BRISTOL MYERS SQUIBB CO
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
10-Q
___________________________
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2024
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)
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(State or other jurisdiction of
incorporation or organization) |
(
I.R.S
Employer
Identification No.)
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(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:
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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, a smaller reporting company, or an emerging growth company. See the definitions of “
large accelerated filer
,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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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.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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No
☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At July 19, 2024, there were
2,027,395,178
shares outstanding of the Registrant’s $0.10 par value common stock.
BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
June 30, 2024
| 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| EARNINGS | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net product sales | $ |
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$ |
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$ |
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$ |
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| Alliance and other revenues |
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| Total Revenues |
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Cost of products sold
(a)
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| Marketing, selling and administrative |
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| Research and development |
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| Acquired IPRD |
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| Amortization of acquired intangible assets |
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Other (income)/expense, net
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(
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| Total Expenses |
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| Earnings/(loss) before income taxes |
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Income tax (benefit)/provision
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(
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(
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| Net earnings/(loss) |
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| Noncontrolling interest |
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| Net earnings/(loss) attributable to BMS | $ |
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$ |
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$ |
(
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$ |
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| Earnings/(Loss) per common share: | |||||||||||||||||||||||
| Basic | $ |
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$ |
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$ |
(
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$ |
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| Diluted |
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(
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(a)
Excludes amortization of acquired intangible assets
.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
Dollars in millions
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| COMPREHENSIVE INCOME/(LOSS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net earnings/(loss) | $ |
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$ |
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$ |
(
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$ |
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| Other comprehensive income/(loss), net of taxes and reclassifications to earnings: | |||||||||||||||||||||||
| Derivatives qualifying as cash flow hedges |
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| Pension and postretirement benefits |
(
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| Marketable debt securities |
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| Foreign currency translation |
(
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(
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(
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| Total Other Comprehensive Income/(Loss) |
(
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| Comprehensive income/(loss) |
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| Comprehensive income attributable to noncontrolling interest |
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| Comprehensive income/(loss) attributable to BMS | $ |
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$ |
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(
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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 |
June 30,
2024 |
December 31,
2023 |
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| Current assets: | |||||||||||
| Cash and cash equivalents | $ |
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$ |
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| Marketable debt securities |
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| Receivables |
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| Inventories |
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| Other current assets |
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| Total Current assets |
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| Property, plant and equipment |
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| Goodwill |
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| Other intangible assets |
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| Deferred income taxes |
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Marketable debt securities
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| Other non-current assets |
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| Total Assets | $ |
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$ |
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| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt obligations | $ |
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$ |
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| Accounts payable |
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| Other current liabilities |
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| Total Current liabilities |
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| Deferred income taxes |
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| Long-term debt |
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| Other non-current liabilities |
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| Total Liabilities |
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| Commitments and Contingencies |
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| EQUITY | |||||||||||
| BMS Shareholders’ equity: | |||||||||||
| Preferred stock |
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| Common stock |
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| Capital in excess of par value of stock |
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| Accumulated other comprehensive loss |
(
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(
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| Retained earnings |
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| Less cost of treasury stock |
(
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(
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| Total BMS Shareholders’ Equity |
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| Noncontrolling interest |
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| Total Equity |
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| Total Liabilities and Equity | $ |
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$ |
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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)
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash Flows From Operating Activities: | |||||||||||
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Net (loss)/earnings
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$ |
(
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$ |
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| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization, net |
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| Deferred income taxes |
(
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(
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| Stock-based compensation |
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| Impairment charges |
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| Divestiture gains and royalties |
(
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(
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| Acquired IPRD |
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Equity investment (gains)/losses
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(
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| Other adjustments |
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(
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| Changes in operating assets and liabilities: | |||||||||||
| Receivables |
(
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(
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| Inventories |
(
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(
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| Accounts payable |
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| Rebates and discounts |
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| Income taxes payable |
(
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(
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| Other |
(
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(
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| Net cash provided by operating activities |
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| Cash Flows From Investing Activities: | |||||||||||
| Sale and maturities of marketable debt securities |
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| Purchase of marketable debt securities |
(
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(
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| Proceeds from sales of equity investments |
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| Capital expenditures |
(
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(
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| Divestiture and other proceeds |
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| Acquisition and other payments, net of cash acquired |
(
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(
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| Net cash used in investing activities |
(
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(
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| Cash Flows From Financing Activities: | |||||||||||
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Proceeds from issuance of short-term debt obligations
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Repayments of short-term debt obligations
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(
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Other short-term financing obligations, net
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Proceeds from issuance of long-term debt
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Repayments of long-term debt
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(
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(
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| Repurchase of common stock |
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(
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| Dividends |
(
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(
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| Stock option proceeds and other, net |
(
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(
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Net cash provided by/(used in) financing activities
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(
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| Effect of exchange rates on cash, cash equivalents and restricted cash |
(
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| Decrease in cash, cash equivalents and restricted cash |
(
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(
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| Cash, cash equivalents and restricted cash at beginning of period |
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| Cash, cash equivalents and restricted cash at end of period | $ |
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$ |
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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 June 30, 2024 and December 31, 2023 and the results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023. 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, 2023 included in the 2023 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.
Recently Issued Accounting Standards Not Yet Adopted
Income Taxes
In December 2023, the FASB issued amended guidance on income tax disclosures. The guidance is intended to provide additional disaggregation to the effective income tax rate reconciliation and income tax payment disclosures. The amended guidance is effective for annual periods beginning January 1, 2025 and should be applied on a prospective basis. Early adoption is permitted.
Segment Reporting
In November 2023, the FASB issued amended guidance for improvements to reportable segment disclosures. The revised guidance requires that a public entity disclose significant segment expenses regularly reviewed by the chief operating decision maker (CODM), including public entities with a single reportable segment. The amended guidance is effective for fiscal years beginning January 1, 2024 and interim periods beginning January 1, 2025 and should be applied on a retrospective basis. Early adoption is permitted.
6
Note 2.
REVENUE
The following table summarizes the disaggregation of revenue by nature:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net product sales | $ |
|
$ |
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$ |
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$ |
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| Alliance revenues |
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| Other revenues |
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| Total Revenues | $ |
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$ |
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$ |
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$ |
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The following table summarizes GTN adjustments:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Gross product sales | $ |
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$ |
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$ |
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$ |
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GTN adjustments
(a)
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| Charge-backs and cash discounts |
(
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(
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(
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(
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| Medicaid and Medicare rebates |
(
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(
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(
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(
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| Other rebates, returns, discounts and adjustments |
(
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(
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(
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(
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Total GTN adjustments
(b)
|
(
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(
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(
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(
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| Net product sales | $ |
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$ |
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$ |
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$ |
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(a) Includes reductions/(increases) to GTN adjustments for product sales made in prior periods resulting from changes in estimates of ($
19
million) and $
61
million for the three and six months ended June 30, 2024 and $
11
million and $
98
million for the three and six months ended June 30, 2023, respectively.
(b) Includes U.S. GTN adjustments of $
8.0
billion and $
14.9
billion for the three and six months ended June 30, 2024 and $
6.4
billion and $
11.9
billion for the three and six months ended June 30, 2023, respectively.
7
The following table summarizes the disaggregation of revenue by product and region:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
|
Growth Portfolio
|
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| Opdivo | $ |
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$ |
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$ |
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| Orencia |
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| Yervoy |
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| Reblozyl |
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| Opdualag |
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| Abecma |
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| Zeposia |
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| Breyanzi |
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| Camzyos |
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| Sotyktu |
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| Augtyro |
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| Krazati |
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Other Growth products
(a)
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Total Growth Portfolio
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Legacy Portfolio
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| Eliquis |
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| Revlimid |
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| Pomalyst/Imnovid |
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| Sprycel |
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| Abraxane |
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Other Legacy products
(b)
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Total Legacy Portfolio
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| Total Revenues | $ |
|
$ |
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$ |
|
$ |
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| United States | $ |
|
$ |
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$ |
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$ |
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| International |
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Other
(c)
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| Total Revenues | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
(a) Includes
Onureg
,
Inrebic
,
Nulojix
,
Empliciti
and royalty revenues.
(b) Includes other mature brands.
(c) Other revenues include alliance-related revenues for products not sold by BMS's regional commercial organizations.
Beginning in 2024, Puerto Rico revenues are included in International revenues. Prior period amounts have been reclassified to conform to the current presentation.
Revenue recognized from performance obligations satisfied in prior periods was $
76
million and $
258
million for the three and six months ended June 30, 2024 and $
75
million and $
241
million for the three and six months ended June 30, 2023, 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
Selected financial information pertaining to alliances was as follows, including net product sales when BMS is the principal in the third-party customer sale for products subject to the alliance. Expenses summarized below do not include all amounts attributed to the activities for the products in the alliance, but only the payments between the alliance partners or the related amortization if the payments were deferred or capitalized.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenues from alliances | |||||||||||||||||||||||
| Net product sales | $ |
|
$ |
|
$ |
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$ |
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| Alliance revenues |
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| Total alliance revenues | $ |
|
$ |
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$ |
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$ |
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| To/(from) alliance partners | |||||||||||||||||||||||
| Cost of products sold | $ |
|
$ |
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$ |
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$ |
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| Marketing, selling and administrative |
(
|
(
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(
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(
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| Research and development |
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| Acquired IPRD |
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| Other (income)/expense, net |
(
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(
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(
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(
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| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
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| Selected alliance balance sheet information | |||||||||||
| Receivables – from alliance partners | $ |
|
$ |
|
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| Accounts payable – to alliance partners |
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|
Deferred income – from alliances
(a)
|
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|||||||||
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 2023 Form 10-K. Significant developments and updates related to alliances during the six months ended June 30, 2024 and 2023 are set forth below.
SystImmune
BMS and SystImmune, Inc. ("SystImmune") are parties to a global strategic collaboration for the co-development and co-commercialization of BL-B01D1, a bispecific topoisomerase inhibitor-based anti-body drug conjugate, which is currently being evaluated in a Phase I clinical trial for metastatic or unresectable NSCLC and is also in development for breast cancer and other tumor types. BMS paid an upfront fee of $
800
million, which was included in Acquired IPRD during the six months ended June 30, 2024. BMS is also obligated to pay up to $
7.6
billion upon the achievement of contingent development, regulatory and sales-based milestones.
The parties will jointly develop and commercialize BL-B01D1 in the U.S. and share in the profits and losses. SystImmune will be responsible for the development, commercialization, and manufacturing in Mainland China and will be responsible for manufacturing certain drug supplies for outside of Mainland China, where BMS will receive a royalty on net sales. BMS will be responsible for the development and commercialization in the rest of the world, where SystImmune will receive a royalty on net sales.
Eisai
In June 2024, BMS and Eisai agreed to end the global strategic collaboration for the co-development and co-commercialization of MORAb-202 due to the ongoing portfolio prioritization efforts within BMS. All rights and obligations for MORAb-202 were transferred to Eisai and BMS will receive $
90
million as part of the termination, which was included in Other (income)/expense, net during the three months ended June 30, 2024.
9
Note 4.
ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS
Asset
Acquisition
Karuna
On March 18, 2024, BMS acquired Karuna, a clinical-stage biopharmaceutical company driven to discover, develop, and deliver transformative medicines for people living with psychiatric and neurological conditions. The acquisition provided BMS with rights to Karuna's lead asset, KarXT (xanomeline-trospium). KarXT is an antipsychotic with a novel mechanism of action and differentiated efficacy and safety, and it is currently under review by the FDA for the treatment of schizophrenia in adults with a PDUFA date of September 26, 2024. KarXT is also in registrational trials for both adjunctive therapy to existing standard of care agents in schizophrenia and the treatment of psychosis in patients with Alzheimer’s disease.
BMS acquired all of the issued and outstanding shares of Karuna's common stock for $
330.00
per share in an all-cash transaction for total consideration of $
14.0
billion, or $
12.9
billion net of cash acquired. The acquisition was funded primarily with debt proceeds (see "—Note 10. Financing Arrangements" for further detail). The transaction was accounted for as an asset acquisition since KarXT represented substantially all of the fair value of the gross assets acquired. As a result, $
12.1
billion was expensed to Acquired IPRD during the six months ended June 30, 2024. Total consideration also included $
1.1
billion of vested equity awards and $
289
million of unvested equity awards that were paid during the second quarter of 2024.
The following summarizes the total consideration transferred and allocation of consideration transferred to the assets acquired, liabilities assumed and Acquired IPRD expense:
| Dollars in millions | |||||
| Cash consideration for outstanding shares | $ |
|
|||
| Cash consideration for equity awards |
|
||||
| Consideration to be paid |
|
||||
|
Less: Charge for unvested stock awards
(a)
|
(
|
||||
| Transaction costs |
|
||||
| Total consideration allocated | $ |
|
|||
| Cash and cash equivalents | $ |
|
|||
| Other assets |
|
||||
| Intangible assets |
|
||||
| Deferred income tax asset |
|
||||
| Deferred income tax liability |
(
|
||||
| Other liabilities |
(
|
||||
|
Total identifiable assets acquired, net
|
|
||||
| Acquired IPRD expense |
|
||||
|
Total consideration allocated
|
$ |
|
|||
(a) Includes cash-settled unvested equity awards of $
130
million expensed in Marketing, selling and administrative and $
159
million expensed in Research and development during the six months ended June 30, 2024.
Business Combinations
RayzeBio
On February 26, 2024, BMS acquired RayzeBio, a clinical-stage radiopharmaceutical therapeutics ("RPT") company with actinium-based RPTs for solid tumors. The acquisition provided BMS with rights to RayzeBio’s actinium-based radiopharmaceutical platform and lead asset, RYZ101, which is in Phase III development for treatment of gastroenteropancreatic neuroendocrine tumors.
BMS acquired all of the issued and outstanding shares of RayzeBio's common stock for $
62.50
per share in an all-cash transaction for total consideration of $
4.1
billion, or $
3.6
billion net of cash acquired. The acquisition was funded through a combination of cash on hand and debt proceeds (see "—Note 10. Financing Arrangements" for further detail).
10
The transaction was accounted for as a business combination requiring all assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The purchase price allocation is preliminary as it relates to the valuation of income taxes. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.
Total consideration for the acquisition consisted of the following:
| Dollars in millions | |||||
| Cash consideration for outstanding shares | $ |
|
|||
| Cash consideration for equity awards |
|
||||
| Consideration paid |
|
||||
|
Less: Unvested stock awards
(a)
|
(
|
||||
| Total consideration allocated | $ |
|
|||
(a) Includes cash settlement for unvested equity awards of $
159
million expensed in Marketing, selling and administrative and $
115
million expensed in Research and development during the six months ended June 30, 2024.
The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective preliminary fair values summarized below:
| Dollars in millions | Preliminary Purchase Price Allocation | ||||
| Cash and cash equivalents | $ |
|
|||
| Other assets |
|
||||
| Intangible assets |
|
||||
| Deferred income tax asset |
|
||||
| Deferred income tax liability |
(
|
||||
| Other liabilities |
(
|
||||
| Identifiable net assets acquired | $ |
|
|||
| Goodwill |
|
||||
| Total consideration allocated | $ |
|
|||
Intangible assets included $
1.7
billion of indefinite-lived IPRD and $
2.0
billion of R&D technology. The estimated fair values for the indefinite-lived IPRD asset and the R&D technology were determined using an income approach valuation method. Goodwill resulted primarily from the recognition of deferred tax liabilities and is not deductible for tax purposes.
Mirati
On January 23, 2024, BMS acquired Mirati, a commercial stage targeted oncology company, obtaining the rights to commercialize lung cancer medicine
Krazati,
and several clinical assets, including MRTX1719.
Krazati
is an inhibitor of the KRAS
G12C
mutation 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.
Krazati
also is in clinical development both as a single agent, and in combinations, for additional indications. MRTX1719 is a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase I development. BMS obtained access to several other clinical and pre-clinical stage assets, including additional KRAS inhibitors and enabling programs.
BMS acquired all of the issued and outstanding shares of Mirati's common stock for $
58.00
per share in an all-cash transaction for total consideration of $
4.8
billion, or $
4.1
billion net of cash acquired. Mirati stockholders also received
one
non-tradeable contingent value right (CVR) 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 acquisition was funded through a combination of cash on hand and debt proceeds (see "—Note 10. Financing Arrangements" for further detail).
The transaction was accounted for as a business combination requiring all assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The purchase price allocation is preliminary as it relates to the valuation of income taxes. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.
11
Total consideration for the acquisition consisted of the following:
| Dollars in millions | |||||
| Cash consideration for outstanding shares | $ |
|
|||
| Cash consideration for equity awards |
|
||||
| Consideration paid |
|
||||
| Plus: Fair value of CVRs |
|
||||
|
Less: unvested stock awards
(a)
|
(
|
||||
| Total consideration allocated | $ |
|
|||
(a) Includes cash settlement of unvested equity awards of $
60
million expensed in Marketing, selling and administrative and $
54
million expensed in Research and development during six months ended June 30, 2024.
The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective preliminary fair values summarized below:
| Dollars in millions | Preliminary purchase price allocation | ||||
| Cash and cash equivalents | $ |
|
|||
| Inventories |
|
||||
| Other assets |
|
||||
| Intangible assets |
|
||||
| Deferred income tax assets |
|
||||
| Deferred income tax liabilities |
(
|
||||
| Other liabilities |
(
|
||||
| Identifiable net assets acquired | $ |
|
|||
| Goodwill |
|
||||
| Total consideration allocated | $ |
|
|||
Inventories includes a fair value adjustment of $
148
million. Intangible assets included $
640
million of definite-lived Acquired marketed product rights (
Krazati
) and $
3.5
billion of indefinite-lived IPRD assets. The estimated fair value of both definite-lived Acquired marketed product rights and indefinite-lived IPRD assets was determined using an income approach valuation method.
Goodwill resulted primarily from the recognition of deferred tax liabilities and is not deductible for tax purposes.
The results of operations and cash flows for Karuna, RayzeBio and Mirati were included in the consolidated financial statements commencing on their respective acquisition dates and were not material. Historical financial results of the acquired entities were not significant.
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 June 30, | |||||||||||||||||||||||||||||||||||
| Net Proceeds | Divestiture (Gains)/Losses | Royalty Income | |||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
|
Diabetes business - royalties
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||||||||||
| Mature products and other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
|
$ |
|
$ |
(
|
(
|
|||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| Net Proceeds | Divestiture (Gains)/Losses | Royalty Income | |||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
|
Diabetes business - royalties
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||||||||||
| Mature products and other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
|
$ |
|
$ |
(
|
(
|
|||||||||||||||||||||||||
12
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
|
Keytruda
* royalties
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
|
Tecentriq
* royalties
|
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Contingent milestone income |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Amortization of deferred income |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Other royalties and licensing income |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Royalty and licensing income | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Keytruda* Patent License Agreement
Note 5.
OTHER (INCOME)/EXPENSE, NET
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Interest expense (Note 10) | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Royalty and licensing income (Note 4) |
(
|
(
|
(
|
(
|
|||||||||||||||||||
|
Royalty income - divestiture (Note 4)
|
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Investment income |
(
|
(
|
(
|
(
|
|||||||||||||||||||
|
Litigation and other settlements
(a)
|
|
(
|
|
(
|
|||||||||||||||||||
| Provision for restructuring (Note 6) |
|
|
|
|
|||||||||||||||||||
| Integration expenses (Note 6) |
|
|
|
|
|||||||||||||||||||
| Equity investment (gain)/losses (Note 9) |
(
|
|
(
|
|
|||||||||||||||||||
|
Acquisition expense (Note 4)
|
|
|
|
|
|||||||||||||||||||
| Other |
(
|
|
|
|
|||||||||||||||||||
|
Other (income)/expense, net
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
(a) Includes $
90
million of income related to the Eisai collaboration termination incurred during the three months ended June 30, 2024 and $
400
million of income related to Nimbus' TYK2 program change of control provision incurred during the six months ended June, 30 2023.
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 expanding our cell therapy manufacturing capabilities. Consistent with our prioritization and efficiency goals communicated earlier this year, BMS continues to execute on strategic productivity initiatives through portfolio prioritization and management of our operating costs. Total expected restructuring costs under the 2023 Restructuring Plan to be incurred through 2026 are approximately $
1.5
billion. These costs consist primarily of employee termination costs, and to a lesser extent, site exit costs, including impairment and accelerated depreciation of property, plant and equipment.
13
Celgene and Other Acquisition Plans
Restructuring and integration plans were initiated to realize expected cost synergies resulting from cost savings and avoidance from the acquisitions of Celgene (2019), Turning Point (2022), Mirati (2024), RayzeBio (2024) and Karuna (2024). The remaining charges of approximately $
400
million consist primarily of employee termination costs, IT system integration costs, and to a lesser extent, site exit costs, including impairment and accelerated depreciation of property, plant and equipment.
The following provides the charges related to restructuring initiatives by type of cost:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| 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 |
|
|
|
|
|||||||||||||||||||
| Other shutdown costs |
|
|
|
|
|||||||||||||||||||
| Total charges | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Cost of products sold | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Marketing, selling and administrative |
|
|
|
|
|||||||||||||||||||
| Research and development |
|
|
|
|
|||||||||||||||||||
| Other (income)/expense, net |
|
|
|
|
|||||||||||||||||||
| Total charges | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
The following summarizes the charges and spending related to restructuring plan activities:
| Six Months Ended June 30, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Beginning balance | $ |
|
$ |
|
|||||||
| Provision for restructuring |
|
|
|||||||||
| Foreign currency translation and other |
(
|
|
|||||||||
| Payments |
(
|
(
|
|||||||||
| Ending balance | $ |
|
$ |
|
|||||||
Note 7.
INCOME TAXES
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
|
Earnings/(Loss) before income taxes
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
|
Income tax (benefit)/provision
|
(
|
(
|
(
|
|
|||||||||||||||||||
| Effective tax rate |
(
|
% |
(
|
% |
|
% |
|
% | |||||||||||||||
Provision for income taxes in interim periods is determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The effective tax rate for the three months ended June 30, 2024 was primarily impacted by the release of income tax reserves of $
644
million related to the resolution of Celgene's 2017-2019 IRS audit and jurisdictional earnings mix resulting from amortization of acquired intangible assets.
The effective tax rate for the six months ended June 30, 2024 was impacted by a $
12.1
billion one-time, non-tax deductible charge for the acquisition of Karuna, as well as the aforementioned income tax reserve releases and jurisdictional earnings mix resulting from amortization of acquired intangible assets.
14
The effective tax rate during the three and six months ended June 30, 2023 was primarily 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. In addition, the effective tax rate during the six months ended June 30, 2023 was impacted by 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.
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 tax legislation code.
During the six months ended June 30, 2024 and 2023, income tax payments were $
2.1
billion and $
3.1
billion, including $
799
million and $
567
million, respectively, for the transition tax following the TCJA enactment.
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 June 30, 2024 could decrease in the range of approximately $
110
million to $
150
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/(LOSS) PER SHARE
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net earnings/(loss) attributable to BMS | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Weighted-average common shares outstanding – basic |
|
|
|
|
|||||||||||||||||||
| Incremental shares attributable to share-based compensation plans |
|
|
|
|
|||||||||||||||||||
| Weighted-average common shares outstanding – diluted |
|
|
|
|
|||||||||||||||||||
| Earnings/(Loss) per common share | |||||||||||||||||||||||
| Basic | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Diluted |
|
|
(
|
|
|||||||||||||||||||
The total number of potential shares of common stock excluded from the diluted (loss)/earnings per common share computation because of the antidilutive impact was
39
million and
44
million for the three and six months ended June 30, 2024, respectively, and
not
material for the three and six months ended June 30, 2023.
15
Note 9.
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| 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
(a)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| 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 2023 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 June 30, 2024 and December 31, 2023.
Marketable Debt Securities
The amortized cost for marketable debt securities approximates its fair value and these securities mature within
five years
as of June 30, 2024, and
four years
as of December 31, 2023.
Equity Investments
The following summarizes the carrying amount of equity investments:
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| Equity investments with readily determinable fair values | $ |
|
$ |
|
|||||||
| Equity investments without readily determinable fair values |
|
|
|||||||||
| Limited partnerships and other equity method investments |
|
|
|||||||||
| Total equity investments | $ |
|
$ |
|
|||||||
16
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
|
Equity investments with RDFV
|
|||||||||||||||||||||||
|
Net (gain)/loss recognized
|
$ |
(
|
$ |
|
(
|
|
|||||||||||||||||
|
Less: net (gain)/loss recognized on investments sold
|
|
(
|
|
(
|
|||||||||||||||||||
|
Net unrealized (gain)/loss recognized on investments still held
|
(
|
|
(
|
|
|||||||||||||||||||
|
Equity investments without RDFV
|
|||||||||||||||||||||||
|
Upward adjustments
|
(
|
|
(
|
(
|
|||||||||||||||||||
|
Net realized (gain)/loss recognized on investments sold
|
(
|
|
(
|
|
|||||||||||||||||||
|
Impairments and downward adjustments
|
|
|
|
|
|||||||||||||||||||
|
Equity in net (income)/loss of affiliates
|
(
|
|
(
|
|
|||||||||||||||||||
|
Total equity investment (gains)/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 June 30, 2024 were $
207
million and $
85
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, third party 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 June 30, 2024, assuming market rates remain constant through contract maturities, we expect to reclassify pre-tax gains of $
80
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 $
4.2
billion for the euro contracts and $
1.2
billion for Japanese yen contracts as of June 30, 2024.
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 June 30, 2024.
In January 2024, BMS entered into forward interest rate contracts of a total notional value of $
5.0
billion to hedge future interest rate risk associated with the unsecured senior notes issued in February 2024. The forward interest rate contracts were designated as cash flow hedges and terminated upon the issuance of the unsecured senior notes. The $
131
million gain on the transaction was included in Other Comprehensive (Loss)/Income and will be amortized as a reduction to interest expense over the term of the related debt. Amounts expected to be recognized during the subsequent 12 months on forward interest rate contracts are not material.
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.
17
Net Investment Hedges
Cross-currency swap contracts and foreign currency forward contracts of $
1.6
billion as of June 30, 2024 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 $
660
million and euro of $
593
million as of June 30, 2024.
During the three months ended March 31, 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 six months ended June 30, 2024, 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.
The following table summarizes the fair value and the notional values of outstanding derivatives:
| June 30, 2024 |
December 31, 2023
|
||||||||||||||||||||||||||||||||||||||||||||||
|
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 June 30, 2024 | Six Months Ended June 30, 2024 | ||||||||||||||||||||||
| 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 |
|
|
|
|
|||||||||||||||||||
|
Forward interest rate contracts
|
|
(
|
|
(
|
|||||||||||||||||||
| Three Months Ended June 30, 2023 | Six Months Ended June 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 |
|
(
|
|
(
|
|||||||||||||||||||
The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Derivatives designated as cash flow hedges | |||||||||||||||||||||||
| Foreign exchange contracts gain/(loss): | |||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Reclassified to Cost of products sold |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Cross-currency swap contracts gain/(loss): | |||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
(
|
|
(
|
|
|||||||||||||||||||
| Reclassified to Other (income)/expense, net |
|
|
|
(
|
|||||||||||||||||||
|
Forward interest rate contract gain/(loss):
|
|||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
|
|
|
|
|||||||||||||||||||
| Reclassified to Other (income)/expense, net |
(
|
|
(
|
|
|||||||||||||||||||
| Derivatives designated as net investment hedges | |||||||||||||||||||||||
| Cross-currency swap contracts gain/(loss): | |||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
|
|
|
|
|||||||||||||||||||
| Foreign exchange contracts gain/(loss): | |||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
|
|
|
|
|||||||||||||||||||
| Non-derivatives designated as net investment hedges | |||||||||||||||||||||||
|
Non-U.S. dollar borrowings gain/(loss):
|
|||||||||||||||||||||||
|
Recognized in Other comprehensive (loss)/income
|
|
|
|
(
|
|||||||||||||||||||
Note 10.
FINANCING ARRANGEMENTS
Short-term debt obligations include:
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
|
Commercial paper borrowings
|
$ |
|
$ |
|
|||||||
|
Non-U.S. short-term financing obligations
|
|
|
|||||||||
| Current portion of Long-term debt |
|
|
|||||||||
| Other |
|
|
|||||||||
|
Short-term debt obligations
|
$ |
|
$ |
|
|||||||
BMS may issue a maximum of $
7.0
billion of unsecured notes with maturities of not more than
365
days from the date of issuance under its commercial paper program. During the first quarter of 2024, $
3.0
billion of commercial paper was issued and $
2.7
billion of it was repaid during the second quarter of 2024. The weighted-average effective borrowing rate on the outstanding commercial paper borrowings was
5.43
% as of June 30, 2024.
19
Long-term debt and the current portion of Long-term debt include:
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| 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 $
47.7
billion as of June 30, 2024 and $
36.7
billion as of December 31, 2023 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 first quarter of 2024, BMS issued an aggregate principal amount of $
13.0
billion of unsecured senior notes ("2024 Senior Unsecured Notes"), with proceeds, net of discount and loan issuance costs, of $
12.9
billion, consisting of:
|
Principal Amount
(in millions)
|
||||||||
|
Floating rate notes due 2026
(a)
|
$ |
|
||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
| Total | $ |
|
||||||
(a) As of June 30, 2024, floating rate equals SOFR+
0.49
%.
The Company used the net proceeds from this offering to partially fund the acquisitions of RayzeBio and Karuna (see "—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for further information) and used the remaining net proceeds for general corporate purposes. In connection with the issuance of the 2024 Senior Unsecured Notes, the Company terminated the $
10.0
billion
364-day
senior unsecured delayed draw term loan facility, which was entered into in February 2024 to provide bridge financing for the RayzeBio and Karuna acquisitions.
During the six months ended June 30, 2024, $
395
million
3.625
% Notes matured and were repaid.
During the six months ended June 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.
Interest payments were $
735
million and $
639
million for the six months ended June 30, 2024 and 2023, respectively, net of amounts related to interest rate swap contracts.
Credit Facilities
As of June 30, 2024, BMS had a
five-year
$
5.0
billion revolving credit facility expiring in January 2029, extendable annually by
one year
with the consent of the lenders and a $
2.0
billion
364-day
revolving credit facility expiring in January 2025. The facilities provide for customary terms and conditions with no financial covenants and are used to provide backup liquidity for our commercial paper borrowings.
No
borrowings were outstanding under the revolving credit facilities as of June 30, 2024 and December 31, 2023.
20
Note 11.
RECEIVABLES
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| 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 $
304
million and $
503
million for the six months ended June 30, 2024 and 2023, respectively. Receivables from the
three
largest customers in the U.S. represented
74
% and
72
% of total trade receivables as of June 30, 2024 and December 31, 2023, respectively.
Note 12.
INVENTORIES
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| Finished goods | $ |
|
$ |
|
|||||||
| Work in process |
|
|
|||||||||
| Raw and packaging materials |
|
|
|||||||||
| Total inventories | $ |
|
$ |
|
|||||||
| Inventories | $ |
|
$ |
|
|||||||
| Other non-current assets |
|
|
|||||||||
Note 13.
PROPERTY, PLANT AND EQUIPMENT
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| Land | $ |
|
$ |
|
|||||||
| Buildings |
|
|
|||||||||
| Machinery, equipment and fixtures |
|
|
|||||||||
| Construction in progress |
|
|
|||||||||
| Gross property, plant and equipment |
|
|
|||||||||
| Less accumulated depreciation |
(
|
(
|
|||||||||
| Property, plant and equipment | $ |
|
$ |
|
|||||||
Depreciation expense was $
161
million and $
316
million for the three and six months ended June 30, 2024 and $
151
million and $
297
million for the three and six months ended June 30, 2023, respectively.
21
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, 2023 | $ |
|
|||
|
Acquisitions (Note 4)
|
|
||||
| Currency translation and other adjustments |
(
|
||||
|
Balance at June 30, 2024
|
$ |
|
|||
Other Intangible Assets
Other intangible assets consisted of the following:
|
Estimated
Useful Lives |
June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||
|
Dollars in millions
|
Gross carrying amounts | Accumulated amortization | Other intangible assets, net | Gross carrying amounts | Accumulated amortization | Other intangible assets, net | |||||||||||||||||||||||||||||||||||
|
R&D technology
(a)
|
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||
|
Acquired marketed product rights
(a)
|
|
|
(
|
|
|
(
|
|
||||||||||||||||||||||||||||||||||
| Capitalized software |
|
|
(
|
|
|
(
|
|
||||||||||||||||||||||||||||||||||
|
IPRD
(a)
|
|
— |
|
|
— |
|
|||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||
(a) Includes assets acquired in connection with Mirati and RayzeBio acquisitions, as further described in "—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements."
Amortization expense of Other intangible assets was $
2.4
billion and $
4.8
billion during the three and six months ended June 30, 2024 and $
2.3
billion and $
4.6
billion during the three and six months ended June 30, 2023, respectively.
During the three months ended June 30, 2024, a $
280
million impairment charge was recorded in Cost of products sold resulting from lower revised cash flow projections for
Inrebic
. The charge represented a partial impairment based on the excess of the asset’s carrying value over its estimated fair value using discounted cash flow projections.
Additionally, a $
590
million IPRD impairment charge for alnuctamab was recorded in Research and development expense in connection with portfolio prioritization. Alnuctamab was being studied as a potential treatment for hematologic diseases and was obtained in the acquisition of Celgene. The charge represented a full write-down of the asset.
Note 15.
SUPPLEMENTAL FINANCIAL INFORMATION
| Dollars in millions |
June 30,
2024 |
December 31, 2023 | |||||||||
| Income taxes | $ |
|
$ |
|
|||||||
| Research and development |
|
|
|||||||||
| Contract assets |
|
|
|||||||||
|
Restricted cash
(a)
|
|
|
|||||||||
| Other |
|
|
|||||||||
| Other current assets | $ |
|
$ |
|
|||||||
22
| Dollars in millions |
June 30,
2024 |
December 31, 2023 | |||||||||
| Equity investments (Note 9) | $ |
|
$ |
|
|||||||
| Operating leases |
|
|
|||||||||
|
Inventories (Note 12)
|
|
|
|||||||||
| Pension and postretirement |
|
|
|||||||||
| Research and development |
|
|
|||||||||
|
Restricted cash
(a)
|
|
|
|||||||||
|
Receivables and convertible notes
|
|
|
|||||||||
| Other |
|
|
|||||||||
| Other non-current assets | $ |
|
$ |
|
|||||||
| Dollars in millions |
June 30,
2024 |
December 31, 2023 | |||||||||
| Rebates and discounts | $ |
|
$ |
|
|||||||
| Income taxes |
|
|
|||||||||
| Employee compensation and benefits |
|
|
|||||||||
| Research and development |
|
|
|||||||||
| Dividends |
|
|
|||||||||
| Interest |
|
|
|||||||||
| Royalties |
|
|
|||||||||
| Operating leases |
|
|
|||||||||
| Other |
|
|
|||||||||
| Other current liabilities | $ |
|
$ |
|
|||||||
| Dollars in millions |
June 30,
2024 |
December 31, 2023 | |||||||||
| Income taxes | $ |
|
$ |
|
|||||||
| Pension and postretirement |
|
|
|||||||||
| Operating leases |
|
|
|||||||||
| Deferred income |
|
|
|||||||||
| Deferred compensation |
|
|
|||||||||
|
Contingent value rights
|
|
|
|||||||||
| Other |
|
|
|||||||||
| Other non-current liabilities | $ |
|
$ |
|
|||||||
23
Note 16.
EQUITY
The following table summarizes changes in equity during the six months ended June 30, 2024:
| 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, 2023 |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||||
|
Net (loss)/earnings
|
— | — | — | — |
(
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||
|
Other comprehensive income/(loss)
|
— | — | — |
|
— | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Cash dividends declared $
|
— | — | — | — |
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — |
(
|
— | — |
(
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — |
(
|
— | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Cash dividends declared $
|
— | — | — | — |
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — |
|
— | — |
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||||
The following table summarizes changes in equity during the six months ended June 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 income/(loss)
|
— | — | — |
(
|
— | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Cash dividends declared $
|
— | — | — | — |
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Share repurchase program | — | — | — | — | — |
|
(
|
— | |||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — |
(
|
— | — |
(
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — |
(
|
— | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Cash dividends declared $
|
— | — | — | — |
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock repurchase program | — | — | — | — | — |
|
(
|
— | |||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — |
|
— | — |
(
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 |
|
|
|
(
|
|
|
(
|
|
|||||||||||||||||||||||||||||||||||||||
24
The following table summarizes the changes in Other comprehensive income by component:
| Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||
| 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) |
(
|
|
(
|
(
|
|
(
|
|||||||||||||||||||||||||||||
|
Amortization
(b)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Settlements
(b)
|
|
|
|
|
(
|
|
|||||||||||||||||||||||||||||
| Pension and postretirement benefits |
(
|
|
(
|
(
|
|
(
|
|||||||||||||||||||||||||||||
|
Unrealized losses on marketable debt securities
|
(
|
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Foreign currency translation |
(
|
(
|
(
|
(
|
(
|
(
|
|||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | $ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||
| Three Months Ended June 30, 2023 | Six Months Ended June 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) |
(
|
|
(
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Foreign currency translation |
(
|
(
|
(
|
|
(
|
|
|||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||||||||||
(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 (loss)/income, net of taxes, were as follows:
| Dollars in millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| 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 $
215
million and $
144
million as of June 30, 2024 and December 31, 2023, respectively.
25
Note 17.
EMPLOYEE STOCK BENEFIT PLANS
Stock-based compensation expense was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| 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 (deficiencies)/benefits from share-based compensation awards that were vested or exercised of $(
3
) million and $(
20
) million for the three and six months ended June 30, 2024, and $
2
million and $
20
million for the three and six months ended June 30, 2023, respectively.
The number of units granted and the weighted-average fair value on the grant date for the six months ended June 30, 2024 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."
INTELLECTUAL PROPERTY
Eliquis
- Europe
Lawsuits have been filed by generic companies in various countries in Europe seeking revocation of our composition-of-matter patents and SPCs relating to Eliquis, and trials or preliminary proceedings have been held in certain of those cases.
26
In Belgium, BMS filed infringement proceedings against Sandoz in February 2024. A hearing date in these proceedings has been scheduled for November 2024.
In Croatia, in February 2024, the court granted BMS's request for a preliminary injunction to prohibit Teva from offering, storing or selling generic
Eliquis
products in Croatia. Teva has appealed this decision.
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. On May 22, 2024, the Finnish court held the patent to be invalid. BMS will seek permission to appeal this decision.
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 and a hearing of the appeal has been scheduled for April 2025.
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 affirmed on appeal by the Irish Court of Appeal. In a decision delivered on December 8, 2023, the Irish trial court found the Irish composition-of-matter patent and related SPC to be invalid. BMS appealed the Irish trial court's decision. On June 13, 2024, the Irish Court of Appeal entered an injunction restraining Teva from launching its generic product pending the determination of BMS's appeal of the trial court's invalidity decision.
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. Trials regarding challenges brought by Sandoz and Teva, respectively, to the validity of the Dutch composition-of-matter patent and related SPC took place on October 13, 2023 and January 12, 2024, and decisions are pending.
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 appealed the decision, and on June 3, 2024, the Court of Appeal issued a decision confirming the validity of the patent and related SPC. The deadline for Teva to appeal the decision of the Court of Appeal is August 19, 2024.
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 began in February 2024 and is ongoing. In early September 2023, Teva launched a generic
Eliquis
product on the Portuguese market. On September 15, 2023, the Company filed a request for a preliminary injunction against Teva at the Portuguese Intellectual Property Court. The hearing of the preliminary injunction against Teva is ongoing.
In Romania, our request for a preliminary injunction against Teva was initially denied by the lower court. However, in January 2024, the Romania Court of Appeal overturned the decision of the lower court, and issued a preliminary injunction against Teva prohibiting Teva from offering, storing or selling generic Eliquis products in Romania.
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, and in a decision delivered in January 2024, the Barcelona Commercial Court found the Spanish composition-of-matter patent and related SPC to be invalid. BMS appealed the decision of the Barcelona Commercial Court to the Barcelona Court of Appeal. In February 2024, the Madrid Commercial Court granted BMS’s preliminary injunctions against Teva, Sandoz and Normon pending determination of the appeal of the decision of the Barcelona Commercial Court. Teva sought an order from the Barcelona Commercial Court to effectively overturn the preliminary injunction. BMS then sought and was granted an order from the Madrid Commercial Court requiring Teva to comply with the preliminary injunction. The issue was referred to the Spanish Supreme Court, which on April 26, 2024 issued a judgment requiring the Madrid Commercial Court to lift the injunction in place against Teva. On July 16, 2024, the Madrid Commercial Court issued a decision maintaining the preliminary injunctions against Sandoz and Normon. In a decision dated July 18, 2024, the Barcelona Court of Appeal overturned the decision of the Barcelona Commercial Court and upheld the validity of the Spanish composition-of-matter patent and related SPC.
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 appealed the decision, and the appeal was heard in May 2024. On June 20, 2024, the Court of Appeal issued a decision upholding the validity of the patent and related SPC.
27
In Switzerland, a trial was held regarding Teva's challenge to the validity of the Swiss composition-of-matter patent and related SPC, and a decision was issued on March 8, 2024, confirming their validity and rejecting Teva's claims. Teva has appealed this decision.
In the UK, Sandoz and Teva filed lawsuits 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 October 31, 2023, the UK Supreme Court rejected BMS's application to appeal. 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, 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.
Onureg
– U.S.
BMS 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 filed a patent infringement action against Accord, MSN, Teva and Natco in the U.S. District Court for the District of Delaware. BMS subsequently entered into confidential settlement agreements with each of Accord, MSN, Teva and Natco, and the cases against each have been dismissed.
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 ($
298
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. In December 2023, the Australian government was granted leave to appeal the decision to the High Court of Australia, and the High Court scheduled an appeal hearing for September 4-6, 2024.
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. No trial date has been scheduled.
28
In May and June 2024, BMS received Notice Letters from Synthon BV ("Synthon") and Apotex Inc. ("Apotex"), respectively, each notifying BMS that it has filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Zeposia in the U.S. and challenging a U.S. patent listed in the Orange Book for Zeposia. In response, BMS filed patent infringement actions against Synthon and Apotex in the U.S. District Court for the District of Delaware.
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. On May 21, 2024, the trial court issued a new decision against Sanofi and BMS, imposing penalties in the total amount of $
916
million, with $
458
million attributed to BMS. Sanofi and BMS will appeal the decision.
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).
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. The United States Court of Appeals for the Sixth Circuit affirmed the decision on February 13, 2024 and the deadline to file a petition for certiorari with the Supreme Court of the United States has passed. A small number of plaintiffs in other jurisdictions voluntarily dismissed their claims, and related tolling agreements have expired. 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.
29
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 NDA 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 plaintiffs' 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 as to the claims regarding statements made by the remaining officer defendants. As to the claims regarding Celgene’s corporate statements, the Court denied the defendants’ motion without prejudice and granted the defendants leave to re-raise the issue. On October 27, 2023, the defendants filed a motion for partial summary judgment as to Celgene’s corporate statements. On July 23, 2024, the Court granted the defendants’ motion as to individual liability for those corporate statements but reserved decision as to the company's liability, noting that another opinion would be forthcoming.
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. The motion is fully briefed and currently pending before the Court.
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 in November 2019. An entity claiming to be 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 alleged successor trustee. The plaintiff seeks damages in an amount to be determined at trial and other relief, including interest and attorneys' fees. BMS disputes the allegations. BMS filed a motion to dismiss the alleged successor trustee's complaint for failure to state a claim upon which relief can be granted, which was denied on June 24, 2022. On February 2, 2024, BMS filed a motion to dismiss the complaint for lack of subject matter jurisdiction.
30
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. In an opinion and order entered on February 29, 2024, the Court granted that motion in its entirety and dismissed the remaining claims with prejudice. On March 28, 2024, plaintiffs filed a notice of appeal.
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 moved to stay the action pending resolution of the federal action or, in the alternative, to dismiss the complaint and later filed a similar motion in response to an amended complaint. On February 2, 2024, the Court granted defendants’ motion and dismissed the case in its entirety. On February 29, 2024, the plaintiff filed a notice of appeal.
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. The Court had temporarily stayed the action pending resolution of the federal action, but lifted the stay on March 21, 2024, following the dismissal of the federal action. On April 4, 2024, defendants moved to dismiss the New Jersey complaint. On June 25, 2024, the Court granted defendants' motion and dismissed the complaint in its entirety without prejudice.
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 that necessarily fall below fair market value. BMS also argues that this program violates the First Amendment right to free speech by requiring manufacturers to state that they agree that the price set by the government is the medicine's "maximum fair price" as determined by negotiation, even though there is no true negotiation. On August 16, 2023, BMS filed a motion for summary judgment. On October 16, 2023, the government filed an opposition to BMS’s motion for summary judgment and a cross-motion for summary judgment. The court heard oral argument on the parties' summary judgment motions on March 7, 2024. On April 29, 2024, the court issued an opinion and order that denied BMS's motion for summary judgment and granted the government's cross-motion for summary judgment. BMS appealed to the United States Court of Appeals for the Third Circuit and briefing on the appeal is scheduled to be completed by October 2, 2024.
31
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 certain claims of certain entities that opted out of the settlement, and who have since filed new suits advancing related theories. As described below, certain other consolidated or coordinated suits 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. On June 6, 2024, the Court granted Celgene and BMS's motion to dismiss in its entirety. The Court granted Humana and the other plaintiffs referenced immediately below (other than United HealthCare Services Inc. ("UHS"), which had previously amended) leave to amend their complaints, with any amended complaint to be filed by August 5, 2024.
UHS, Blue Cross Blue Shield Association ("BCBSM"), 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 between 2020 and 2022 making largely the same claims and allegations as were made in the now-settled class action litigation and in the
Humana
opt-out action. The UHS and MSP matters include 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. BCBSM has voluntarily dismissed its claims. The Court's order granting Celgene and BMS's motion to dismiss in the
Humana
action dismissed the complaints filed by these plaintiffs as well (except as to UHS, which has already been amended). The Court granted these plaintiffs leave to amend all dismissed claims, with the exception of MSP's claims under RICO, which were dismissed with prejudice. Any amended complaint must be filed by August 5, 2024.
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. The motions were fully briefed in May 2023 and administratively terminated in November 2023 pending a ruling on Celgene and BMS's motion to dismiss the Humana amended complaint. In view of the Court's
32
dismissal decision in the
Humana
action described above, these plaintiffs have stated that they will seek leave to file amended complaints by August 5, 2024. No trial dates have been scheduled.
In October and November 2023,
three
healthcare systems—the Mayo Clinic, LifePoint Corporate Services, G.P. and Intermountain Health, Inc.—filed
two
new lawsuits against Celgene, BMS and certain generic manufacturers making 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 seeking injunctive relief and damages under the Sherman Antitrust Act and parallel state laws. In view of the Court's dismissal decision in the
Humana
action described above, these plaintiffs have stated that they will file amended complaints by August 5, 2024. Those actions are pending in the U.S. District Court for the District of New Jersey. No trial dates have been scheduled.
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. On January 24, 2024, the Court granted Defendants’ motion to dismiss as to BMS and Celgene, removing them from the case. On July 22, 2024, Defendants entered into a confidential settlement of this matter with Plaintiffs, pursuant to which all claims in the litigation are to be dismissed.
Pomalyst Antitrust Class Action
In September 2023, certain health plan entities 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 U.S., including by allegedly engaging in fraud before the USPTO in the acquisition of patents related to the use of pomalidomide, by filing alleged sham patent litigations against generic pharmaceutical companies seeking to market generic pomalidomide, and by entering into allegedly unlawful patent litigation settlements with certain generic pharmaceutical companies seeking to market generic pomalidomide. In December 2023, the plaintiffs filed an amended complaint that added
one
individual Pomalyst patient as a plaintiff, removed the generic manufacturer defendants, and added
two
individuals as defendants. In March 2024,
one
new plaintiff filed a substantially similar complaint, on behalf of the same putative class and in the same court, which was subsequently consolidated with the first action. In March 2024, BMS and its co-defendants filed motions to dismiss these actions. No trial dates have 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.
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 $
77
million as of June 30, 2024, 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.
33
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s discussion and analysis of financial condition and results of operations 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 (i) to continue to renew and diversify our portfolio through launching new medicines, (ii) advancing our early, mid and late-stage pipeline, and (iii) executing disciplined business development. Our focus is on discovering, developing and delivering transformational medicines for patients facing serious diseases in the following five core therapeutic areas: (i) oncology with a priority in certain tumor types, including diversification beyond IO; (ii) hematology with opportunities to expand leadership position in multiple myeloma, as well as broaden our portfolio across leukemias, lymphomas and non-malignant hematologic diseases; (iii) immunology with a focus in dermatology, rheumatology and gastrointestinal disorders, establishing new standards of care in pulmonology and rapidly advancing cell therapy into immunology diseases; (iv) cardiovascular diseases with focus on cardiomyopathies, heart failures and thrombotic diseases; and (v) neuroscience with a focus on neuropsychiatry, neurodegenerative and neuroinflammation diseases. 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 remain committed to strategic business development and maintaining a strong investment grade credit rating, growing the dividend and reducing additional debt that was issued in support of recent transactions during the first quarter of 2024. 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 2023 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 2024, we achieved significant advances in CAR-T cell therapy with the approval of
Breyanzi
in the U.S. for adults with relapsed or refractory CLL/SLL, follicular lymphoma and mantle cell lymphoma; and
Abecma
in the U.S. and EU for triple-class exposed relapsed and refractory multiple myeloma after two or more prior lines of therapy. In addition,
Reblozyl
received expanded approval to include the first-line treatment of adult patients with transfusion-dependent anemia due to very low, low and intermediate-risk myelodysplastic syndromes in the EU and Japan. In oncology, we received (i) accelerated approval in the U.S. of
Krazati
in combination with cetuximab as a targeted treatment option for adult patients with KRAS
G12C
-mutated locally advanced or metastatic colorectal cancer; (ii) approval in the U.S. of
Augtyro
for the treatment of patients with NTRK-positive locally advanced or metastatic solid tumors; and (iii) both in the U.S. and EU, approval of Opdivo in combination with cisplatin and gemcitabine for first-line treatment of adult patients with unresectable or metastatic muscle invasive urothelial carcinoma. Refer to "—Product and Pipeline Developments" for additional updates on our pipeline.
Additionally, we completed the following acquisitions in 2024: (i) Karuna, a biopharmaceutical company in the area of developing and delivering psychiatric and neurological conditions medicines; (ii) RayzeBio, a clinical-stage radiopharmaceutical therapeutics company with a pipeline of potentially first-in-class and best-in-class drug development programs, and (iii) Mirati, a commercial stage targeted oncology company, with a commercialized medicine,
Krazati
, in addition to a pipeline of clinical and pre-clinical stage oncology assets. BMS also entered into a strategic collaboration with SystImmune, to co-develop and co-commercialize BL-B01D1, a bispecific topoisomerase inhibitor-based anti-body drug conjugate, which is currently being evaluated in a Phase I clinical trial for metastatic or unresectable NSCLC and is also in development for breast cancer and other tumor types. We also entered into a worldwide capacity reservation and supply agreement with Cellares for the manufacturing of CAR-T cell therapies. This agreement is expected to enable us to expand our manufacturing capacity through a platform that is scalable and has the potential to improve turnaround time. For additional information relating to our acquisitions, divestitures, licensing and other arrangements refer to "Item 1. Financial Statements—Note 3. Alliances" and "Item 1. Financial Statements—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements".
We remain committed to the strategic allocation of resources and investing in areas that maximize value and drive sustainable growth. In the first half of 2024, we began to execute a strategic productivity initiative that will drive approximately $1.5 billion in annual cost savings by the end of 2025, the majority of which are expected to be reinvested to fund innovation and drive growth. As a result, we are focusing resources on R&D programs with the potential to deliver the greatest return on investment, prioritizing investments in key growth brands, and optimizing operations across the organization. The exit costs resulting from these actions are included in our updated 2023 Restructuring Plan.
34
Financial Highlights
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Total Revenues | $ | 12,201 | $ | 11,226 | $ | 24,066 | $ | 22,563 | |||||||||||||||
| Diluted (loss)/earnings per share | |||||||||||||||||||||||
| GAAP | $ | 0.83 | $ | 0.99 | $ | (5.05) | $ | 2.06 | |||||||||||||||
| Non-GAAP | 2.07 | 1.75 | (2.33) | 3.80 | |||||||||||||||||||
Revenues increased by 9% during the second quarter of 2024 and 7% year-to-date due to the Growth Portfolio and
Eliquis
, partially offset by
Revlimid
.
The $0.16 decrease in GAAP EPS for the second quarter of 2024 was primarily driven by the impact of certain specified items, including intangible asset impairments, and higher interest expense resulting from the recent acquisitions, partially offset by higher revenues. After adjusting for specified items, the $0.32 increase in non-GAAP EPS was primarily due to higher revenues partially offset by higher interest expense resulting from the debt associated with recent acquisitions and lower royalty income.
The $7.11 decrease in GAAP EPS year-to-date was primarily driven by higher one-time Acquired IPRD charges primarily from the Karuna asset acquisition and SystImmune collaboration ($6.29) and the impact of certain specified items, including intangible asset impairments, as well as the cash settlement of unvested stock awards. After adjusting for specified items, the $6.13 decrease in non-GAAP EPS was primarily due to the above mentioned Acquired IPRD charges, higher interest expense resulting from the recent acquisitions and lower royalty income, partially offset by higher revenues.
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."
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. The IRA directs (i) the federal government to “negotiate” prices for select high-cost Medicare Part D (beginning in 2026) and Part B (beginning in 2028) drugs that are more than nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval, (ii) manufacturers to pay a rebate for Medicare Part B and Part D drugs when prices increase faster than inflation and (iii) Medicare Part D redesign replacing the current Part D CGDP and establishes a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of costs up to the $2,000 cap and 20% after that cap is reached. In August 2023,
Eliquis
was selected as one of the first 10 medicines subject to "negotiation" for government-set prices beginning in 2026, and it is possible that more of our products could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiry of intellectual property protections.
In addition, in December 2023, the Biden Administration released a proposed framework that for the first time proposed that a drug’s price can be a factor in determining that the drug is not accessible to the public and therefore that the government could exercise “march-in rights” and license it to a third party to manufacture. We cannot predict whether a final rule will be adopted along the lines proposed and, if adopted, whether the government would seek to exercise march-in rights for any of our products. Other proposals and potential executive orders focused on drug pricing remain possible. The effect of reducing prices and reimbursement for certain of our products would significantly impact our business and consolidated results of operations.
35
At the state level, multiple states have passed, are pursuing or are considering government actions, legislation or proposals to change drug pricing and reimbursement (e.g., establishing prescription drug affordability boards, implementing manufacturer mandates tied to the Federal Public Health Service drug pricing program, etc.). Some of these state-level government actions, legislation and proposals may also influence federal and other state policies and legislation. Given the current uncertainty surrounding the adoption, timing and implementation of many of these measures, as well as pending litigation challenging such laws, we are unable to predict their full impact on our business. However, such measures could modify or decrease access, coverage, or reimbursement of our products, or result in significant changes to our sales or pricing practices, which could have a material impact on our revenues and results of operations. With respect to the Federal Public Health Service drug pricing program, eight states have enacted laws regulating manufacturer pricing obligations under the program. Several additional states are considering similar potential legislation or other government actions, and we expect other states may do the same in the future.
Additionally, in connection with the IRA, the following changes have been made to U.S. tax laws, including (i) a 15% minimum tax that generally applies to U.S. corporations on adjusted financial statement income beginning in 2023 and (ii) a non-deductible 1% excise tax provision on net stock repurchases, to be applied to repurchases beginning in 2023. 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. Furthermore, countries are in the process of enacting changes to their tax laws to implement the agreement by the OECD 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 2023 Form 10-K.
36
Significant Product and Pipeline Approvals
The following is a summary of the significant approvals received in 2024 as of July 26, 2024:
| Product | Date | Approval | ||||||
| Krazati |
June 2024
|
FDA accelerated approval for
Krazati
in combination with cetuximab as a targeted treatment option for adult patients with KRAS
G12C
-mutated locally advanced or metastatic colorectal cancer, as determined by an FDA-approved test, who have received prior treatment with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy.
|
||||||
| Augtyro |
June 2024
|
FDA accelerated approval of
Augtyro
for the treatment of adult and pediatric patients 12 years of age and older with solid tumors that have a neurotrophic tyrosine receptor kinase gene fusion, are locally advanced or metastatic or where surgical resection is likely to result in severe morbidity, and have progressed following treatment or have no satisfactory alternative therapy.
|
||||||
| Opdivo |
May 2024
|
EC approved
Opdivo
in combination with cisplatin and gemcitabine for the first-line treatment of adult patients with unresectable or metastatic urothelial carcinoma.
|
||||||
|
Breyanzi
|
May 2024
|
FDA approval of Breyanzi for the treatment of adult patients with relapsed or refractory mantle cell lymphoma who have received at least two prior lines of systemic therapy, including a Bruton tyrosine kinase inhibitor.
|
||||||
|
Breyanzi
|
May 2024
|
FDA accelerated approval of
Breyanzi
for the treatment of adult patients with relapsed or refractory follicular lymphoma who have received at least two prior lines of systemic therapy.
|
||||||
| Abecma | April 2024 |
FDA approval of
Abecma
for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody.
|
||||||
| Reblozyl |
April 2024
|
EC expanded approval of
Reblozyl
to include the first-line treatment of adult patients with transfusion-dependent anemia due to very low, low and intermediate-risk myelodysplastic syndromes.
|
||||||
|
Abecma
|
March 2024
|
EC approval of
Abecma
for the treatment of adult patients with relapsed and refractory multiple myeloma who have received at least two prior therapies, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 antibody and have demonstrated disease progression on the last therapy.
|
||||||
|
Breyanzi
|
March 2024
|
FDA accelerated approval of Breyanzi for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma who have received at least two prior lines of therapy, including a Bruton tyrosine kinase inhibitor and a B-cell lymphoma 2 inhibitor. | ||||||
| Opdivo |
March 2024
|
FDA approval of
Opdivo
, in combination with cisplatin and gemcitabine, for the first-line treatment of adult patients with unresectable or metastatic UC.
|
||||||
|
Reblozyl
|
January 2024
|
Japan's Ministry of Health, Labour and Welfare approval of
Reblozyl
for the treatment of anemia associated with myelodysplastic syndrome.
|
||||||
Refer to "—Product and Pipeline Developments" for a listing of other developments in our marketed products and late-stage pipeline since the start of the second quarter of 2024.
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.
37
RESULTS OF OPERATIONS
Regional Revenues
The composition of the changes in revenues was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change |
Foreign Exchange
(b)
|
2024 | 2023 | % Change |
Foreign Exchange
(b)
|
|||||||||||||||||||||||||||||||||||||||
| United States | $ | 8,801 | $ | 7,804 | 13 | % | N/A | $ | 17,277 | $ | 15,756 | 10 | % | N/A | |||||||||||||||||||||||||||||||||
|
International
|
3,224 | 3,247 | (1) | % | (7) | % | 6,414 | 6,477 | (1) | % | (5) | % | |||||||||||||||||||||||||||||||||||
|
Other
(a)
|
176 | 175 | 1 | % | N/A | 375 | 330 | 14 | % | N/A | |||||||||||||||||||||||||||||||||||||
| Total | $ | 12,201 | $ | 11,226 | 9 | % | (2) | % | $ | 24,066 | $ | 22,563 | 7 | % | (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 increased 13% during the second quarter of 2024 and 10% year-to-date primarily due to higher demand for the Growth and Legacy Portfolios, partially offset by
Abecma
and
Revlimid
. Average U.S. net selling prices decreased 1% year-to-date compared to the same period a year ago.
International
•
International revenues decreased 1% for both the second quarter of 2024 and year-to-date due to foreign exchange impacts and lower demand for the Legacy Portfolio, partially offset by higher demand for the Growth Portfolio. The negative foreign exchange impact of 7% during the second quarter and 5% year-to-date was primarily attributed to the devaluation of the Argentine peso, which was mostly offset by inflation-related local currency price increases.
Beginning in 2024, Puerto Rico revenues are presented as part of International revenues to align with management's review of the Company's financial results. Prior period amounts have been recast to conform to the current presentation. No single country outside the U.S. contributed more than 10% of total revenues during the six months ended June 30, 2024 and 2023. 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Gross product sales | $ | 20,780 | $ | 18,111 | 15 | % | $ | 40,075 | $ | 35,399 | 13 | % | |||||||||||||||||||||||
| GTN adjustments | |||||||||||||||||||||||||||||||||||
| Charge-backs and cash discounts | (2,843) | (2,279) | 25 | % | (5,399) | (4,370) | 24 | % | |||||||||||||||||||||||||||
| Medicaid and Medicare rebates | (3,864) | (3,143) | 23 | % | (6,948) | (5,625) | 24 | % | |||||||||||||||||||||||||||
| Other rebates, returns, discounts and adjustments | (2,148) | (1,772) | 21 | % | (4,244) | (3,439) | 23 | % | |||||||||||||||||||||||||||
| Total GTN adjustments | (8,855) | (7,194) | 23 | % | (16,591) | (13,434) | 24 | % | |||||||||||||||||||||||||||
| Net product sales | $ | 11,925 | $ | 10,917 | 9 | % | $ | 23,484 | $ | 21,965 | 7 | % | |||||||||||||||||||||||
| GTN adjustments percentage | 42 | % | 40 | % | 2 | % | 41 | % | 38 | % | 3 | % | |||||||||||||||||||||||
| U.S. | 48 | % | 45 | % | 3 | % | 46 | % | 43 | % | 3 | % | |||||||||||||||||||||||
| Non-U.S. | 20 | % | 20 | % | — | % | 21 | % | 19 | % | 2 | % | |||||||||||||||||||||||
Reductions/(increases) to provisions for product sales made in prior periods resulting from changes in estimates were ($19 million) and $61 million for the three and six months ended June 30, 2024 and $11 million and $98 million for the three and six months ended June 30, 2023, 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.
38
Product Revenues
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
|
Growth Portfolio
|
|||||||||||||||||||||||||||||||||||
| Opdivo | $ | 2,387 | $ | 2,145 | 11 | % | $ | 4,465 | $ | 4,347 | 3 | % | |||||||||||||||||||||||
| U.S. | 1,406 | 1,221 | 15 | % | 2,561 | 2,502 | 2 | % | |||||||||||||||||||||||||||
| Non-U.S. | 981 | 924 | 6 | % | 1,904 | 1,845 | 3 | % | |||||||||||||||||||||||||||
| Orencia | 948 | 927 | 2 | % | 1,746 | 1,691 | 3 | % | |||||||||||||||||||||||||||
| U.S. | 742 | 695 | 7 | % | 1,314 | 1,246 | 5 | % | |||||||||||||||||||||||||||
| Non-U.S. | 206 | 232 | (11) | % | 432 | 445 | (3) | % | |||||||||||||||||||||||||||
| Yervoy | 630 | 585 | 8 | % | 1,213 | 1,093 | 11 | % | |||||||||||||||||||||||||||
| U.S. | 404 | 368 | 10 | % | 772 | 680 | 14 | % | |||||||||||||||||||||||||||
| Non-U.S. | 226 | 217 | 4 | % | 441 | 413 | 7 | % | |||||||||||||||||||||||||||
| Reblozyl | 425 | 234 | 82 | % | 779 | 440 | 77 | % | |||||||||||||||||||||||||||
| U.S. | 348 | 178 | 96 | % | 641 | 334 | 92 | % | |||||||||||||||||||||||||||
| Non-U.S. | 77 | 56 | 38 | % | 138 | 106 | 30 | % | |||||||||||||||||||||||||||
| Opdualag | 235 | 154 | 53 | % | 441 | 271 | 63 | % | |||||||||||||||||||||||||||
| U.S. | 223 | 151 | 48 | % | 421 | 267 | 58 | % | |||||||||||||||||||||||||||
| Non-U.S. | 12 | 3 | * | 20 | 4 | * | |||||||||||||||||||||||||||||
| Abecma | 95 | 132 | (28) | % | 177 | 279 | (37) | % | |||||||||||||||||||||||||||
| U.S. | 54 | 115 | (53) | % | 106 | 233 | (55) | % | |||||||||||||||||||||||||||
| Non-U.S. | 41 | 17 | * | 71 | 46 | 54 | % | ||||||||||||||||||||||||||||
| Zeposia | 151 | 100 | 51 | % | 261 | 178 | 47 | % | |||||||||||||||||||||||||||
| U.S. | 111 | 73 | 52 | % | 183 | 124 | 48 | % | |||||||||||||||||||||||||||
| Non-U.S. | 40 | 27 | 48 | % | 78 | 54 | 44 | % | |||||||||||||||||||||||||||
| Breyanzi | 153 | 100 | 53 | % | 260 | 171 | 52 | % | |||||||||||||||||||||||||||
| U.S. | 122 | 83 | 47 | % | 209 | 141 | 48 | % | |||||||||||||||||||||||||||
| Non-U.S. | 31 | 17 | 82 | % | 51 | 30 | 70 | % | |||||||||||||||||||||||||||
| Camzyos | 139 | 46 | * | 223 | 75 | * | |||||||||||||||||||||||||||||
| U.S. | 130 | 46 | * | 207 | 75 | * | |||||||||||||||||||||||||||||
| Non-U.S. | 9 | — | N/A | 16 | — | N/A | |||||||||||||||||||||||||||||
| Sotyktu | 53 | 25 | * | 97 | 41 | * | |||||||||||||||||||||||||||||
| U.S. | 41 | 24 | 71 | % | 75 | 39 | 92 | % | |||||||||||||||||||||||||||
| Non-U.S. | 12 | 1 | * | 22 | 2 | * | |||||||||||||||||||||||||||||
| Augtyro | 7 | — | N/A | 13 | — | N/A | |||||||||||||||||||||||||||||
| U.S. | 7 | — | N/A | 13 | — | N/A | |||||||||||||||||||||||||||||
| Non-U.S. | — | — | N/A | — | — | N/A | |||||||||||||||||||||||||||||
| Krazati | 32 | — | N/A | 53 | — | N/A | |||||||||||||||||||||||||||||
| U.S. | 29 | — | N/A | 50 | — | N/A | |||||||||||||||||||||||||||||
| Non-U.S. | 3 | — | N/A | 3 | — | N/A | |||||||||||||||||||||||||||||
|
Other Growth Products
(a)
|
341 | 295 | 16 | % | 660 | 575 | 15 | % | |||||||||||||||||||||||||||
| U.S. | 168 | 162 | 4 | % | 316 | 306 | 3 | % | |||||||||||||||||||||||||||
| Non-U.S. | 173 | 133 | 30 | % | 344 | 269 | 28 | % | |||||||||||||||||||||||||||
|
Total Growth Portfolio
|
$ | 5,596 | $ | 4,743 | 18 | % | $ | 10,388 | $ | 9,161 | 13 | % | |||||||||||||||||||||||
| U.S. | 3,785 | 3,116 | 21 | % | 6,868 | 5,947 | 15 | % | |||||||||||||||||||||||||||
| Non-U.S. | 1,811 | 1,627 | 11 | % | 3,520 | 3,214 | 10 | % | |||||||||||||||||||||||||||
39
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
|
Legacy Portfolio
|
|||||||||||||||||||||||||||||||||||
| Eliquis | $ | 3,416 | $ | 3,204 | 7 | % | $ | 7,136 | $ | 6,627 | 8 | % | |||||||||||||||||||||||
| U.S. | 2,544 | 2,311 | 10 | % | 5,365 | 4,838 | 11 | % | |||||||||||||||||||||||||||
| Non-U.S. | 872 | 893 | (2) | % | 1,771 | 1,789 | (1) | % | |||||||||||||||||||||||||||
| Revlimid | 1,353 | 1,468 | (8) | % | 3,022 | 3,218 | (6) | % | |||||||||||||||||||||||||||
| U.S. | 1,165 | 1,219 | (4) | % | 2,618 | 2,742 | (5) | % | |||||||||||||||||||||||||||
| Non-U.S. | 188 | 249 | (24) | % | 404 | 476 | (15) | % | |||||||||||||||||||||||||||
| Pomalyst/Imnovid | 959 | 847 | 13 | % | 1,824 | 1,679 | 9 | % | |||||||||||||||||||||||||||
| U.S. | 716 | 565 | 27 | % | 1,313 | 1,106 | 19 | % | |||||||||||||||||||||||||||
| Non-U.S. | 243 | 282 | (14) | % | 511 | 573 | (11) | % | |||||||||||||||||||||||||||
| Sprycel | 424 | 458 | (7) | % | 798 | 887 | (10) | % | |||||||||||||||||||||||||||
| U.S. | 341 | 323 | 6 | % | 623 | 612 | 2 | % | |||||||||||||||||||||||||||
| Non-U.S. | 83 | 135 | (39) | % | 175 | 275 | (36) | % | |||||||||||||||||||||||||||
| Abraxane | 231 | 258 | (10) | % | 448 | 497 | (10) | % | |||||||||||||||||||||||||||
| U.S. | 154 | 187 | (18) | % | 299 | 348 | (14) | % | |||||||||||||||||||||||||||
| Non-U.S. | 77 | 71 | 8 | % | 149 | 149 | — | % | |||||||||||||||||||||||||||
|
Other Legacy Products
(b)
|
222 | 248 | (10) | % | 450 | 494 | (9) | % | |||||||||||||||||||||||||||
| U.S. | 96 | 83 | 16 | % | 191 | 163 | 17 | % | |||||||||||||||||||||||||||
| Non-U.S. | 126 | 165 | (24) | % | 259 | 331 | (22) | % | |||||||||||||||||||||||||||
|
Total Legacy Portfolio
|
$ | 6,605 | $ | 6,483 | 2 | % | $ | 13,678 | 13,402 | 2 | % | ||||||||||||||||||||||||
| U.S. | 5,016 | 4,688 | 7 | % | 10,409 | 9,809 | 6 | % | |||||||||||||||||||||||||||
| Non-U.S. | 1,589 | 1,795 | (11) | % | 3,269 | 3,593 | (9) | % | |||||||||||||||||||||||||||
|
Total Revenues
|
$ | 12,201 | $ | 11,226 | 9 | % | $ | 24,066 | $ | 22,563 | 7 | % | |||||||||||||||||||||||
| U.S. | 8,801 | 7,804 | 13 | % | 17,277 | 15,756 | 10 | % | |||||||||||||||||||||||||||
| Non-U.S. | 3,400 | 3,422 | (1) | % | 6,789 | 6,807 | — | % | |||||||||||||||||||||||||||
* Change in excess of 100%.
(a) Includes
Onureg
,
Inrebic
,
Nulojix
,
Empliciti
and royalty revenues.
(b) Includes other mature brands.
Growth Portfolio
Opdivo
(nivolumab) — a fully human monoclonal antibody that binds to the PD-1 on T and NKT cells. It has been approved for several anti-cancer indications including bladder, blood, CRC, head and neck, RCC, HCC, 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 15% during the second quarter of 2024 primarily due to higher average net selling prices, higher demand and timing of sales channel inventory and customer orders.
•
U.S. revenues increased 2% year-to-date primarily due to higher average net selling prices.
•
International revenues increased 6% during the second quarter of 2024 and 3% year-to-date primarily due to higher demand as a result of additional indication launches and core indications, partially offset by foreign exchange impacts of 12% and 10%, respectively. Excluding foreign exchange impacts, revenues increased 18% and 13%, respectively.
40
Orencia
(abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and PsA and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular JIA and for the treatment of aGVHD, in combination with a calcineurin inhibitor and methotrexate.
•
U.S. revenues increased
7% during the second quarter of 2024 and 5% year-to-date primarily due to higher demand, partially offset by lower average net selling prices.
•
International revenues decreased 11% during the second quarter of 2024 due to foreign exchange impacts of 9%. Excluding foreign exchange impacts, revenues decreased by 2%.
•
International revenues decreased 3% year-to-date due to foreign exchange impacts of 8%, partially offset by higher demand. Excluding foreign exchange impacts, revenues increased 5%.
•
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.
Yervoy
(ipilimumab) — a CTLA4 immune checkpoint inhibitor.
Yervoy
is a monoclonal antibody for the treatment of patients with unresectable or metastatic melanoma. The
Opdivo
+
Yervoy
regimen is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and esophageal cancer.
•
U.S. revenues increased 10% during the second quarter of 2024 and 14% year-to-date due to higher average net selling prices and higher demand.
•
International revenues increased 4% during the second quarter of 2024 and 7% year-to-date due to higher demand, partially offset by foreign exchange impacts of 7% in both periods. Excluding foreign exchange impacts, revenues increased by 11% and 14%, respectively.
Reblozyl
(luspatercept-aamt) — an erythroid maturation agent indicated for the treatment of anemia in adult patients with lower risk myelodysplastic syndrome and beta thalassemia.
•
U.S. revenues increased 96% during the second quarter of 2024 and 92% year-to-date driven by higher demand due to a first line label extension in August 2023.
Opdualag
(nivolumab and relatlimab-rmbw) — a combination of nivolumab, a PD-1 blocking antibody, and relatlimab, a LAG-3 blocking antibody, indicated for the treatment of adult and pediatric patients 12 years of age or older with unresectable or metastatic melanoma.
•
U.S. revenues increased 48% during second quarter of 2024 and 58% year-to-date primarily due to higher demand.
Abecma
(idecabtagene vicleucel) — a BCMA genetically modified autologous CAR–T cell therapy indicated for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-cyclic ADP ribose hydrolase monoclonal antibody.
•
U.S. revenues decreased 53% during the second quarter of 2024 and 55% year-to-date due to increased competition in BCMA targeted therapies.
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.
•
U.S. revenues increased 52% during the second quarter of 2024 and 48% year-to-date primarily due to higher demand.
Breyanzi
(lisocabtagene maraleucel) — a CD19-directed genetically modified autologous CAR-T cell therapy indicated for the treatment of adult patients with relapsed or refractory LBCL after one or more lines of systemic therapy, including DLBCL not otherwise specified, high-grade B-cell lymphoma, primary mediastinal LBCL, grade 3B FL and relapsed or refractory FL after at least two prior lines of systemic therapy, relapsed or refractory CLL or SLL , and relapsed or refractory MCL in patients who have received at least two prior lines of systemic therapy, including a Bruton tyrosine kinase inhibitor and a B-cell lymphoma 2 inhibitor.
•
U.S. revenues increased 47% during the second quarter of 2024 and 48% year-to-date primarily due to higher demand enabled by expanded manufacturing capacity.
41
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.
•
U.S. revenues increased more than 100% during the second quarter of 2024 and year-to-date, primarily due to higher demand.
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.
•
U.S. revenues increased 71% during the second quarter of 2024 and 92% year-to-date, primarily due to higher demand, partially offset by lower average net selling prices.
Augtyro
(repotrectinib)
—
a kinase inhibitor indicated for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC and for the treatment of adult and pediatric patients 12 years of age and older with solid tumors that have NTRK gene fusion, are locally advanced or metastatic or where surgical resection is likely to result in severe morbidity, and have progressed following treatment or have no satisfactory alternative therapy.
Augtyro
was launched in November 2023.
Krazati
(adagrasib) — a highly selective and potent oral small-molecule inhibitor of the KRAS
G12C
mutation, indicated for the treatment of adult patients with KRAS
G12C
-mutated locally advanced or metastatic NSCLC, as determined by an FDA-approved test, who have received at least one prior systemic therapy and for the treatment of adult patients with KRAS
G12C
-mutated locally advanced or metastatic CRC, as determined by an FDA-approved test, who have received prior treatment with fluoropyrimidine-, oxaliplatin-, and irinotecan-based chemotherapy.
Krazati
was brought into the BMS portfolio as part of the Mirati acquisition completed in 2024.
Other Growth Brands
— includes
Onureg
,
Inrebic
,
Nulojix
,
Empliciti and
royalty revenues.
Legacy Portfolio
Eliquis
(apixaban)
— an oral Factor Xa inhibitor indicated for the reduction in risk of stroke/systemic embolism in NVAF and for the treatment of DVT/PE and reduction in risk of recurrence following initial therapy.
•
U.S. revenues
increased 10% during second quarter of 2024 and 11% year-to-date primarily due to higher demand.
•
International revenues decreased 2% during the second quarter of 2024 and 1% year-to-date primarily due to foreign exchange impacts of 2% and 1%, respectively. Excluding foreign exchange impacts, revenues were flat.
•
Following the May 2021 expiration of regulatory exclusivity for
Eliquis
in Europe, generic manufacturers have sought to challenge our
Eliquis
patents and related SPCs and have begun marketing generic versions of
Eliquis
in certain countries prior to the expiry of our patents and related SPCs, which has led to the filing of infringement and invalidity actions involving our
Eliquis
patents and related SPCs being filed in various countries in Europe. 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.
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.
Revlimid
has received approvals for several indications in the hematological malignancies including lymphoma and MDS.
•
U.S. revenues decreased 4% during the second quarter of 2024 and 5% year-to-date primarily due to generic erosion and lower average net selling prices, partially offset by the impact 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, in 2023.
•
International revenues decreased 24% during second quarter of 2024 and 15% year-to-date primarily due to generic erosion across several European countries and foreign exchange impacts of 4% in both periods. Excluding foreign exchange impacts, revenues decreased by 20% and 11%, respectively.
•
In the U.S., certain third parties were 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 and Japan, generic lenalidomide products have entered the market.
42
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 increased 27% during the second quarter of 2024 and 19% year-to-date due to higher demand and the impact 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, in 2023.
•
International revenues decreased 14% during the second quarter of 2024 and 11% year-to-date primarily due to lower demand and foreign exchange impacts of 3% and 2%, respectively. Excluding foreign exchange impacts, revenues decreased by 11% and 9%, respectively. In the EU, the estimated minimum market exclusivity date is August 2024.
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 6% during the second quarter of 2024 and 2% year-to-date primarily due to higher demand partially offset by lower average net selling prices.
•
International revenues decreased 39% during the second quarter of 2024 and 36% year-to-date primarily due to lower demand, lower average net selling prices and foreign exchange impacts of 5% and 4%, respectively. Excluding foreign exchange impacts, revenues decreased by 34% and 32%, respectively.
•
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 for the treatment of non-imatinib-resistant CML has expired.
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 decreased 18% during the second quarter of 2024 and 14% year-to-date primarily due to lower demand.
Other Legacy Portfolio Products
— includes other mature brands.
Estimated End-User Demand
Pursuant to the SEC Consent Order described under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation— SEC Consent Order" in our 2023 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 June 30, 2024, for our U.S. distribution channels, and as of March 31, 2024, 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 six months ended June 30, 2024. Factors that may influence our estimates include generic erosion, 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.
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
.
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.
43
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 six months ended June 30, 2024 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.
44
Expenses
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
|
Cost of products sold
(a)
|
$ | 3,267 | $ | 2,876 | 14 | % | $ | 6,199 | $ | 5,442 | 14 | % | |||||||||||||||||||||||
| Marketing, selling and administrative | 1,928 | 1,934 | — | % | 4,295 | 3,696 | 16 | % | |||||||||||||||||||||||||||
| Research and development | 2,899 | 2,258 | 28 | % | 5,594 | 4,579 | 22 | % | |||||||||||||||||||||||||||
| Acquired IPRD | 132 | 158 | (16) | % | 13,081 | 233 | * | ||||||||||||||||||||||||||||
| Amortization of acquired intangible assets | 2,416 | 2,257 | 7 | % | 4,773 | 4,513 | 6 | % | |||||||||||||||||||||||||||
| Other (income)/expense, net | 273 | (116) | * | 354 | (529) | * | |||||||||||||||||||||||||||||
| Total Expenses | $ | 10,915 | $ | 9,367 | 17 | % | $ | 34,296 | $ | 17,934 | 91 | % | |||||||||||||||||||||||
* In excess of +/- 100%.
(a) Excludes amortization of acquired intangible assets.
Cost of Products Sold
Cost of products sold increased by $391 million in the second quarter of 2024 and $757 million year-to-date primarily due to an impairment charge related to
Inrebic
($280 million), higher profit sharing and royalty expense ($144 million and $295 million) and higher sales volume.
Marketing, Selling and Administrative
Marketing, selling and administrative expense was flat in the second quarter of 2024.
Marketing, selling and administrative expense increased by $599 million year-to-date primarily due to the impact of recent acquisitions ($507 million, including the cash settlement of unvested stock awards and other related expenses of $372 million) and timing of charitable giving ($150 million).
Research and Development
Research and development expense increased by $641 million in the second quarter of 2024 and $1.0 billion year-to-date primarily due to an IPRD impairment charge relating to alnuctamab ($590 million) and the impact of recent acquisitions ($197 million in the second quarter and $648 million year-to-date). Year-to-date 2024 impact from acquisitions includes the cash settlement of unvested stock awards and other related expenses of $348 million.
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Karuna asset acquisition (Note 4) | $ | — | $ | — | $ | 12,122 | $ | — | |||||||||||||||
| SystImmune upfront fee (Note 3) | — | — | 800 | — | |||||||||||||||||||
| Evotec designation and opt in license fee | 20 | 40 | 45 | 90 | |||||||||||||||||||
| Prothena opt-in license fee | 80 | 55 | 80 | 55 | |||||||||||||||||||
| Other | 32 | 63 | 34 | 88 | |||||||||||||||||||
| Acquired IPRD | $ | 132 | $ | 158 | $ | 13,081 | $ | 233 | |||||||||||||||
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets increased by $159 million in the second quarter of 2024 and $260 million year-to-date primarily due to the intangible assets acquired through the RayzeBio acquisition in the first quarter of 2024 and FDA approval of
Augtyro
in the fourth quarter of 2023.
45
Other (Income)/Expense, Net
Other (income)/expense, net changed by $389 million in the second quarter of 2024 and $883 million year-to-date as discussed below.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Interest expense | $ | 521 | $ | 282 | $ | 946 | $ | 570 | |||||||||||||||
| Royalty and licensing income | (191) | (340) | (352) | (703) | |||||||||||||||||||
| Royalty income - divestitures | (265) | (218) | (536) | (406) | |||||||||||||||||||
| Investment income | (87) | (95) | (270) | (197) | |||||||||||||||||||
| Litigation and other settlements | 69 | (7) | 71 | (332) | |||||||||||||||||||
| Provision for restructuring | 260 | 113 | 480 | 180 | |||||||||||||||||||
| Integration expenses | 74 | 59 | 145 | 126 | |||||||||||||||||||
| Equity investment (gain)/losses | (107) | 58 | (209) | 213 | |||||||||||||||||||
| Acquisition expenses | 1 | — | 50 | — | |||||||||||||||||||
| Other | (2) | 32 | 29 | 20 | |||||||||||||||||||
|
Other (income)/expense, net
|
$ | 273 | $ | (116) | $ | 354 | $ | (529) | |||||||||||||||
•
Interest expense increased in the second quarter of 2024 and year-to-date compared to 2023 due to additional borrowings. Refer to "Item 1. Financial Statements—Note 10. Financing Arrangements" for further information.
•
Royalty income decreased in the second quarter of 2024 and year-to-date primarily due to lower royalty rates for
Keytruda
* starting in 2024, partially offset by higher royalties from diabetes business divestitures in 2024. Refer to "Item 1. Financial Statements—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for further information.
•
Investment income is primarily driven by changes in average cash and marketable debt securities balances.
•
Litigation and other settlements includes amounts related to pricing, sales and promotional practices disputes and securities litigation matters, partially offset by income from the Eisai collaboration termination in 2024. Refer to "Item 1. Financial Statements—Note 3. Alliances" and "Item 1. Financial Statements —Note 18. Legal Proceedings and Contingencies" for further information. Year-to-date 2023 includes income related to the Nimbus' TYK2 program change of control provision and additional settlement costs related to commercial disputes regarding intellectual property matters. Refer to "Item 1. Financial Statements—Note 5. Other (Income)/Expense, Net" for further information.
•
Provision for restructuring includes exit and other costs primarily related to certain restructuring activities including the plans discussed further in "Item 1. Financial Statements—Note 6. Restructuring". The increase is primarily due to the recent acquisitions.
•
Integration expenses increased in the second quarter of 2024 and year-to-date primarily due to the recent acquisitions.
•
Equity investments generated gains in the second quarter of 2024 compared to losses in 2023 primarily driven by fair value adjustments for investments that have readily determinable fair value. Refer to "Item 1. Financial Statements—Note 9. Financial Instruments and Fair Value Measurements" for more information.
•
Acquisition expenses primarily includes investment banking and professional advisory fees.
•
Other in 2024 includes a $19 million settlement charge in connection with the termination of the Puerto Rico pension plan.
Income Taxes
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Earnings before income taxes | $ | 1,286 | $ | 1,859 | $ | (10,230) | $ | 4,629 | |||||||||||||||
|
Income tax (benefit)/provision
|
(398) | (218) | (6) | 285 | |||||||||||||||||||
| Effective tax rate | (30.9) | % | (11.7) | % | 0.1 | % | 6.2 | % | |||||||||||||||
| Impact of specified items | (45.0) | % | (28.6) | % | 43.3 | % | (10.0) | % | |||||||||||||||
| Effective tax rate excluding specified items | 14.1 | % | 16.9 | % | (43.2) | % | 16.2 | % | |||||||||||||||
Provision for income taxes in interim periods is determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The effective tax rate for the second quarter of 2024 was primarily impacted by the release of income tax reserves of $644 million related to the resolution of Celgene's 2017-2019 IRS audit and impacted by specified items including jurisdictional earnings mix resulting from amortization of acquired intangible assets.
Excluding the impact of specified items, the effective tax rate decreased from 16.9% to 14.1% in the second quarter of 2024 primarily due to the release of income tax reserves of $142 million related to the resolution of the aforementioned Celgene audit.
46
The year-to-date 2024 effective tax rate was primarily impacted by a $12.1 billion one-time, non-tax deductible charge for the acquisition of Karuna and the $644 million related to the resolution of Celgene's 2017-2019 IRS audits. The Karuna non-tax deductible charge affected the effective tax rate as well as the effective tax rate excluding specified items. In addition, the effective tax rate was impacted by jurisdictional earnings mix resulting from amortization of acquired intangible assets, foreign currency changes on certain net operating loss and other carryforwards in 2024, and other specified items.
The effective tax rate during the second quarter and year-to-date 2023 was primarily 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. In addition, the effective tax rate during the six months ended June 30, 2023 was impacted by 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.
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 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 and release of income tax reserves relating to the Celgene acquisition. 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 July 26, 2024 and are incorporated herein by reference.
Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management's, 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 financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
47
Specified items were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Inventory purchase price accounting adjustments | $ | 13 | $ | 31 | $ | 21 | $ | 84 | |||||||||||||||
|
Intangible asset impairment
|
280 | — | 280 | — | |||||||||||||||||||
| Site exit and other costs | 3 | 36 | 17 | 37 | |||||||||||||||||||
| Cost of products sold | 296 | 67 | 318 | 121 | |||||||||||||||||||
|
Acquisition related charges
(a)
|
— | — | 372 | — | |||||||||||||||||||
| Site exit and other costs | 6 | 20 | 12 | 20 | |||||||||||||||||||
| Marketing, selling and administrative | 6 | 20 | 384 | 20 | |||||||||||||||||||
| IPRD impairments | 590 | — | 590 | 20 | |||||||||||||||||||
| Priority review voucher | — | — | — | 95 | |||||||||||||||||||
|
Acquisition related charges
(a)
|
— | — | 348 | — | |||||||||||||||||||
| Site exit and other costs | 14 | 6 | 15 | 6 | |||||||||||||||||||
| Research and development | 604 | 6 | 953 | 121 | |||||||||||||||||||
| Amortization of acquired intangible assets | 2,416 | 2,257 | 4,773 | 4,513 | |||||||||||||||||||
|
Interest expense
(b)
|
(12) | (13) | (25) | (27) | |||||||||||||||||||
| Litigation and other settlements | 61 | — | 61 | (335) | |||||||||||||||||||
| Provision for restructuring | 260 | 113 | 480 | 180 | |||||||||||||||||||
| Integration expenses | 74 | 59 | 145 | 126 | |||||||||||||||||||
| Equity investment (gain)/losses | (107) | 58 | (209) | 208 | |||||||||||||||||||
| Acquisition expenses | 1 | — | 50 | — | |||||||||||||||||||
| Other | — | — | 10 | (5) | |||||||||||||||||||
| Other (income)/expense, net | 277 | 217 | 512 | 147 | |||||||||||||||||||
| Increase to pretax income | 3,599 | 2,567 | 6,940 | 4,922 | |||||||||||||||||||
| Income taxes on items above | (585) | (311) | (925) | (604) | |||||||||||||||||||
|
Income tax reserve releases
|
(502) | — | (502) | — | |||||||||||||||||||
| Income taxes attributed to non-U.S. tax ruling | — | (656) | — | (656) | |||||||||||||||||||
| Income taxes | (1,087) | (967) | (1,427) | (1,260) | |||||||||||||||||||
| Increase to net earnings | $ | 2,512 | $ | 1,600 | $ | 5,513 | $ | 3,662 | |||||||||||||||
(a) Includes cash settlement of unvested stock awards, and other related costs incurred in connection with the recent acquisitions.
(b) Includes amortization of purchase price adjustments to Celgene debt.
The reconciliations from GAAP to Non-GAAP were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
|
Net (loss)/earnings attributable to BMS
|
|||||||||||||||||||||||
| GAAP | $ | 1,680 | $ | 2,073 | $ | (10,231) | $ | 4,335 | |||||||||||||||
| Specified items | 2,512 | 1,600 | 5,513 | 3,662 | |||||||||||||||||||
| Non-GAAP | $ | 4,192 | $ | 3,673 | $ | (4,718) | $ | 7,997 | |||||||||||||||
| Weighted-average common shares outstanding – diluted | 2,029 | 2,102 | 2,025 | 2,107 | |||||||||||||||||||
|
Diluted (loss)/earnings per share attributable to BMS
|
|||||||||||||||||||||||
| GAAP | $ | 0.83 | $ | 0.99 | $ | (5.05) | $ | 2.06 | |||||||||||||||
| Specified items | 1.24 | 0.76 | 2.72 | 1.74 | |||||||||||||||||||
| Non-GAAP | $ | 2.07 | $ | 1.75 | $ | (2.33) | $ | 3.80 | |||||||||||||||
48
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our net debt position was as follows:
| Dollars in Millions |
June 30,
2024 |
December 31,
2023 |
|||||||||
| Cash and cash equivalents | $ | 6,293 | $ | 11,464 | |||||||
| Marketable debt securities – current | 360 | 816 | |||||||||
| Marketable debt securities – non-current | 357 | 364 | |||||||||
| Total cash, cash equivalents and marketable debt securities | 7,010 | 12,644 | |||||||||
| Short-term debt obligations | (3,531) | (3,119) | |||||||||
| Long-term debt | (48,858) | (36,653) | |||||||||
| Net debt position | $ | (45,379) | $ | (27,128) | |||||||
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 six months ended June 30, 2024, our net debt position increased by $18.3 billion primarily driven by payments for recent acquisitions, collaborations and milestones of $21.4 billion and $2.4 billion of dividend payments, partially offset by cash provided by operations of $5.2 billion.
During the six months ended June 30, 2024, we issued the 2024 Senior Unsecured Notes in an aggregate principal amount of $13.0 billion with proceeds, net of discount and loan issuance costs, of $12.9 billion. The proceeds from the 2024 Senior Unsecured Notes were used to partially fund the acquisitions of RayzeBio and Karuna, and the remaining net proceeds were used for general corporate purposes. In connection with the issuance of the 2024 Senior Unsecured Notes, we terminated the $10.0 billion 364-day senior unsecured delayed draw term loan facility entered in February 2024 to provide bridge financing for the RayzeBio and Karuna acquisitions.
During the six months ended June 30, 2024, $395 million 3.625% Notes matured and were repaid.
Under our commercial paper program, we may issue a maximum of $7.0 billion of unsecured notes that have maturities of not more than 365 days from the date of issuance. During the first quarter of 2024, we issued $3.0 billion of commercial paper, of which $2.7 billion was repaid during the second quarter of 2024.
There were no borrowings outstanding under our $5.0 billion revolving credit facility as of June 30, 2024 and December 31, 2023. This credit facility expires in January 2029 and is extendable annually by one year with the consent of the lenders. Additionally, in February 2024, we entered into a $2.0 billion 364-day revolving credit facility, under which no borrowings were outstanding as of June 30, 2024. The facilities provide for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for our commercial paper borrowings.
Dividend payments were $2.4 billion during the six months ended June 30, 2024 and 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 $1.4 billion for the full year 2024. We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities, research and development and other facility-related activities.
During the six months ended June 30, 2024 and 2023, income tax payments were $2.1 billion and $3.1 billion, including $799 million and $567 million, respectively, for the transition tax following the TCJA enactment.
49
Cash Flows
The following is a discussion of cash flow activities:
| Six Months Ended June 30, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Cash flow provided by/(used in): | |||||||||||
| Operating activities | $ | 5,160 | $ | 4,857 | |||||||
| Investing activities | (20,937) | (539) | |||||||||
| Financing activities | $ | 10,621 | $ | (5,223) | |||||||
Operating Activities
The $303 million increase in cash provided by operating activities compared to 2023, was primarily due to lower income tax payments of $1 billion, higher customer collections, net of rebates and discounts and alliance payments, ($600 million), partially offset by acquisition-related expenses, including cash settlement of unvested stock awards ($1.0 billion), as well as timing of payments in the ordinary course of business.
Investing Activities
The $20.4 billion increase in cash used in investing activities compared to 2023 was due to higher acquisition-related expenses of $21.2 billion, which included $1.1 billion of payment for Karuna vested equity awards in the second quarter of 2024, as well as collaboration and milestone payments, partially offset by changes in the amount of marketable debt securities held of $692 million.
Financing Activities
The $15.8 billion increase in cash provided by financing activities compared to 2023 was primarily due to net debt borrowings of $13.2 billion in 2024 primarily to fund recent acquisitions compared to net debt repayments of $1.6 billion and $1.2 billion repurchases of common stock in 2023.
50
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 second quarter of 2024 as of July 26, 2024:
| Product | Indication | Date | Developments | ||||||||
|
cendakimab
|
Eosinophilic Esophagitis
|
July 2024 |
Announced that the results from the Phase 3 trial evaluating the efficacy and safety of cendakimab in patients with eosinophilic esophagitis met both co-primary endpoints, demonstrating statistically significant reductions versus placebo in symptoms (dysphagia days) and esophageal eosinophil counts after 24 weeks of treatment. The overall safety profile of cendakimab through 48 weeks of treatment in the Phase 3 trial was consistent with previously reported eosinophilic esophagitis Phase 2 trial results, and no new safety signals were identified.
|
||||||||
|
Camzyos
|
oHCM
|
July 2024 |
Announced that Japan's Pharmaceuticals and Medical Devices Agency accepted the Japanese New Drug Application for
Camzyos
for the treatment of obstructive hypertrophic cardiomyopathy, based on results from the global Phase 3 EXPLORER-HCM and Phase 3 VALOR-HCM trials, as well as the Japan Phase 3 HORIZON-HCM study.
|
||||||||
|
Krazati
|
Colorectal Cancer
|
June 2024 |
Announced FDA accelerated approval for
Krazati
in combination with cetuximab as a targeted treatment option for adult patients with KRAS
G12C
-mutated locally advanced or metastatic colorectal cancer, as determined by an FDA-approved test, who have received prior treatment with fluoropyrimidine-oxaliplatin- and irinotecan-based chemotherapy. This accelerated approval is based on results from the Phase 1/2 KRYSTAL-1 study.
|
||||||||
|
NSCLC
|
June 2024 |
Announced that the results from the Phase 3 KRYSTAL-12 study evaluating
Krazati
compared to standard of care chemotherapy in patients with locally advanced or metastatic KRAS
G12C
-mutated NSCLC who had previously received platinum-based chemotherapy, concurrently or sequentially with anti-PD-(L)1 therapy, demonstrated a statistically significant and clinically meaningful improvement in progression-free survival (PFS), the study’s primary endpoint. The KRYSTAL-12 study remains ongoing to assess the additional key secondary endpoint of overall survival.
|
|||||||||
|
Colorectal Cancer
|
April 2024 |
Announced that data from the cohorts evaluating
Krazati
in combination with cetuximab of the Phase 1/2 KRYSTAL-1 study for the treatment of patients with previously treated KRAS
G12C
-mutated locally advanced or metastatic colorectal cancer demonstrated clinically meaningful activity. With a median follow up of 11.9 months in 94 patients,
Krazati
plus cetuximab demonstrated an objective response rate of 34%, median progression-free survival of 6.9 months, and median overall survival of 15.9 months in pre-treated patients.
|
|||||||||
| Augtyro | Solid Tumor | June 2024 |
Announced FDA accelerated approval of
Augtyro
for the treatment of adult and pediatric patients 12 years of age and older with solid tumors that have a neurotrophic tyrosine receptor kinase gene fusion, are locally advanced or metastatic or where surgical resection is likely to result in severe morbidity, and have progressed following treatment or have no satisfactory alternative therapy. This approval is based on results from the Phase 1/2 TRIDENT-1 study.
|
||||||||
|
Opdivo
|
Urothelial Carcinoma | May 2024 |
Announced EC approval of Opdivo in combination with cisplatin and gemcitabine for the first-line treatment of adult patients with unresectable or metastatic urothelial carcinoma. The approval is based on the results from the CheckMate -901 trial.\
|
||||||||
|
NSCLC
|
June 2024 |
Announced that the four-year survival data from the Phase 3 CheckMate -816 trial demonstrated that at a median follow up of 57.6 months, neoadjuvant
Opdivo
with chemotherapy continued to improve event-free survival versus chemotherapy alone.
|
|||||||||
| June 2024 |
Announced that an exploratory analysis from the Phase 3 CheckMate -77T study of perioperative
Opdivo
showed improved event-free survival and pathologic complete response in stage III resectable NSCLC patients regardless of nodal status.
|
||||||||||
51
| Product | Indication | Date | Developments | ||||||||
|
Opdivo + Yervoy
|
Colorectal Cancer
|
May 2024 |
Announced EMA validation of the Type II variation application for Opdivo plus Yervoy for the first-line treatment of adult patients with microsatellite instability–high or mismatch repair deficient metastatic colorectal cancer. This application is based on the Phase 3 CheckMate -8HW trial.
|
||||||||
|
HCC
|
July 2024 |
Announced EMA validation of the Type II variation application for Opdivo plus Yervoy as a potential first-line treatment option for adult patients with unresectable or advanced HCC who have not received prior systemic therapy. The application was based on results from the Phase 3 CheckMate -9DW trial.
|
|||||||||
| June 2024 |
Announced that the results from the Phase 3 CheckMate -9DW trial showed the dual immunotherapy combination of
Opdivo
plus
Yervoy
meaningfully improved overall survival, the trial’s primary endpoint, compared to investigator’s choice of lenvatinib or sorafenib as a first-line treatment for patients with unresectable hepatocellular carcinoma. The results also demonstrated a statistically significant and clinically meaningful improvement in the key secondary endpoint of objective response rate.
|
||||||||||
|
NSCLC
|
June 2024 |
Announced that the five-year follow-up results from the Phase 3 CheckMate -9LA trial showed durable, long-term survival benefits with
Opdivo
plus
Yervoy
combined with two cycles of chemotherapy compared to chemotherapy alone as a first-line treatment in patients with metastatic NSCLC.
|
|||||||||
| May 2024 |
Announced that the Phase 3 CheckMate -73L trial did not meet its primary endpoint of progression-free survival in unresectable, locally advanced stage III NSCLC.
|
||||||||||
|
Breyanzi
|
Large B-Cell Lymphoma
|
June 2024 |
Announced that three-year follow-up results from the Phase 3 TRANSFORM trial demonstrated ongoing event-free survival and durable responses with
Breyanzi
compared to the standard of care.
|
||||||||
| Mantle Cell Lymphoma | June 2024 |
Announced results from a subgroup analysis from mantle cell lymphoma cohort of the Phase 1 TRANSCEND NHL 001 trial show
Breyanzi
demonstrated consistent clinical benefit regardless of number of prior lines of therapy.
|
|||||||||
| May 2024 |
Announced FDA approval of
Breyanzi
for the treatment of adult patients with relapsed or refractory mantle cell lymphoma who have received at least two prior lines of systemic therapy, including a Bruton tyrosine kinase inhibitor. This approval is based on results from the MCL cohort of the Phase 1 TRANSCEND NHL 001 study.
|
||||||||||
|
Follicular Lymphoma
|
June 2024 |
Announced data from a bridging therapy subgroup analysis of the Phase 2 TRANSCEND FL trial evaluating
Breyanzi
in second-line plus relapsed or refractory follicular lymphoma show consistent efficacy with high response rates and a consistent safety profile regardless of receiving prior bridging therapy.
|
|||||||||
| May 2024 |
Announced FDA accelerated approval of
Breyanzi
for the treatment of adult patients with relapsed or refractory FL who have received at least two prior lines of systemic therapy. This accelerated approval is based on results from the Phase 2 TRANSCEND FL study.
|
||||||||||
52
| Product | Indication | Date | Developments | ||||||||
|
Subcutaneous nivolumab
|
Multiple Indications
|
June 2024 |
Announced EMA validation of the extension application to introduce a new route of administration (subcutaneous use) for Opdivo (nivolumab) that includes a new pharmaceutical form (solution for injection) and a new strength (600 mg/vial) across multiple previously approved adult solid tumor indications as monotherapy, monotherapy maintenance following completion of nivolumab plus ipilimumab combination therapy, or in combination with chemotherapy or cabozantinib, based on the results from the Phase 3 CheckMate -67T study.
|
||||||||
| May 2024 |
Announced FDA acceptance of the BLA for the subcutaneous formulation of Opdivo co-formulated with Halozyme’s proprietary recombinant human hyaluronidase (rHuPH20) across all previously approved adult, solid tumor Opdivo indications as monotherapy, monotherapy maintenance following completion of Opdivo plus Yervoy (ipilimumab) combination therapy, or in combination with chemotherapy or cabozantinib, based on results from the Phase 3 CheckMate -67T study. The FDA assigned a PDUFA goal date of December 29, 2024.
|
||||||||||
|
Sotyktu
|
Plaque Psoriasis
|
May 2024 |
Announced four-year results from the POETYK PSO long-term extension trial of Sotyktu treatment in adult patients with moderate-to-severe plaque psoriasis showed that, after four years of continuous Sotyktu treatment, clinical response was maintained in more than seven out of 10 patients for Psoriasis Area and Severity Index (PASI) 75. In addition, the safety profile of Sotyktu at Year 4 remained consistent with the established safety profile, with no new safety signals identified.
|
||||||||
|
Abecma
|
Multiple Myeloma
|
April 2024 |
Announced the FDA approval of
Abecma
for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. The approval is based on results from the Phase III KarMMa-3 trial.
Abecma
is being jointly developed and commercialized in the U.S. by Bristol Myers Squibb and 2seventy bio, Inc.
|
||||||||
| KarXT |
Schizophrenia
|
April 2024 |
Announced pooled interim long-term safety, tolerability, and metabolic outcomes data from the Phase III EMERGENT-4 and EMERGENT-5 trials evaluating the safety, tolerability and efficacy of KarXT in adults with schizophrenia. KarXT demonstrated a favorable weight and long-term metabolic profile where most patients experience stability or improvements on key metabolic parameters over 52 weeks of treatment. KarXT was generally well-tolerated with a side effect profile consistent with prior trials.
In addition, announced interim long-term efficacy data from the Phase III EMERGENT-4 open-label extension trial demonstrated that KarXT was associated with significant improvement in symptoms of schizophrenia across all efficacy measures at 52 weeks.
|
||||||||
|
Reblozyl
|
Myelodysplastic Syndromes
|
April 2024 |
Announced the EC expanded approval of
Reblozyl
to include the first-line treatment of transfusion-dependent anemia due to very low, low and intermediate-risk myelodysplastic syndromes. The approval covers all European Union member states and is based on the pivotal Phase III COMMANDS trial.
|
||||||||
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 2023 Form 10-K. There have been no material changes to our critical accounting policies during the six months ended June 30, 2024. 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."
53
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 and in relation to our ability to realize the projected benefits of our acquisitions, alliances and other business development activities, the impact of any pandemic or epidemic 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 2023 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 2023 Form 10-K. There have been no material changes to our market risk during the six months ended June 30, 2024.
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 June 30, 2024, such disclosure controls and procedures are effective.
There were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2024 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 2023 Form 10-K.
54
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 June 30, 2024:
| 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 | |||||||||||||||||||||||
| April 1 to 30, 2024 | 125,970 | $ | 52.44 | — | $ | 5,014 | |||||||||||||||||
| May 1 to 31, 2024 | 77,862 | $ | 43.07 | — | $ | 5,014 | |||||||||||||||||
| June 1 to 30, 2024 | 9,023 | $ | 42.51 | — | $ | 5,014 | |||||||||||||||||
| Three months ended June 30, 2024 | 212,855 | — | |||||||||||||||||||||
(a)
Includes 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 in February 2020, January and December 2021 and December 2023, in the amounts of $5.0 billion, $2.0 billion, $15.0 billion and $3.0 billion, respectively, to the share repurchase authorization. The remaining share repurchase capacity under the program was $5.0 billion as of June 30, 2024. Refer to "Item 8. Financial Statements and Supplementary Data—Note 17. Equity" in our 2023 Form 10-K for information on the share repurchase program.
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,"
as each term is defined in Item 408(a) of Regulation S-K.
55
Item 6. EXHIBITS
Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).
| Exhibit No. | Description | |||||||
| 3a. | ||||||||
| 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;
Onglyza
is a trademark of AstraZeneca AB;
Otezla
is a trademark of Amgen Inc.;
Plavix
is a trademark of Sanofi; and
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.
56
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:
|
2023 Form 10-K
|
Annual Report on Form 10-K for the fiscal year ended December 31, 2023 |
Merck
|
Merck & Co.
|
||||||||
|
2024 Senior Unsecured Notes
|
Aggregate principal amount of $13.0 billion of unsecured senior notes issued by BMS in February 2024 |
LBCL
|
Large B-cell Lymphoma
|
||||||||
|
aGVHD
|
acute graft-versus-host disease | Mirati | Mirati Therapeutics, Inc. | ||||||||
| ANDA | Abbreviated New Drug Application | MPM | malignant pleural mesothelioma | ||||||||
| AstraZeneca | AstraZeneca PLC |
MTA
|
Methylthioadenosine
|
||||||||
|
BCMA
|
B-cell maturation antigen-directed |
NKT
|
natural killer T cells | ||||||||
| CAR-T | chimeric antigen receptor T-cell |
NDA
|
New Drug Application | ||||||||
| Celgene | Celgene Corporation | NSCLC | non-small cell lung cancer | ||||||||
| CERCLA | U.S. Comprehensive Environmental Response, Compensation and Liability Act |
NTRK
|
Neurotrophic Tropomyosin Receptor Kinase
|
||||||||
|
CGDP
|
Coverage Gap Discount Program
|
Nimbus | Nimbus Therapeutics | ||||||||
|
CLL
|
Chronic Lymphocytic Leukemia
|
NVAF
|
non-valvular atrial fibrillation
|
||||||||
| CML | chronic myeloid leukemia |
OECD
|
Organization for Economic Co-operation and Development
|
||||||||
| CRC | colorectal carcinoma |
Ono
|
Ono Pharmaceutical Co., Ltd
|
||||||||
|
CTLA4
|
Cytotoxic T-lymphocyte Antigen-4
|
Otsuka | Otsuka Pharmaceutical Co., Ltd. | ||||||||
|
DLBCL
|
Diffuse Large B-cell Lymphoma
|
PD-1 | programmed cell death protein 1 | ||||||||
| EC | European Commission |
PDUFA
|
Prescription Drug User Fee Act
|
||||||||
|
Eisai
|
Eisai Co., Ltd.
|
PsA
|
psoriatic arthritis
|
||||||||
| EPS | earnings per share |
PRMT5
|
protein arginine methyltransferase 5
|
||||||||
| EU | European Union | Quarterly Report on Form 10-Q |
Quarterly Report on Form 10-Q for the quarter ended June 30, 2024
|
||||||||
| Exchange Act | the Securities Exchange Act of 1934 | R&D | research and development | ||||||||
|
FASB
|
Financial Accounting Standards Board
|
RA | rheumatoid arthritis | ||||||||
| FDA | U.S. Food and Drug Administration |
RayzeBio
|
RayzeBio, Inc.
|
||||||||
|
FL
|
follicular lymphoma | RCC | renal cell carcinoma | ||||||||
| GAAP | generally accepted accounting principles | REMS | risk evaluation and mitigation strategy | ||||||||
| GTN | gross-to-net | Sanofi | Sanofi S.A. | ||||||||
| HCC | hepatocellular carcinoma | SEC | U.S. Securities and Exchange Commission | ||||||||
| HCM | hypertrophic cardiomyopathy | SLL | Small Lymphocytic Lymphoma | ||||||||
| IPRD | in-process research and development | SPC | Supplementary Protection Certificate | ||||||||
| IRA | Inflation Reduction Act of 2022 | SystImmune | SystImmune, Inc. | ||||||||
| IRS | Internal Revenue Service | Takeda | Takeda Pharmaceutical Company Limited | ||||||||
|
IV
|
intravenous
|
TCJA
|
Tax Cuts and Jobs Act
|
||||||||
| JIA | juvenile idiopathic arthritis | Turning Point | Turning Point Therapeutics, Inc. | ||||||||
| Juno | Juno Therapeutics, Inc. | UC | ulcerative colitis | ||||||||
|
Karuna
|
Karuna Therapeutics, Inc.
|
UK | United Kingdom | ||||||||
|
KRAS
|
Kirsten rat sarcoma
|
U.S. | United States | ||||||||
| MDL | multi-district litigation | USPTO | U.S. Patent and Trademark Office | ||||||||
| MDS | myelodysplastic syndromes | VAT |
value added tax
|
||||||||
57
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: | July 26, 2024 | By: | /s/ Christopher Boerner, Ph.D. | ||||||||
|
Christopher Boerner, Ph. D.
Chair of the Board and Chief Executive Officer
|
|||||||||||
| Date: | July 26, 2024 | By: | /s/ David V. Elkins | ||||||||
|
David V. Elkins
Chief Financial Officer
|
|||||||||||
58
TABLE OF CONTENTS
Part I Financial InformationprintItem 1. Financial StatementsprintNote 1. Basis Of Presentation and Recently Issued Accounting StandardsprintNote 2. RevenueprintNote 3. AlliancesprintNote 4. Acquisitions, Divestitures, Licensing and Other ArrangementsprintNote 5. Other (income)/expense, NetprintNote 6. RestructuringprintNote 7. Income TaxesprintNote 8. Earnings/(loss) Per ShareprintNote 9. Financial Instruments and Fair Value MeasurementsprintNote 10. Financing ArrangementsprintNote 11. ReceivablesprintNote 12. InventoriesprintNote 13. Property, Plant and EquipmentprintNote 14. Goodwill and Other Intangible AssetsprintNote 15. Supplemental Financial InformationprintNote 16. EquityprintNote 17. Employee Stock Benefit PlansprintNote 18. Legal Proceedings and ContingenciesprintItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsprintItem 3. Quantitative and Qualitative Disclosures About Market RiskprintItem 4. Controls and ProceduresprintPart II Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 5. Other InformationprintItem 6. Exhibitsprint