022, Plaintiffs filed an amended complaint. Plaintiffs allege that Defendants breached a license agreement by allegedly failing to use commercially reasonable efforts to develop, manufacture, and commercialize a certain chimeric antigen receptor product and by failing to pay Plaintiffs a running royalty of at least 1.5 % of worldwide sales of Abecma allegedly owed to Plaintiffs under the license agreement. Defendants disagree with plaintiffs' claims, and filed a motion to dismiss the amended complaint in July 2022. No trial date has been scheduled.
Pomalyst Antitrust Class Action
In September 2023, certain health insurance companies filed an action on behalf of a putative class of end-payor plaintiffs against Celgene, BMS, and certain generic pharmaceutical manufacturers in the U.S. District Court for the Southern District of New York. The class complaint asserts claims under federal antitrust law and state antitrust, consumer protection, and unjust enrichment laws based on allegations that Celgene and BMS engaged in anticompetitive conduct related to pomalidomide in the United States, including by allegedly engaging in fraud before the USPTO in the acquisition of patents that cover the use of pomalidomide, by filing sham patent litigations against generic pharmaceutical companies seeking to market generic pomalidomide, and by entering into unlawful patent litigation settlements with certain generic pharmaceutical companies seeking to market generic pomalidomide. No trial date has been scheduled.
GOVERNMENT INVESTIGATIONS
Like other pharmaceutical companies, BMS and certain of its subsidiaries are subject to extensive regulation by national, state and local authorities in the U.S. and other countries in which BMS operates. As a result, BMS, from time to time, is subject to various governmental and regulatory inquiries and investigations as well as threatened legal actions and proceedings. It is possible that criminal charges, substantial fines and/or civil penalties, could result from government or regulatory investigations.
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ENVIRONMENTAL PROCEEDINGS
As previously reported, BMS is a party to several environmental proceedings and other matters, and is responsible under various state, federal and foreign laws, including CERCLA, for certain costs of investigating and/or remediating contamination resulting from past industrial activity at BMS's current or former sites or at waste disposal or reprocessing facilities operated by third parties.
CERCLA and Other Remediation Matters
With respect to CERCLA and other remediation matters for which BMS is responsible under various state, federal and international laws, BMS typically estimates potential costs based on information obtained from the U.S. Environmental Protection Agency, or counterpart state or foreign agency and/or studies prepared by independent consultants, including the total estimated costs for the site and the expected cost-sharing, if any, with other "potentially responsible parties," and BMS accrues liabilities when they are probable and reasonably estimable. BMS estimated its share of future costs for these sites to be $81 million as of September 30, 2023, which represents the sum of best estimates or, where no best estimate can reasonably be made, estimates of the minimal probable amount among a range of such costs (without taking into account any potential recoveries from other parties). The amount includes the estimated costs for any additional probable loss associated with the previously disclosed North Brunswick Township High School Remediation Site.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s discussion and analysis of results of operations and financial condition is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.
EXECUTIVE SUMMARY
Our principal strategy is to combine the resources, scale and capability of a large pharmaceutical company with the speed, agility and focus on innovation typically found in the biotech industry. Our priorities are to continue to renew and diversify our portfolio through launching new medicines, advancing our early, mid and late-stage pipeline, and executing disciplined business development. Our focus is on discovering, developing and delivering transformational medicines for patients facing serious diseases in the following core therapeutic areas: (i) oncology with a priority in certain tumor types; (ii) hematology with opportunities to broaden our franchise and sustain a leadership position in multiple myeloma; (iii) immunology with priorities in psoriasis, lupus, RA, inflammatory bowel diseases and fibrotic lung diseases; (iv) cardiovascular disease; and (v) neuroscience with a focus on neurodegenerative disease. We are working on accelerating our drug development and delivery of our innovative medicines to patients, enhancing our commercial operating model, as well as enhancing flexibility and reliability of our manufacturing network. We are committed to the strategic allocation of resources and investing in areas that maximize value and drive sustainable growth. We remain committed to maintaining a strong investment grade credit rating and returning capital to shareholders. For further information on our strategy, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Strategy" in our 2022 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.
In 2023, we received approvals for initial and additional indications for the following marketed products in major markets (the U.S., EU and Japan), which further expanded our geographical reach in immunology, hematology and oncology including: (i) U.S. and EC approval of Opdivo expanding upon the existing adjuvant treatment for melanoma patients; (ii) FDA approval of Reblozyl in the first-line setting for the treatment of anemia in MDS and EC approval for an additional indication for anemia associated with non-transfusion-dependent beta thalassemia; (iii) approvals in Japan and by the EC of Opdivo in combination with chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC; (iv) approval of Camzyos for the treatment of symptomatic obstructive HCM by the EC; (v) approval of Breyanzi for the second-line treatment of diffuse large B-cell lymphoma by the EC; and (vi) approval for Sotyktu for moderate-to-severe plaque psoriasis by the EC. We continue expanding our commercial CAR-T manufacturing network through the FDA approval of our Devens, MA facility in June 2023. In October 2023, we entered into a definitive merger agreement to acquire Mirati, a commercial stage targeted oncology company with a pipeline of commercial, clinical and pre-clinical stage oncology medicines and assets, including Krazati*, a best-in-class inhibitor of KRASG12C mutation, which was approved by the FDA as a second-line treatment for patients with NSCLC, and MRTX1719, a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase 1 development, among others.
Revenues decreased by 4% for the nine months ended September 30, 2023 primarily due to lower Revlimid sales driven by the previously disclosed generic erosion and increase in patients receiving free drug product for Revlimid, and to a lesser extent, Pomalyst, from the Bristol Myers Squibb Patient Assistance Foundation, a separate and independent 501(c)(3) entity to which BMS donates product, and foreign exchange impacts of 1% partially offset by higher sales in our New Product Portfolio and In-Line Products (primarily Opdivo). The $0.99 increase in GAAP EPS was primarily driven by the impact of certain specified items, including lower losses on equity investments and amortization of intangible assets, litigation and other settlement income and a deferred income tax benefit related to a non-U.S. tax ruling. After adjusting for specified items, non-GAAP EPS decreased $0.08 primarily as a result of lower revenues, partially offset by lower Acquired IPRD charges, net interest expense, effective income tax rate and weighted average shares outstanding.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Total Revenues | $ | 10,966 | $ | 11,218 | $ | 33,529 | $ | 34,753 | |||||||||||||||
| Diluted earnings per share | |||||||||||||||||||||||
| GAAP | $ | 0.93 | $ | 0.75 | $ | 2.99 | $ | 2.00 | |||||||||||||||
| Non-GAAP | 2.00 | 1.99 | 5.80 | 5.88 | |||||||||||||||||||
Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items that represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For further information and reconciliations relating to our non-GAAP financial measures refer to "—Non-GAAP Financial Measures."
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Economic and Market Factors
Governmental Actions
Our products continue to be subject to increasing pressures across the portfolio from pharmaceutical market access and pricing controls and discounting, changes to tax and importation laws and other restrictions in the U.S., the EU and other regions around the world that result in lower prices, lower reimbursement rates and smaller populations for whom payers will reimburse, which can negatively impact our results of operations (including intangible asset impairment charges), operating cash flow, liquidity and financial flexibility. For example, some of the provisions of the IRA signed into law in August 2022, were as follows: (i) the government requires pharmaceutical manufacturers like BMS, under the threat of significant penalties, to sell certain innovative Medicare Part D and Part B medicines at government-set discounted prices, (ii) manufacturers are to pay an inflation-based rebate for Medicare Part B and Part D medicines, and (iii) Medicare Part D redesign. In addition, there were changes made to U.S. tax laws, including (i) a 15% minimum tax that generally applies to U.S. corporations, and a (ii) a non-deductible 1% excise tax provision on net stock repurchases, to be applied to repurchases beginning in 2023. Implementation of this legislation is expected to be carried out through upcoming actions by regulatory authorities, the outcome of which is uncertain. We continue to evaluate the impact of the IRA on our results of operations and it is possible that these changes may result in a material impact on our business and results of operations. See "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies—Other Litigation" for further information. Furthermore, countries are expected to make changes to their tax laws and updates to international tax treaties to implement the agreement by the Organization for Economic Co-operation and Development to establish a global minimum tax. See risk factors on these items included under "Part I—Item 1A. Risk Factors—Product, Industry and Operational Risks—Increased pricing pressure and other restrictions in the U.S. and abroad continue to negatively affect our revenues and profit margins" and "—Changes to tax regulations could negatively impact our earnings" in our 2022 Form 10-K.
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Significant Product and Pipeline Approvals
The following is a summary of the significant approvals received in 2023 as of October 26, 2023:
| Product | Date | Approval | ||||||
| Opdivo | October 2023 | FDA approval of Opdivo for the adjuvant treatment of adult and pediatric patients 12 years and older with completely resected stages IIB and IIC melanoma. | ||||||
| Reblozyl | August 2023 | FDA approval of Reblozyl as first-line treatment of anemia without previous erythropoiesis stimulating agent use (ESA-naïve) in adult patients with very low- to intermediate-risk MDS who may also require red blood cell transfusions. | ||||||
| Opdivo | August 2023 | EC approval of Opdivo for the adjuvant treatment of adult and pediatric patients 12 years and older with completely resected stages IIB and IIC melanoma. | ||||||
| Opdivo | June 2023 | EC approval of Opdivo in combination with platinum-based chemotherapy for the neoadjuvant treatment of resectable NSCLC at a high risk of recurrence in adult patients with tumor cell PD-L1 expression > 1%. | ||||||
| Camzyos | June 2023 | EC approval of Camzyos for the treatment of symptomatic (New York Heart Association, class II-III) obstructive HCM in adult patients. | ||||||
| Breyanzi | May 2023 | EC approval of Breyanzi for the treatment of adult patients with diffuse large B-cell lymphoma, high grade B-cell lymphoma, primary mediastinal large B-cell lymphoma and follicular lymphoma grade 3B, who relapsed within 12 months from completion of, or are refractory to, first-line chemoimmunotherapy. | ||||||
| Opdivo | March 2023 | Japan's Ministry of Health, Labour and Welfare approval of Opdivo plus chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC. | ||||||
| Sotyktu | March 2023 | EC approval of Sotyktu for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy. | ||||||
| Reblozyl | March 2023 | EC approval of Reblozyl for the treatment in adult patients of anemia associated with non-transfusion-dependent beta thalassemia. | ||||||
Refer to "—Product and Pipeline Developments" for the developments in our marketed products and late-stage pipeline since the start of the third quarter of 2023.
Acquisitions, Divestitures, Licensing and Other Arrangements
Refer to "Item 1. Financial Statements—Note 3. Alliances" and "—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for information on significant acquisitions, divestitures, licensing and other arrangements.
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RESULTS OF OPERATIONS
Regional Revenues
The composition of the changes in revenues was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | Foreign Exchange(b) | 2023 | 2022 | % Change | Foreign Exchange(b) | |||||||||||||||||||||||||||||||||||||||
| United States | $ | 7,628 | $ | 7,941 | (4) | % | — | % | $ | 23,552 | $ | 23,903 | (1) | % | — | % | |||||||||||||||||||||||||||||||
| International | 3,153 | 3,062 | 3 | % | 1 | % | 9,462 | 10,216 | (7) | % | (2) | % | |||||||||||||||||||||||||||||||||||
Other(a) | 185 | 215 | (14) | % | N/A | 515 | 634 | (19) | % | N/A | |||||||||||||||||||||||||||||||||||||
| Total | $ | 10,966 | $ | 11,218 | (2) | % | 1 | % | $ | 33,529 | $ | 34,753 | (4) | % | (1) | % | |||||||||||||||||||||||||||||||
(a) Other revenues include royalties and alliance-related revenues for products not sold by our regional commercial organizations.
(b) Foreign exchange impacts were derived by applying the prior period average currency rates to the current period sales.
United States
•U.S. revenues decreased 4% during the third quarter of 2023 and 1% year-to-date, primarily due to lower Revlimid sales driven by the previously disclosed generic erosion and increase in patients receiving free drug product for Revlimid, and to a lesser extent, Pomalyst, from the Bristol Myers Squibb Patient Assistance Foundation, a separate and independent 501(c)(3) entity to which BMS donates product, partially offset by an increase in demand for our In-Line Products and New Product Portfolio. Average U.S. net selling prices decreased 1% year-to-date compared to the same period a year ago.
International
•International revenues increased 3% during the third quarter of 2023 primarily due to Opdivo and New Product Portfolio and foreign exchange, partially offset by lower average net selling prices.
•International revenues decreased 7% year-to-date primarily due to Revlimid and Eliquis generic erosion, lower average net selling prices and foreign exchange, partially offset by Opdivo and New Product Portfolio.
No single country outside the U.S. contributed more than 10% of total revenues during the nine months ended September 30, 2023 and 2022. Our business is typically not seasonal.
GTN Adjustments
The reconciliation of gross product sales to net product sales by each significant category of GTN adjustments was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||
| Gross product sales | $ | 18,648 | $ | 17,606 | 6 | % | $ | 54,047 | $ | 51,555 | 5 | % | |||||||||||||||||||||||
| GTN adjustments | |||||||||||||||||||||||||||||||||||
| Charge-backs and cash discounts | (2,373) | (1,907) | 24 | % | (6,743) | (5,420) | 24 | % | |||||||||||||||||||||||||||
| Medicaid and Medicare rebates | (3,730) | (3,295) | 13 | % | (9,355) | (8,003) | 17 | % | |||||||||||||||||||||||||||
| Other rebates, returns, discounts and adjustments | (1,900) | (1,591) | 19 | % | (5,339) | (4,526) | 18 | % | |||||||||||||||||||||||||||
| Total GTN adjustments | (8,003) | (6,793) | 18 | % | (21,437) | (17,949) | 19 | % | |||||||||||||||||||||||||||
| Net product sales | $ | 10,645 | $ | 10,813 | (2) | % | $ | 32,610 | $ | 33,606 | (3) | % | |||||||||||||||||||||||
| GTN adjustments percentage | 43 | % | 38 | % | 5 | % | 40 | % | 35 | % | 5 | % | |||||||||||||||||||||||
| U.S. | 49 | % | 43 | % | 6 | % | 45 | % | 40 | % | 5 | % | |||||||||||||||||||||||
| Non-U.S. | 20 | % | 18 | % | 2 | % | 20 | % | 17 | % | 3 | % | |||||||||||||||||||||||
Reductions to provisions for product sales made in prior periods resulting from changes in estimates were $18 million and $116 million for the three and nine months ended September 30, 2023 and $10 million and $207 million for the three and nine months ended September 30, 2022, respectively. GTN adjustments are primarily a function of product sales volume, regional and payer channel mix, contractual or legislative discounts and rebates. U.S. GTN adjustments percentage increased primarily due to product mix and higher government channel rebates.
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Product Revenues
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||
| In-Line Products | |||||||||||||||||||||||||||||||||||
| Eliquis | $ | 2,705 | $ | 2,655 | 2 | % | $ | 9,332 | $ | 9,101 | 3 | % | |||||||||||||||||||||||
| U.S. | 1,799 | 1,729 | 4 | % | 6,693 | 6,068 | 10 | % | |||||||||||||||||||||||||||
| Non-U.S. | 906 | 926 | (2) | % | 2,639 | 3,033 | (13) | % | |||||||||||||||||||||||||||
| Opdivo | 2,275 | 2,047 | 11 | % | 6,622 | 6,033 | 10 | % | |||||||||||||||||||||||||||
| U.S. | 1,352 | 1,243 | 9 | % | 3,872 | 3,547 | 9 | % | |||||||||||||||||||||||||||
| Non-U.S. | 923 | 804 | 15 | % | 2,750 | 2,486 | 11 | % | |||||||||||||||||||||||||||
| Pomalyst/Imnovid | 872 | 886 | (2) | % | 2,551 | 2,620 | (3) | % | |||||||||||||||||||||||||||
| U.S. | 610 | 640 | (5) | % | 1,725 | 1,813 | (5) | % | |||||||||||||||||||||||||||
| Non-U.S. | 262 | 246 | 7 | % | 826 | 807 | 2 | % | |||||||||||||||||||||||||||
| Orencia | 925 | 883 | 5 | % | 2,616 | 2,551 | 3 | % | |||||||||||||||||||||||||||
| U.S. | 719 | 682 | 5 | % | 1,988 | 1,928 | 3 | % | |||||||||||||||||||||||||||
| Non-U.S. | 206 | 201 | 2 | % | 628 | 623 | 1 | % | |||||||||||||||||||||||||||
| Sprycel | 517 | 560 | (8) | % | 1,404 | 1,587 | (12) | % | |||||||||||||||||||||||||||
| U.S. | 406 | 402 | 1 | % | 1,029 | 1,079 | (5) | % | |||||||||||||||||||||||||||
| Non-U.S. | 111 | 158 | (30) | % | 375 | 508 | (26) | % | |||||||||||||||||||||||||||
| Yervoy | 579 | 523 | 11 | % | 1,672 | 1,563 | 7 | % | |||||||||||||||||||||||||||
| U.S. | 362 | 322 | 12 | % | 1,045 | 959 | 9 | % | |||||||||||||||||||||||||||
| Non-U.S. | 217 | 201 | 8 | % | 627 | 604 | 4 | % | |||||||||||||||||||||||||||
| Mature and other products | 476 | 514 | (7) | % | 1,415 | 1,563 | (9) | % | |||||||||||||||||||||||||||
| U.S. | 191 | 191 | — | % | 570 | 565 | 1 | % | |||||||||||||||||||||||||||
| Non-U.S. | 285 | 323 | (12) | % | 845 | 998 | (15) | % | |||||||||||||||||||||||||||
| Total In-Line Products | 8,349 | 8,068 | 3 | % | 25,612 | 25,018 | 2 | % | |||||||||||||||||||||||||||
| U.S. | 5,439 | 5,209 | 4 | % | 16,922 | 15,959 | 6 | % | |||||||||||||||||||||||||||
| Non-U.S. | 2,910 | 2,859 | 2 | % | 8,690 | 9,059 | (4) | % | |||||||||||||||||||||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||
| New Product Portfolio | |||||||||||||||||||||||||||||||||||
| Reblozyl | 248 | 190 | 31 | % | 688 | 518 | 33 | % | |||||||||||||||||||||||||||
| U.S. | 200 | 156 | 28 | % | 537 | 434 | 24 | % | |||||||||||||||||||||||||||
| Non-U.S. | 48 | 34 | 41 | % | 151 | 84 | 80 | % | |||||||||||||||||||||||||||
| Abecma | 93 | 107 | (13) | % | 372 | 263 | 41 | % | |||||||||||||||||||||||||||
| U.S. | 69 | 75 | (8) | % | 302 | 203 | 49 | % | |||||||||||||||||||||||||||
| Non-U.S. | 24 | 32 | (25) | % | 70 | 60 | 17 | % | |||||||||||||||||||||||||||
| Opdualag | 166 | 84 | 98 | % | 437 | 148 | * | ||||||||||||||||||||||||||||
| U.S. | 162 | 84 | 93 | % | 430 | 148 | * | ||||||||||||||||||||||||||||
| Non-U.S. | 4 | — | N/A | 7 | — | N/A | |||||||||||||||||||||||||||||
| Zeposia | 123 | 69 | 78 | % | 301 | 171 | 76 | % | |||||||||||||||||||||||||||
| U.S. | 96 | 50 | 92 | % | 223 | 119 | 87 | % | |||||||||||||||||||||||||||
| Non-U.S. | 27 | 19 | 42 | % | 78 | 52 | 50 | % | |||||||||||||||||||||||||||
| Breyanzi | 92 | 44 | * | 263 | 127 | * | |||||||||||||||||||||||||||||
| U.S. | 77 | 35 | * | 218 | 109 | 100 | % | ||||||||||||||||||||||||||||
| Non-U.S. | 15 | 9 | 67 | % | 45 | 18 | * | ||||||||||||||||||||||||||||
| Onureg | 43 | 32 | 34 | % | 121 | 87 | 39 | % | |||||||||||||||||||||||||||
| U.S. | 30 | 24 | 25 | % | 86 | 68 | 26 | % | |||||||||||||||||||||||||||
| Non-U.S. | 13 | 8 | 63 | % | 35 | 19 | 84 | % | |||||||||||||||||||||||||||
| Inrebic | 29 | 21 | 38 | % | 81 | 62 | 31 | % | |||||||||||||||||||||||||||
| U.S. | 19 | 17 | 12 | % | 55 | 52 | 6 | % | |||||||||||||||||||||||||||
| Non-U.S. | 10 | 4 | * | 26 | 10 | * | |||||||||||||||||||||||||||||
| Camzyos | 68 | 5 | * | 143 | 8 | * | |||||||||||||||||||||||||||||
| U.S. | 67 | 5 | * | 142 | 8 | * | |||||||||||||||||||||||||||||
| Non-U.S. | 1 | — | N/A | 1 | — | N/A | |||||||||||||||||||||||||||||
| Sotyktu | 66 | 1 | * | 107 | 1 | * | |||||||||||||||||||||||||||||
| U.S. | 62 | 1 | * | 101 | 1 | * | |||||||||||||||||||||||||||||
| Non-U.S. | 4 | — | N/A | 6 | — | N/A | |||||||||||||||||||||||||||||
| Total New Product Portfolio | 928 | 553 | 68 | % | 2,513 | 1,385 | 81 | % | |||||||||||||||||||||||||||
| U.S. | 782 | 447 | 75 | % | 2,094 | 1,142 | 83 | % | |||||||||||||||||||||||||||
| Non-U.S. | 146 | 106 | 38 | % | 419 | 243 | 72 | % | |||||||||||||||||||||||||||
| Total In-Line Products and New Product Portfolio | 9,277 | 8,621 | 8 | % | 28,125 | 26,403 | 7 | % | |||||||||||||||||||||||||||
| U.S. | 6,221 | 5,656 | 10 | % | 19,016 | 17,101 | 11 | % | |||||||||||||||||||||||||||
| Non-U.S. | 3,056 | 2,965 | 3 | % | 9,109 | 9,302 | (2) | % | |||||||||||||||||||||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||
Recent LOE Products(a) | |||||||||||||||||||||||||||||||||||
| Revlimid | 1,429 | 2,420 | (41) | % | 4,647 | 7,718 | (40) | % | |||||||||||||||||||||||||||
| U.S. | 1,226 | 2,170 | (44) | % | 4,004 | 6,338 | (37) | % | |||||||||||||||||||||||||||
| Non-U.S. | 203 | 250 | (19) | % | 643 | 1,380 | (53) | % | |||||||||||||||||||||||||||
| Abraxane | 260 | 177 | 47 | % | 757 | 632 | 20 | % | |||||||||||||||||||||||||||
| U.S. | 181 | 115 | 57 | % | 532 | 464 | 15 | % | |||||||||||||||||||||||||||
| Non-U.S. | 79 | 62 | 27 | % | 225 | 168 | 34 | % | |||||||||||||||||||||||||||
| Total Recent LOE Products | 1,689 | 2,597 | (35) | % | 5,404 | 8,350 | (35) | % | |||||||||||||||||||||||||||
| U.S. | 1,407 | 2,285 | (38) | % | 4,536 | 6,802 | (33) | % | |||||||||||||||||||||||||||
| Non-U.S. | 282 | 312 | (10) | % | 868 | 1,548 | (44) | % | |||||||||||||||||||||||||||
| Total Revenues | $ | 10,966 | $ | 11,218 | (2) | % | $ | 33,529 | $ | 34,753 | (4) | % | |||||||||||||||||||||||
| U.S. | $ | 7,628 | $ | 7,941 | (4) | % | $ | 23,552 | $ | 23,903 | (1) | % | |||||||||||||||||||||||
| Non-U.S. | $ | 3,338 | $ | 3,277 | 2 | % | $ | 9,977 | $ | 10,850 | (8) | % | |||||||||||||||||||||||
* Change in excess of 100%.
(a) Recent LOE Products includes products with significant decline in revenue from a prior reporting period as a result of a loss of exclusivity.
In-Line Products
Eliquis (apixaban) — an oral Factor Xa inhibitor, indicated for the reduction in risk of stroke/systemic embolism in non-valvular atrial fibrillation and for the treatment of DVT/PE and reduction in risk of recurrence following initial therapy.
•U.S. revenues increased 4% during the third quarter of 2023 and 10% year-to-date primarily due to higher demand, partially offset by lower average net selling prices, including higher GTN adjustments due to product mix in 2023. A majority of Eliquis patients enter the coverage gap during the third and fourth quarters, which is expected to result in lower revenues during the second half of the year.
•International revenues decreased 2% during the third quarter of 2023 and 13% year-to-date primarily due to lower average net selling price, generic erosion in the UK and Canada partially offset by foreign exchange impact of 4% in the third quarter. Generic erosion had a more significant impact in the first half of 2023. The decrease in international revenues year-to-date included foreign exchange impacts of 1%. Excluding foreign exchange impacts, revenues decreased by 6% and 12%, respectively.
•Following the May 2021 expiration of regulatory exclusivity for Eliquis in Europe and the court decision in the United Kingdom finding the UK apixaban composition-of-matter patent and related SPC invalid, generic manufacturers have begun marketing generic versions of Eliquis in the UK and in Portugal, and may seek to market generic versions of Eliquis in additional countries in Europe, prior to the expiration of our patents, which has led to additional infringement and invalidity actions involving our Eliquis patents being filed in various countries in Europe. Most recently, in France, Norway and Sweden, courts held in BMS's favor, confirming the validity of the composition of matter patent and related SPCs in those countries. We believe in the innovative science behind Eliquis and the strength of our intellectual property, which we will defend against infringement. Refer to "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies—Intellectual Property" for further information.
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Opdivo (nivolumab) — a fully human monoclonal antibody that binds to the PD-1 on T and natural killer T cells that has been approved for several anti-cancer indications including bladder, blood, CRC, head and neck, RCC, hepatocellular carcinoma, lung, melanoma, MPM, stomach and esophageal cancer. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and various gastric and esophageal cancers. There are several ongoing potentially registrational studies for Opdivo across other tumor types and disease areas, in monotherapy and in combination with Yervoy and various anti-cancer agents.
•U.S. revenues increased 9% during both the third quarter of 2023 and year-to-date primarily due to higher demand across multiple indications and to a lesser extent higher average net selling prices. The higher demand was related to the following indications: the Opdivo+Yervoy combinations for NSCLC, various gastric, esophageal and bladder cancers.
•International revenues increased 15% during the third quarter of 2023 and 11% year-to-date due to higher demand as a result of additional indication launches and core indications and to a lesser extent lower average net selling prices. The year-to-date revenue increase was partially offset by foreign exchange impact of 3%. Excluding foreign exchange impacts, revenues increased 15% and 14%, respectively.
Pomalyst/Imnovid (pomalidomide) — a proprietary, distinct, small molecule that is administered orally and modulates the immune system and other biologically important targets. Pomalyst/Imnovid is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy.
•U.S. revenues decreased 5% during both the third quarter of 2023 and year-to-date due to an increase in the number of patients receiving free drug product from the Bristol Myers Squibb Patient Assistance Foundation, a separate and independent 501(c)(3) entity to which BMS donates products, partially offset by higher average net selling prices.
•International revenues increased 7% during the third quarter of 2023 and 2% year-to-date primarily due to higher demand and foreign exchange impacts of 3% partially offset by lower average net selling prices in the third quarter. The year-to-date revenues increase was partially offset by lower average net selling prices and foreign exchange impacts of 2%. Excluding foreign exchange impacts, revenues increased by 4% in both periods.
Orencia (abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and psoriatic arthritis and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular juvenile idiopathic arthritis.
•U.S. revenues increased 5% during the third quarter of 2023 and 3% year-to-date primarily due to higher demand. Year-to-date was also impacted by lower average net selling prices.
•International revenues increased 2% during the third quarter of 2023 and 1% year-to-date due to higher demand and in the third quarter, foreign exchange impacts of 1%. The year-to-date revenue increase was also partially offset by foreign exchange impacts of 3%. Excluding foreign exchange impacts, revenues increased by 1% and 4%, respectively.
•BMS is not aware of any Orencia biosimilars on the market in the U.S., EU and Japan. Formulation and additional patents expire in 2026 and beyond.
Sprycel (dasatinib) — an oral inhibitor of multiple tyrosine kinase indicated for the first-line treatment of patients with Philadelphia chromosome-positive CML in chronic phase and the treatment of adults with chronic, accelerated, or myeloid or lymphoid blast phase CML with resistance or intolerance to prior therapy, including Gleevec* (imatinib mesylate) and the treatment of children and adolescents aged 1 year to 18 years with chronic phase Philadelphia chromosome-positive CML.
•U.S. revenues increased 1% during the third quarter of 2023 due to increased demand partially offset by lower average net selling prices.
•U.S. revenues decreased 5% year-to-date due to lower average selling price driven by unfavorable prior period GTN adjustments.
•International revenues decreased 30% during the third quarter of 2023 and 26% year-to-date primarily due to lower demand as a result of generic erosion, lower average net selling price and foreign exchange impacts of 1% and 3%, respectively. Excluding foreign exchange impacts, revenues decreased by 29% and 23%, respectively.
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•In the U.S., BMS entered into settlement agreements with certain third parties to sell generic dasatinib products beginning in September 2024, or earlier in certain circumstances. In the EU, generic dasatinib products have entered the market. In Japan, the composition of matter patent has been extended to 2024 for the treatment of non-imatinib-resistant CML, but generics have been approved for other indications.
Yervoy (ipilimumab) — a monoclonal antibody for the treatment of patients with unresectable or metastatic melanoma. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and esophageal cancer.
•U.S. revenues increased 12% during the third quarter of 2023 and 9% year-to-date primarily due to higher demand and average net selling prices.
•International revenues increased 8% during the third quarter of 2023 and 4% year-to-date primarily due to higher demand as a result of additional indication launches and core indications and foreign exchange impacts of 2% during the third quarter of 2023. The year-to-date increase was partially offset by lower average net selling price and foreign exchange impacts of 3%. Excluding foreign exchange impacts, revenues increased by 6% and 7%, respectively.
Mature and other products — includes all other products, including those which have lost exclusivity in major markets, OTC products, royalty revenue and mature products.
•International revenues decreased 12% during the third quarter of 2023 and 15% year-to-date primarily due to continued generic erosion, lower average net selling prices and foreign exchange impacts of 1% and 2%, respectively. Excluding foreign exchange impacts, revenues decreased by 11% and 13%, respectively.
New Product Portfolio
Reblozyl (luspatercept-aamt) — an erythroid maturation agent indicated for the treatment of anemia in i) adult patients with transfusion dependent and non-transfusion dependent beta thalassemia who require regular red blood cell transfusions, ii) adult patients with very low- to intermediate-risk MDS who have ring sideroblasts and require red blood cell transfusions, as well as iii) adult patients without previous erythropoiesis stimulating agent use (ESA-naïve) with very low- to intermediate-risk MDS who may require regular red blood cell transfusions, regardless of ring sideroblast status. Reblozyl was launched in November 2019.
•U.S. revenues increased 28% during the third quarter of 2023 and 24% year-to-date primarily due to higher demand.
Abecma (idecabtagene vicleucel) — is a B-cell maturation antigen-directed ("BCMA") genetically modified autologous CAR–T cell therapy indicated for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-cyclic ADP ribose hydrolase monoclonal antibody. Abecma was launched in May 2021.
•U.S. revenues decreased 8% during the third quarter of 2023 resulting from a planned facility maintenance and lower demand due to increased competition in BCMA targeted therapies, partially offset by higher average net selling prices.
•U.S. revenues increased 49% year-to-date primarily due to higher demand enabled by additional manufacturing capacity.
Opdualag (nivolumab and relatlimab-rmbw) — a combination of nivolumab, a PD-1 blocking antibody, and relatlimab, a lymphocyte activation gene-3 blocking antibody, indicated for the treatment of adult and pediatric patients 12 years of age or older with unresectable or metastatic melanoma. Opdualag was launched in March 2022.
Zeposia (ozanimod) — an oral immunomodulatory drug used to treat relapsing forms of multiple sclerosis, to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults and to treat moderately to severely active UC in adults. Zeposia was launched in June 2020.
Breyanzi (lisocabtagene maraleucel) — is a CD19-directed genetically modified autologous CAR-T cell therapy indicated for the treatment of adult patients with certain types of relapsed or refractory large B-cell lymphoma after one or more lines of systemic therapy. Breyanzi was launched in April 2021.
Onureg (azacitidine) — an oral hypomethylating agent that incorporates into DNA and RNA, indicated for continued treatment of adult patients with acute myeloid leukemia who achieved first complete remission or complete remission with incomplete blood count recovery following intensive induction chemotherapy and are not able to complete intensive curative therapy. Onureg was launched in September 2020.
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Inrebic (fedratinib) — an oral kinase inhibitor indicated for the treatment of adult patients with intermediate-2 or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis. Inrebic was launched in August 2019.
Camzyos (mavacamten) — a cardiac myosin inhibitor indicated for the treatment of adults with symptomatic obstructive HCM to improve functional capacity and symptoms. Camzyos was launched in April 2022.
Sotyktu (deucravacitinib) — an oral, selective, allosteric tyrosine kinase 2 inhibitor indicated for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy. Sotyktu was launched in September 2022.
Recent LOE Products
Revlimid (lenalidomide) — an oral immunomodulatory drug that in combination with dexamethasone is indicated for the treatment of patients with multiple myeloma. Revlimid as a single agent is also indicated as a maintenance therapy in patients with multiple myeloma following autologous hematopoietic stem cell transplant.
•U.S. revenues decreased 44% during the third quarter of 2023 and 37% year-to-date primarily due to generic erosion and an increase in the number of patients receiving free drug product from the Bristol Myers Squibb Patient Assistance Foundation, a separate and independent 501(c)(3) entity to which BMS donates products, and to a lesser extent lower average net selling prices.
•International revenues decreased 19% during the third quarter of 2023 and 53% year-to-date primarily due to generic erosion across several European countries and foreign exchange impacts of 1%. The year-to-date decrease was also impacted by lower average net selling prices. Excluding foreign exchange impacts, revenues decreased by 18% and 52%, respectively.
•In the U.S., certain third parties have been granted volume-limited licenses to sell generic lenalidomide beginning in March 2022 or thereafter. Pursuant to these licenses, several generics have entered or are expected to enter the U.S. market with volume-limited quantities of generic lenalidomide. In the EU, generic lenalidomide products have entered the market. Global revenues for Revlimid are expected to decline to approximately $6.0 billion in 2023.
Abraxane (paclitaxel albumin-bound particles for injectable suspension) — a solvent-free protein-bound chemotherapy product that combines paclitaxel with albumin using our proprietary Nab® technology platform, and is used to treat breast cancer, NSCLC and pancreatic cancer, among others.
•U.S. revenues increased 57% during the third quarter of 2023 and 15% year-to-date primarily due to higher branded sales resulting from lower authorized generic sales.
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Estimated End-User Demand
Pursuant to the SEC Consent Order described under "— SEC Consent Order" in our 2022 Form 10-K, we monitor inventory levels on hand in the U.S. wholesaler distribution channel and outside of the U.S. in the direct customer distribution channel. We disclose products with levels of inventory in excess of one month on hand or expected demand, subject to certain limited exceptions. There were none as of September 30, 2023, for our U.S. distribution channels, and June 30, 2023, for our non-U.S. distribution channels.
In the U.S., we generally determine our months on hand estimates using inventory levels of product on hand and the amount of out-movement provided by our three largest wholesalers, which accounted for approximately 86% of total gross sales of U.S. products during the nine months ended September 30, 2023. Factors that may influence our estimates include generic competition, seasonality of products, wholesaler purchases in light of increases in wholesaler list prices, new product launches, new warehouse openings by wholesalers and new customer stockings by wholesalers. In addition, these estimates are calculated using third-party data, which may be impacted by their recordkeeping processes.
Revlimid and Pomalyst are distributed in the U.S. primarily through contracted pharmacies under the Lenalidomide REMS (Revlimid) and Pomalyst REMS programs, respectively. These are proprietary risk-management distribution programs tailored specifically to provide for the safe and appropriate distribution and use of Revlimid and Pomalyst. Internationally, Revlimid and Imnovid are distributed under mandatory risk-management distribution programs tailored to meet local authorities' specifications to provide for the products' safe and appropriate distribution and use. These programs may vary by country and, depending upon the country and the design of the risk-management program, the product may be sold through hospitals or retail pharmacies.
Camzyos is only available through a restricted program called the Camzyos REMS Program. Product distribution is limited to REMS certified pharmacies, and enrolled pharmacies must only dispense to patients who are authorized to receive Camzyos.
Our non-U.S. businesses have significantly more direct customers. Information on available direct customer product level inventory and corresponding out-movement information and the reliability of third-party demand information varies widely. We limit our direct customer sales channel inventory reporting to where we can influence demand. When this information does not exist or is otherwise not available, we have developed a variety of methodologies to estimate such data, including using historical sales made to direct customers and third-party market research data related to prescription trends and end-user demand. Given the difficulties inherent in estimating third-party demand information, we evaluate our methodologies to estimate direct customer product level inventory and to calculate months on hand on an ongoing basis and make changes as necessary. Factors that may affect our estimates include generic competition, seasonality of products, price increases, new product launches, new warehouse openings by direct customers, new customer stockings by direct customers and expected direct customer purchases for governmental bidding situations. As such, all of the information required to estimate months on hand in the direct customer distribution channel for non-U.S. business during the nine months ended September 30, 2023 is not available prior to the filing of this Quarterly Report on Form 10-Q. We will disclose any product with levels of inventory in excess of one month on hand or expected demand for the current quarter, subject to certain limited exceptions, in our next quarterly report on Form 10-Q.
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Expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||
Cost of products sold(a) | $ | 2,506 | $ | 2,353 | 7 | % | $ | 7,948 | $ | 7,544 | 5 | % | |||||||||||||||||||||||
| Marketing, selling and administrative | 2,003 | 1,930 | 4 | % | 5,699 | 5,548 | 3 | % | |||||||||||||||||||||||||||
| Research and development | 2,242 | 2,418 | (7) | % | 6,821 | 6,999 | (3) | % | |||||||||||||||||||||||||||
| Acquired IPRD | 80 | 30 | * | 313 | 763 | (59) | % | ||||||||||||||||||||||||||||
| Amortization of acquired intangible assets | 2,256 | 2,418 | (7) | % | 6,769 | 7,252 | (7) | % | |||||||||||||||||||||||||||
| Other (income)/expense, net | (258) | (140) | 84 | % | (787) | 793 | * | ||||||||||||||||||||||||||||
| Total Expenses | $ | 8,829 | $ | 9,009 | (2) | % | $ | 26,763 | $ | 28,899 | (7) | % | |||||||||||||||||||||||
* In excess of +/- 100%.
(a) Excludes amortization of acquired intangible assets.
Cost of Products Sold
Cost of products sold increased by $153 million in the third quarter of 2023 and $404 million year-to-date primarily due to lower hedging settlement gains ($143 million in the quarter and $147 million year-to-date) and higher royalty and profit sharing ($28 million in the quarter and $270 million year-to-date). Year-to-date also included the offsetting impacts of higher CAR-T cell therapy inventory charges and the elimination of the Puerto Rico excise tax ($164 million).
Marketing, Selling and Administrative
Marketing, selling and administrative expense increased by $73 million in the third quarter of 2023 primarily driven by higher advertising and promotion costs to support new product launches, a lease impairment in 2023 ($65 million) and timing of charitable giving ($90 million), partially offset by the cash settlement of Turning Point unvested stock awards ($73 million) in 2022.
Marketing, selling and administrative expense increased by $151 million year-to-date primarily due to higher advertising and promotion costs to support new product launches, and consulting costs supporting corporate initiatives, a lease impairment in 2023 ($65 million), partially offset by timing of charitable giving ($60 million) and cash settlement of Turning Point unvested stock awards ($73 million).
Research and Development
Research and development expense decreased by $176 million in the third quarter of 2023 and $178 million year-to-date, primarily due to lower clinical grants and supplies in 2023 and the cash settlement of Turning Point unvested stock awards ($80 million) in 2022. Year-to-date also included the impacts of the unwinding of inventory purchase price adjustments for clinical use ($130 million) in 2022, partially offset by the purchase of a priority review voucher ($95 million) in 2023.
Acquired IPRD
Acquired IPRD charges resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Mavacamten royalty extinguishment | $ | — | $ | — | $ | — | $ | 295 | |||||||||||||||
| Dragonfly milestone | — | — | — | 175 | |||||||||||||||||||
| Prothena opt-in license fee | — | — | 55 | — | |||||||||||||||||||
| Immatics upfront license fee | — | — | 15 | 150 | |||||||||||||||||||
| Evotec designation and opt-in license fees | — | — | 90 | — | |||||||||||||||||||
| BridgeBio upfront license fee | — | — | — | 90 | |||||||||||||||||||
Zenas upfront license fee | 50 | — | 50 | — | |||||||||||||||||||
| Other | 30 | 30 | 103 | 53 | |||||||||||||||||||
| Acquired IPRD charges | $ | 80 | $ | 30 | $ | 313 | $ | 763 | |||||||||||||||
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Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets decreased by $162 million in the third quarter of 2023 and $483 million year-to-date primarily due to Abraxane marketed product right being fully amortized in the fourth quarter of 2022.
Other (Income)/Expense, Net
Other (income)/expense, net changed by $118 million in the third quarter of 2023 and $1.6 billion year-to-date primarily litigation and other settlements, equity investments and other items discussed below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Interest expense | $ | 280 | $ | 299 | $ | 850 | $ | 938 | |||||||||||||||
| Royalty and licensing income | (365) | (374) | (1,068) | (967) | |||||||||||||||||||
| Royalty income - divestitures | (217) | (205) | (623) | (597) | |||||||||||||||||||
| Equity investment losses | — | 14 | 213 | 966 | |||||||||||||||||||
| Integration expenses | 54 | 114 | 180 | 343 | |||||||||||||||||||
| Loss on debt redemption | — | — | — | 266 | |||||||||||||||||||
| Divestiture gains | — | — | — | (211) | |||||||||||||||||||
| Litigation and other settlements | (61) | 44 | (393) | 32 | |||||||||||||||||||
| Investment income | (107) | (52) | (304) | (89) | |||||||||||||||||||
| Provision for restructuring | 141 | 17 | 321 | 60 | |||||||||||||||||||
| Other | 17 | 3 | 37 | 52 | |||||||||||||||||||
| Other (income)/expense, net | $ | (258) | $ | (140) | $ | (787) | $ | 793 | |||||||||||||||
•Interest expense decreased in the third quarter of 2023 and year-to-date compared to 2022 due to additional debt maturities. Refer to "Item 1. Financial Statements and Supplementary Data—Note 10. Financing Arrangements" for further information.
•Royalties increased in the third quarter of 2023 and year-to-date primarily due to higher Keytruda* and diabetes business divestiture royalties. Refer to "Item 1. Financial Statements and Supplementary Data—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for further information.
•Equity investments generated lower losses in the third quarter of 2023 and year-to-date compared to 2022 primarily driven by fair value adjustments for investments that have readily determinable fair value. Refer to "Item 1. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements" for more information.
•Integration expenses decreased in the third quarter of 2023 and year-to-date primarily due to lower consulting fees to implement Celgene integration initiatives related to processes and systems.
•Loss on debt redemption resulted from the early redemption of long-term debt during the nine months ended September 30, 2022, as further discussed in "Item 1. Financial Statements and Supplementary Data—Note 10. Financing Arrangements".
•Divestiture gains resulted from the divestiture of certain mature product rights during the first quarter of 2022.
•Litigation and other settlements include $384 million of income related to the AZ settlement, partially offset by $322 million expense recorded in connection with the BeiGene settlement in 2023. In addition, year-to-date 2023 included $400 million of income related to the Nimbus' TYK2 program change of control provision incurred during the second quarter. Refer to "Item 1. Financial Statements and Supplementary Data—Note 5. Other (Income)/Expense, Net" for further information.
•Investment income increased during the third quarter of 2023 and year-to-date primarily due to higher interest rates.
•Provision for restructuring includes exit and other costs primarily related to certain restructuring activities including a new plan in 2023 discussed further in "Item 1. Financial Statements and Supplementary Data—Note 6. Restructuring".
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Income Taxes
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Earnings before income taxes | $ | 2,137 | $ | 2,209 | $ | 6,766 | $ | 5,854 | ||||||||||||||||||
| Income tax provision | 203 | 601 | 488 | 1,534 | ||||||||||||||||||||||
| Effective tax rate | 9.5 | % | 27.2 | % | 7.2 | % | 26.2 | % | ||||||||||||||||||
| Impact of specified items | (2.1) | % | 10.3 | % | (7.5) | % | 9.6 | % | ||||||||||||||||||
| Effective tax rate excluding specified items | 11.6 | % | 16.9 | % | 14.7 | % | 16.6 | % | ||||||||||||||||||
Provision for income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The reduction in the effective tax rate during the third quarter of 2023 was primarily due to recently issued Section 174 guidance regarding deductibility of certain non-U.S. research and development expenses. The revised guidance resulted in a reduction of previously estimated income taxes attributed to 2022, which was reflected in the current quarter as well as a reduction in the estimated annual effective rates for 2023. Previously estimated income taxes for 2022 were reduced by approximately $240 million upon finalization of the U.S. Federal tax return primarily due to the aforementioned revised Section 174 guidance that was issued in the third quarter of 2023.
In addition, the effective tax rate during the first nine months of 2023 was impacted by a $656 million deferred income tax benefit following the receipt of a non-U.S. tax ruling regarding the deductibility of a statutory impairment of subsidiary investments, jurisdictional earnings mix resulting from amortization of acquired intangible assets, equity investment losses, litigation and other settlements, as well as releases of income tax reserves of $89 million related to the resolution of Celgene's 2009-2011 IRS audits, partially offset by the impact of changes in the Puerto Rico tax decree that eliminated a previously creditable excise tax. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code.
The changes in the non-GAAP effective tax rate were due to the changes in the aforementioned changes to Section 174 guidance, Puerto Rico tax decree, jurisdictional earnings mix and the tax reserve releases in the first quarter of 2023.
Non-GAAP Financial Measures
Our non-GAAP financial measures, such as non-GAAP earnings and related EPS information, are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded from non-GAAP earnings and related EPS information because the Company believes they neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods, including (i) amortization of acquired intangible assets, including product rights that generate a significant portion of our ongoing revenue and will recur until the intangible assets are fully amortized, (ii) unwind of inventory purchase price adjustments, (iii) acquisition and integration expenses, (iv) restructuring costs, (v) accelerated depreciation and impairment of property, plant and equipment and intangible assets, (vi) costs of acquiring a priority review voucher, (vii) divestiture gains or losses, (viii) stock compensation resulting from acquisition-related equity awards, (ix) pension, legal and other contractual settlement charges, (x) equity investment and contingent value rights fair value adjustments (including fair value adjustments attributed to limited partnership equity method investments), (xi) income resulting from the change in control of the Nimbus Therapeutics TYK2 Program and (xii) amortization of fair value adjustments of debt acquired from Celgene in our 2019 exchange offer, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Certain other significant tax items are also excluded such as the impact resulting from a non-U.S. tax ruling regarding the deductibility of a statutory impairment of subsidiary investments. We also provide international revenues for our priority products excluding the impact of foreign exchange. We calculate foreign exchange impacts by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in Exhibit 99.1 to our Form 8-K filed on October 26, 2023 and are incorporated herein by reference.
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Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors' overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. This information is not intended to be considered in isolation or as a substitute for the related financial measures prepared in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our consolidated financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Specified items were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Inventory purchase price accounting adjustments | $ | — | $ | 86 | $ | 84 | $ | 240 | |||||||||||||||
| Site exit and other costs | 16 | — | 53 | 43 | |||||||||||||||||||
| Cost of products sold | 16 | 86 | 137 | 283 | |||||||||||||||||||
| Employee compensation charges | — | 73 | — | 73 | |||||||||||||||||||
| Site exit and other costs | 65 | — | 85 | 6 | |||||||||||||||||||
| Marketing, selling and administrative | 65 | 73 | 85 | 79 | |||||||||||||||||||
| IPRD impairments | 60 | 58 | 80 | 98 | |||||||||||||||||||
| Priority review voucher | — | — | 95 | — | |||||||||||||||||||
| Inventory purchase price accounting adjustments | — | 22 | — | 130 | |||||||||||||||||||
| Employee compensation charges | — | 80 | — | 80 | |||||||||||||||||||
| Site exit and other costs | 4 | — | 10 | — | |||||||||||||||||||
| Research and development | 64 | 160 | 185 | 308 | |||||||||||||||||||
| Amortization of acquired intangible assets | 2,256 | 2,418 | 6,769 | 7,252 | |||||||||||||||||||
Interest expense(a) | (12) | (18) | (39) | (66) | |||||||||||||||||||
| Equity investment (income)/losses | (2) | 12 | 206 | 962 | |||||||||||||||||||
| Integration expenses | 54 | 114 | 180 | 343 | |||||||||||||||||||
Loss on debt redemption | — | — | — | 266 | |||||||||||||||||||
| Divestiture gains | — | — | — | (211) | |||||||||||||||||||
| Litigation and other settlements | (62) | 36 | (397) | (4) | |||||||||||||||||||
| Provision for restructuring | 141 | 17 | 321 | 60 | |||||||||||||||||||
| Other | 28 | 28 | 23 | 70 | |||||||||||||||||||
| Other (income)/expense, net | 147 | 189 | 294 | 1,420 | |||||||||||||||||||
| Increase to pretax income | 2,548 | 2,926 | 7,470 | 9,342 | |||||||||||||||||||
| Income taxes on items above | (340) | (268) | (944) | (987) | |||||||||||||||||||
| Income taxes attributed to non-U.S. tax ruling | — | — | (656) | — | |||||||||||||||||||
| Income taxes | (340) | (268) | (1,600) | (987) | |||||||||||||||||||
| Increase to net earnings | $ | 2,208 | $ | 2,658 | $ | 5,870 | $ | 8,355 | |||||||||||||||
(a) Includes amortization of purchase price adjustments to Celgene debt.
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The reconciliations from GAAP to Non-GAAP were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net earnings attributable to BMS | |||||||||||||||||||||||
| GAAP | $ | 1,928 | $ | 1,606 | $ | 6,263 | $ | 4,305 | |||||||||||||||
| Specified items | 2,208 | 2,658 | 5,870 | 8,355 | |||||||||||||||||||
| Non-GAAP | $ | 4,136 | $ | 4,264 | $ | 12,133 | $ | 12,660 | |||||||||||||||
| Weighted-average common shares outstanding – diluted | 2,064 | 2,148 | 2,093 | 2,154 | |||||||||||||||||||
| Diluted earnings per share attributable to BMS | |||||||||||||||||||||||
| GAAP | $ | 0.93 | $ | 0.75 | $ | 2.99 | $ | 2.00 | |||||||||||||||
| Specified items | 1.07 | 1.24 | 2.81 | 3.88 | |||||||||||||||||||
| Non-GAAP | $ | 2.00 | $ | 1.99 | $ | 5.80 | $ | 5.88 | |||||||||||||||
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our net debt position was as follows:
| Dollars in Millions | September 30, 2023 | December 31, 2022 | |||||||||
| Cash and cash equivalents | $ | 7,514 | $ | 9,123 | |||||||
| Marketable debt securities – current | 171 | 130 | |||||||||
| Marketable debt securities – non-current | 325 | — | |||||||||
| Total cash, cash equivalents and marketable debt securities | 8,010 | 9,253 | |||||||||
| Short-term debt obligations | (5,467) | (4,264) | |||||||||
| Long-term debt | (32,137) | (35,056) | |||||||||
| Net debt position | $ | (29,594) | $ | (30,067) | |||||||
We believe that our existing cash, cash equivalents and marketable debt securities, together with our ability to generate cash from operations and our access to short-term and long-term borrowings, are sufficient to satisfy our existing and anticipated cash needs, including dividends, capital expenditures, milestone payments, working capital, income taxes, restructuring initiatives, business development, business combinations, asset acquisitions, repurchase of common stock, debt maturities, as well as any debt repurchases through redemptions or tender offers. During the first nine months ended September 30, 2023, our net debt position decreased by $473 million primarily driven by $9.6 billion of cash provided by operations partially offset by $8.7 billion of dividend payments and common stock repurchases.
During the first nine months ended September 30, 2023, $1.9 billion of debt matured and was repaid including $750 million 2.750% Notes, $890 million 3.250% Notes and $239 million 7.150% Notes.
During the nine months ended September 30, 2023 we repurchased an aggregate $5.2 billion of common stock. Refer to "Item 1. Financial Statements and Supplementary Data—Note 16. Equity" for further information.
Dividend payments were $3.6 billion during the nine months ended September 30, 2023. Dividend paid per common share was $0.57 during each of the first, second and third quarters of 2023. The decision to authorize dividends is made on a quarterly basis by our Board of Directors.
Annual capital expenditures are expected to be approximately $1.1 billion and $1.4 billion in 2023 and 2024, respectively. We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities, research and development and other facility-related activities.
There were no borrowings outstanding under our $5.0 billion revolving credit facility as of September 30, 2023 and December 31, 2022.
Under our commercial paper program, we may issue a maximum of $5.0 billion unsecured notes that have maturities of not more than 366 days from the date of issuance. There were no commercial paper borrowings outstanding as of September 30, 2023.
Cash Flows
The following is a discussion of cash flow activities:
| Nine Months Ended September 30, | |||||||||||
| Dollars in millions | 2023 | 2022 | |||||||||
| Cash flow provided by/(used in): | |||||||||||
| Operating activities | $ | 9,608 | $ | 9,760 | |||||||
| Investing activities | (949) | (2,275) | |||||||||
| Financing activities | (10,383) | (13,716) | |||||||||
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Operating Activities
The $152 million decrease in cash provided by operating activities compared to 2022 was primarily due to lower collections of $700 million (net of rebates and discounts) partially offset by lower non-refundable advance payments for research and development services ($500 million).
Investing Activities
The $1.3 billion decrease in cash used in investing activities compared to 2022 was primarily due to the acquisition of Turning Point ($3.2 billion net of cash acquired) in 2022 partially offset by changes in the amount of marketable debt securities held ($2.0 billion).
Financing Activities
The $3.3 billion decrease in cash used in financing activities compared to 2022 was primarily due to lower net debt borrowings ($3.8 billion), lower share repurchases ($430 million) partially offset by lower proceeds from stock option exercises ($803 million).
Product and Pipeline Developments
Our R&D programs are managed on a portfolio basis from early discovery through late-stage development and include a balance of early-stage and late-stage programs to support future growth. Our late-stage R&D programs in Phase III development include both investigational compounds for initial indications and additional indications or formulations for marketed products. The following are the developments in our marketed products and our late-stage pipeline since the start of the third quarter of 2023:
| Product | Indication | Date | Developments | ||||||||
| Opdivo | Bladder | October 2023 | Announced results from the Phase III CheckMate -901 trial in which Opdivo in combination with cisplatin-based chemotherapy followed by Opdivo monotherapy demonstrated statistically significant and clinically meaningful improvements in the primary efficacy endpoints of overall survival and progression-free survival as assessed by Blinded Independent Central Review compared to standard-of-care cisplatin-based chemotherapy as a first-line treatment for patients with unresectable or metastatic urothelial carcinoma who are cisplatin-eligible. With a median follow up of 33 months, treatment with Opdivo in combination with cisplatin-based chemotherapy reduced risk of death by 22%; no new safety signals were identified. | ||||||||
| Melanoma | October 2023 | Announced FDA approval of Opdivo for the adjuvant treatment of adult and pediatric patients 12 years and older with completely resected stages IIB and IIC melanoma. The approval is based on the Phase III CheckMate -76K trial. | |||||||||
| August 2023 | Announced EC approval of Opdivo for the adjuvant treatment of adult and pediatric patients 12 years and older with completely resected stages IIB and IIC melanoma. The approval is based on results from the Phase III CheckMate -76K trial. | ||||||||||
NSCLC | October 2023 | Announced follow-up results from the Phase III CheckMate -816 trial, demonstrating sustained event-free survival and promising overall survival trends with three cycles of Opdivo in combination with platinum-based chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC, regardless of PD-L1 expression levels. Neoadjuvant Opdivo with chemotherapy also showed improvements in pathologic complete response and major pathologic response over chemotherapy alone in PD-L1>1% and <1% patient populations. The safety profile of the Opdivo-based regimen was consistent across all PD-L1 subgroups. | |||||||||
| October 2023 | Announced that the first disclosure of data from the Phase III CheckMate -77T trial evaluating perioperative regimen of neoadjuvant Opdivo with chemotherapy followed by surgery and adjuvant Opdivo in patients with resectable stage IIA to IIIB NSCLC showed statistically significant and clinically meaning improvement in the primary efficacy endpoint of event-free survival as assessed by Blinded Independent Central Review compared to neoadjuvant chemotherapy and placebo followed by surgery and adjuvant placebo. Neoadjuvant Opdivo with chemotherapy followed by surgery and adjuvant Opdivo reduced the risk of disease recurrence, progression or death by 42% in patients with resectable non-small cell lung cancer. | ||||||||||
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| Product | Indication | Date | Developments | ||||||||
| Opdivo | Prostate Cancer | July 2023 | Announced that results from the Phase III CheckMate -7DX trial evaluating Opdivo in combination with docetaxel in patients with advanced or metastatic castration-resistant prostate cancer did not meet the primary endpoints of radiographic progressive free survival at final analysis, nor overall survival at an interim analysis. No safety concerns were reported. Based on the recommendation from the data monitoring committee, the Company has decided to discontinue the study. | ||||||||
| RCC | October 2023 | Announced that the Phase III CheckMate -67T noninferiority trial evaluating the subcutaneous formulation of Opdivo co-formulated with Halozyme Therapeutics’ proprietary recombinant human hyaluronidase (rHPuH20) ("subcutaneous nivolumab") compared to intravenous (IV) Opdivo in patients with advanced or metastatic clear cell renal cell carcinoma (ccRCC) who have received prior systemic therapy met its co-primary pharmacokinetics endpoints and key secondary endpoint. Subcutaneous nivolumab demonstrated noninferiority of Cavgd28 (time-averaged Opdivo serum concentration over 28 days) and Cminss (trough serum concentration at steady state) compared to IV Opdivo, the study’s co-primary endpoints. Additionally, subcutaneous nivolumab showed a noninferior objective response rate as assessed by Blinded Independent Central Review vs. IV Opdivo, a key secondary endpoint. The safety profile of subcutaneous nivolumab was consistent with the IV formulation. | |||||||||
Opdivo+Yervoy | NSCLC | September 2023 | Announced six-year results from Part 1 of the Phase III CheckMate -227 trial demonstrating long-term, durable survival benefits of Opdivo plus Yervoy compared to chemotherapy in the first-line treatment of patients with metastatic NSCLC, regardless of PD-L1 expression levels. | ||||||||
| Reblozyl | MDS | August 2023 | Announced FDA approval of Reblozyl as first-line treatment of anemia in adults with lower-risk Myelodysplastic Syndromes (MDS) who may require transfusions. This expanded indication to the first-line setting is based on interim results from the Phase III COMMANDS trial, expanding approved population to ESA-naïve patients, regardless of ring sideroblast status. | ||||||||
Zeposia | Multiple Sclerosis | October 2023 | Announced data from the Phase III DAYBREAK and RADIANCE trials showing that after eight years of follow-up, 76% of patients treated with Zeposia for relapsing multiple sclerosis were free of six-month confirmed disability progression. Findings also demonstrated treatment with Zeposia resulted in low rates of progression independent relapse activity and relapse-associated worsening, key drivers of disease progression and permanent disability in multiple sclerosis. Also announced that first interim readout from the Phase IIIb ENLIGHTEN trial showing clinically meaningful improvement in cognitive functioning compared to baseline after one year of Zeposia treatment in almost half of patients with early relapsing multiple sclerosis. | ||||||||
| Camzyos | Obstructive HCM | August 2023 | Announced long-term follow-up results from the Phase III VALOR-HCM LTE trial demonstrating consistent impact of oral treatment for severely symptomatic obstructive HCM patients by showing that nearly 9 out of 10 patients treated with Camzyos have continued in the trial without septal reduction therapy at either 40 or 56 weeks of treatment. Also announced long-term follow-up results from the Phase III EXPLORER-LTE trial showing sustained improvements in left ventricular outflow tract obstruction, symptoms and NT-proBNP levels in patients with symptomatic obstructive HCM. No new safety signals were observed. | ||||||||
Sotyktu | Plaque Psoriasis | October 2023 | Announced results from the POETYK PSO LTE trial of Sotyktu treatment in adult patients with moderate-to-severe plaque psoriasis. Clinical response rates were maintained with continuous treatment with modified nonresponder imputation responses of 73.2% for Psoriasis Area and Severity Index (PASI) 75 with 3 years of continuous Sotyktu treatment. Sotyktu had a consistent safety profile with no increases in adverse events or serious adverse events and no new safety signals. | ||||||||
| repotrectinib | NSCLC | October 2023 | Announced the submission of the Japan NDA to the Pharmaceuticals and Medical Devices Agency for repotrectinib, a next-generation ROS1/TRK tyrosine kinase inhibitor, for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC. The application is based on data from the registrational Phase I/II TRIDENT-1 trial. | ||||||||
| August 2023 | Announced updated results from the registrational Phase I/II TRIDENT-1 trial demonstrating that repotrectinib, a next-generation ROS1/TRK tyrosine kinase inhibitor, continued to show high response rates and durable responses, including robust intracranial responses, in patients with ROS1-positive locally advanced or metastatic NSCLC. Based on prior results from the TRIDENT-1 trial, the FDA accepted the NDA for repotrectinib granting Priority Review and assigned a PDUFA goal date of November 27, 2023. | ||||||||||
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| Product | Indication | Date | Developments | ||||||||
LPA1 | Progressive Pulmonary Fibrosis | October 2023 | Announced that the FDA has granted Breakthrough Therapy Designation for BMS-986278, a potential first-in-class, oral, lysophosphatidic acid receptor 1 (LPA1) antagonist, for the treatment of progressive pulmonary fibrosis (PPF). The Breakthrough Therapy Designation is based on results from the global, randomized Phase II study that assessed the safety and efficacy of BMS-986278 treatment versus placebo in people living with idiopathic pulmonary fibrosis (IPF) and PPF. Stable background use of antifibrotics in the IPF cohort and/or select immunosuppressives in the PPF cohort were allowed. | ||||||||
Critical Accounting Policies
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Our critical accounting policies are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates. For a discussion of our critical accounting policies, refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Form 10-K. There have been no material changes to our critical accounting policies during the nine months ended September 30, 2023. For information regarding the impact of recently adopted accounting standards, refer to "Item 1. Financial Statements—Note 1. Basis of Presentation and Recently Issued Accounting Standards."
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (including documents incorporated by reference) and other written and oral statements we make from time to time contain certain "forward-looking" statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. You can identify these forward-looking statements by the fact they use words such as "should," "could," "expect," "anticipate," "estimate," "target," "may," "project," "guidance," "intend," "plan," "believe," "will" and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on our current expectations and projections about our future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years, and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. These statements are likely to relate to, among other things, our goals, plans and objectives regarding our financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products, our business development strategy, our ability to complete the acquisition of Mirati, and in relation to our ability to realize the projected benefits of our acquisitions of Celgene, MyoKardia, Turning Point and Mirati, the impact of the COVID-19 pandemic on our operations and the development and commercialization of our products, potential laws and regulations to lower drug prices, market actions taken by private and government payers to manage drug utilization and contain costs, the expiration of patents or data protection on certain products, including assumptions about our ability to retain marketing exclusivity of certain products and the outcome of contingencies such as legal proceedings and financial results. No forward-looking statement can be guaranteed. This Quarterly Report on Form 10-Q, our 2022 Form 10-K, particularly under the section "Item 1A. Risk Factors," and our other filings with the SEC, include additional information on the factors that we believe could cause actual results to differ materially from any forward-looking statement.
Although we believe that we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report on Form 10-Q not to occur. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise after the date of this Quarterly Report on Form 10-Q.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of our market risk, refer to "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" in our 2022 Form 10-K.
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Item 4. CONTROLS AND PROCEDURES
Management carried out an evaluation, under the supervision and with the participation of its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2023, such disclosure controls and procedures are effective.
There were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information pertaining to legal proceedings can be found in "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies," to the interim consolidated financial statements, and is incorporated by reference herein.
Item 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in the Company's 2022 Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table summarizes the surrenders of our equity securities during the three months ended September 30, 2023:
| Period | Total Number of Shares Purchased(a) | Average Price Paid per Share(a) | Total Number of Shares Purchased as Part of Publicly Announced Programs(b) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs(b) | |||||||||||||||||||
| Dollars in millions, except per share data | |||||||||||||||||||||||
| July 1 to 31, 2023 | 11,032 | $ | 63.90 | — | $ | 6,014 | |||||||||||||||||
August 1 to 31, 2023(c) | 56,110,995 | 56,087,101 | 2,014 | ||||||||||||||||||||
| September 1 to 30, 2023 | 57,330 | 59.72 | — | 2,014 | |||||||||||||||||||
Three months ended September 30, 2023 | 56,179,357 | 56,087,101 | |||||||||||||||||||||
(a)Includes shares repurchased as part of publicly announced programs and shares of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of awards under our long-term incentive program.
(b)In May 2010, the Board of Directors authorized the repurchase of up to $3.0 billion of our common stock. Following this authorization, the Board subsequently approved additional authorizations, including most recently, in February 2020, January 2021 and December 2021, in the amounts of $5.0 billion, $2.0 billion and $15.0 billion, respectively, to the share repurchase authorization. The remaining share repurchase capacity under the program was approximately $2.0 billion as of September 30, 2023. Refer to "Item 8. Financial Statements and Supplementary Data—Note 17. Equity" in our 2022 Form 10-K for information on the share repurchase program.
(c)On August 9, 2023, as part of our existing share repurchase program, BMS executed accelerated share repurchase (“ASR”) agreements to repurchase an aggregate $4.0 billion of common stock. Approximately 56 million shares of common stock (85% of the $4.0 billion aggregate purchase price calculated on the basis of a price of $60.62 per share, the closing share price of the Company's common stock on August 9, 2023) were received by BMS and included in treasury stock. The total number of shares to be repurchased under the ASR agreements, and the average price paid per share, will be determined at the settlement of the ASR agreements and will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. The ASR transactions are scheduled to terminate in the fourth quarter of 2023, but each may conclude earlier than its scheduled termination date at the election of the applicable bank.
Item 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement,"
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Item 6. EXHIBITS
Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).
| Exhibit No. | Description | |||||||
| 31a. | ||||||||
| 31b. | ||||||||
| 32a. | ||||||||
| 32b. | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
* Indicates, in this Quarterly Report on Form 10-Q, brand names of products, which are registered trademarks not solely owned by the Company or its subsidiaries. Abilify is a trademark of Otsuka Pharmaceutical Co., Ltd.; Gleevec is a trademark of Novartis AG; Keytruda is a trademark of Merck Sharp & Dohme Corp; Krazati is a trademark Mirati, Therapeutics, Inc.; Onglyza is a trademark of AstraZeneca AB; Otezla is a trademark of Amgen Inc.; and Plavix is a trademark of Sanofi; Tecentriq is a trademark of Genentech, Inc. Brand names of products that are in all italicized letters, without an asterisk, are registered trademarks of BMS and/or one of its subsidiaries.
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SUMMARY OF ABBREVIATED TERMS
Bristol-Myers Squibb Company and its consolidated subsidiaries may be referred to as Bristol Myers Squibb, BMS, the Company, we, our or us in this Quarterly Report on Form 10-Q, unless the context otherwise indicates. Throughout this Quarterly Report on Form 10-Q we have used terms which are defined below:
| 2022 Form 10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 2022 | LPA1 | lysophosphatidic acid receptor 1 | ||||||||
| ANDA | Abbreviated New Drug Application | MDL | multi-district litigation | ||||||||
| AstraZeneca | AstraZeneca PLC | MDS | myelodysplastic syndromes | ||||||||
| ASR | accelerated share repurchase | Mirati Therapeutics | Mirati Therapeutics, Inc. | ||||||||
BCMA | B-cell maturation antigen-directed | MPM | malignant pleural mesothelioma | ||||||||
| CAR-T | chimeric antigen receptor T-cell | MyoKardia | MyoKardia, Inc. | ||||||||
| Celgene | Celgene Corporation | NDA | New Drug Application | ||||||||
| Celgene and Other Acquisition Plans | Restructuring and integration plan implemented as a result of the acquisition of Celgene in 2019, MyoKardia in 2020 and Turning Point in 2022 | NSCLC | non-small cell lung cancer | ||||||||
| CERCLA | U.S. Comprehensive Environmental Response, Compensation and Liability Act | Nimbus | Nimbus Therapeutics | ||||||||
| Cheplapharm | Cheplapharm Arzneimittel GmbH | OTC | over-the-counter | ||||||||
| CML | chronic myeloid leukemia | Otsuka | Otsuka Pharmaceutical Co., Ltd. | ||||||||
| CRC | colorectal carcinoma | PD-1 | programmed cell death protein 1 | ||||||||
| Dragonfly | Dragonfly Therapeutics, Inc. | PD-L1 | programmed death-ligand 1 | ||||||||
| EC | European Commission | PDUFA | Prescription Drug User Fee Act | ||||||||
| EPS | earnings per share | PPF | progessive pulmonary fibrosis | ||||||||
| ESA | erythropoiesis stimulating agent | Quarterly Report on Form 10-Q | Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 | ||||||||
| EU | European Union | R&D | research and development | ||||||||
| Exchange Act | the Securities Exchange Act of 1934 | RA | rheumatoid arthritis | ||||||||
| FASB | Financial Accounting Standards Board | RCC | renal cell carcinoma | ||||||||
| FDA | U.S. Food and Drug Administration | REMS | risk evaluation and mitigation strategy | ||||||||
| GAAP | generally accepted accounting principles | Sanofi | Sanofi S.A. | ||||||||
| GTN | gross-to-net | SEC | U.S. Securities and Exchange Commission | ||||||||
| HCM | hypertrophic cardiomyopathy | Section 174 | Guidance on amortization of specified research or experimental expenditures under Section 174 Notice 2023-63 | ||||||||
| Immatics | Immatics Biotechnologies GmbH. | SPC | Supplementary Protection Certificate | ||||||||
IPF | idiopathic pulmonary fibrosis | Takeda | Takeda Pharmaceutical Company Limited | ||||||||
| IPRD | in-process research and development | Turning Point | Turning Point Therapeutics, Inc. | ||||||||
| IRA | Inflation Reduction Act of 2022 | UC | ulcerative colitis | ||||||||
| IRS | Internal Revenue Service | UK | United Kingdom | ||||||||
IV | intravenous | U.S. | United States | ||||||||
| Juno | Juno Therapeutics, Inc. | USPTO | U.S. Patent and Trademark Office | ||||||||
| LTE | long-term extension | VAT | value added tax | ||||||||
| LOE | loss of exclusivity | ||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BRISTOL-MYERS SQUIBB COMPANY (REGISTRANT) | |||||||||||
| Date: | October 26, 2023 | By: | /s/ Giovanni Caforio, M.D. | ||||||||
Giovanni Caforio, M.D. Chairman of the Board and Chief Executive Officer | |||||||||||
| Date: | October 26, 2023 | By: | /s/ David V. Elkins | ||||||||
David V. Elkins Chief Financial Officer | |||||||||||
58
EXHIBIT 31a
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Giovanni Caforio, certify that:
1.I have reviewed Bristol-Myers Squibb Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a.all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
Date: October 26, 2023
| /s/ Giovanni Caforio, M.D. | ||
Giovanni Caforio, M.D. Chairman of the Board and Chief Executive Officer | ||
EXHIBIT 31b
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David V. Elkins, certify that:
1.I have reviewed Bristol-Myers Squibb Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a.all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
Date: October 26, 2023
| /s/ David V. Elkins | ||
David V. Elkins Chief Financial Officer | ||
EXHIBIT 32a
Certification by the Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, I, Giovanni Caforio, hereby certify that, to the best of my knowledge, Bristol-Myers Squibb Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the "Report"), as filed with the Securities and Exchange Commission on October 26, 2023, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Bristol-Myers Squibb Company.
| /s/ Giovanni Caforio, M.D. | ||
Giovanni Caforio, M.D. Chairman of the Board and Chief Executive Officer | ||
October 26, 2023
This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Bristol-Myers Squibb Company and will be retained by Bristol-Myers Squibb Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32b
Certification by the Chief Financial Officer Pursuant to 18 U. S. C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, I, David V. Elkins, hereby certify that, to the best of my knowledge, Bristol-Myers Squibb Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the "Report"), as filed with the Securities and Exchange Commission on October 26, 2023, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Bristol-Myers Squibb Company.
| /s/ David V. Elkins | ||
David V. Elkins Chief Financial Officer | ||
October 26, 2023
This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Bristol-Myers Squibb Company and will be retained by Bristol-Myers Squibb Company and furnished to the Securities and Exchange Commission or its staff upon request.