SEC Form 10-Q filed by Bristol-Myers Squibb Company
$BMY
Biotechnology: Pharmaceutical Preparations
Health Care
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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)
___________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
(609 ) 252-4621
(Registrant’s telephone number, including area code)
___________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer ,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐ | ||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At April 18, 2024, there were 2,027,100,096 shares outstanding of the Registrant’s $0.10 par value common stock.
BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
March 31, 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 March 31, | |||||||||||
| EARNINGS | 2024 | 2023 | |||||||||
| Net product sales | $ | $ | |||||||||
| Alliance and other revenues | |||||||||||
| Total Revenues | |||||||||||
Cost of products sold(a) | |||||||||||
| Marketing, selling and administrative | |||||||||||
| Research and development | |||||||||||
| Acquired IPRD | |||||||||||
| Amortization of acquired intangible assets | |||||||||||
Other (income)/expense, net | ( | ||||||||||
| Total Expenses | |||||||||||
(Loss)/Earnings before income taxes | ( | ||||||||||
Income tax provision | |||||||||||
Net (loss)/earnings | ( | ||||||||||
| Noncontrolling interest | |||||||||||
Net (loss)/earnings attributable to BMS | $ | ( | $ | ||||||||
(Loss)/Earnings per common share: | |||||||||||
| Basic | $ | ( | $ | ||||||||
| Diluted | ( | ||||||||||
(a) Excludes amortization of acquired intangible assets .
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
Dollars in millions
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
COMPREHENSIVE (LOSS)/INCOME | 2024 | 2023 | |||||||||
Net (loss)/earnings | $ | ( | $ | ||||||||
| Other comprehensive income/(loss), net of taxes and reclassifications to earnings: | |||||||||||
| Derivatives qualifying as cash flow hedges | ( | ||||||||||
| Pension and postretirement benefits | |||||||||||
| Marketable debt securities | ( | ||||||||||
| Foreign currency translation | ( | ||||||||||
Total Other comprehensive income/(loss) | ( | ||||||||||
Comprehensive (loss)/income | ( | ||||||||||
| Comprehensive income attributable to noncontrolling interest | |||||||||||
Comprehensive (loss)/income attributable to BMS | $ | ( | $ | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in millions
(UNAUDITED)
| ASSETS | March 31, 2024 | December 31, 2023 | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable debt securities | |||||||||||
| Receivables | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total Current assets | |||||||||||
| Property, plant and equipment | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Deferred income taxes | |||||||||||
Marketable debt securities | |||||||||||
| Other non-current assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt obligations | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Other current liabilities | |||||||||||
| Total Current liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Long-term debt | |||||||||||
| Other non-current liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| EQUITY | |||||||||||
| BMS Shareholders’ equity: | |||||||||||
| Preferred stock | |||||||||||
| Common stock | |||||||||||
| Capital in excess of par value of stock | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Less cost of treasury stock | ( | ( | |||||||||
| Total BMS Shareholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total Equity | |||||||||||
| Total Liabilities and Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash Flows From Operating Activities: | |||||||||||
Net (loss)/earnings | $ | ( | $ | ||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization, net | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Impairment charges | |||||||||||
| Divestiture gains and royalties | ( | ( | |||||||||
| Acquired IPRD | |||||||||||
Equity investment (gains)/losses | ( | ||||||||||
| Other adjustments | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Receivables | ( | ||||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Rebates and discounts | ( | ( | |||||||||
| Income taxes payable | |||||||||||
| Other | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows From Investing Activities: | |||||||||||
| Sale and maturities of marketable debt securities | |||||||||||
| Purchase of marketable debt securities | ( | ( | |||||||||
| Proceeds from sales of equity investments | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Divestiture and other proceeds | |||||||||||
| Acquisition and other payments, net of cash acquired | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows From Financing Activities: | |||||||||||
| Short-term debt obligations, net | |||||||||||
| Issuance of long-term debt | |||||||||||
| Repayment of long-term debt | ( | ||||||||||
| Repurchase of common stock | ( | ||||||||||
| Dividends | ( | ( | |||||||||
| Stock option proceeds and other, net | ( | ( | |||||||||
Net cash provided by/(used in) financing activities | ( | ||||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | ( | ||||||||||
| Decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS
Basis of Consolidation
Bristol-Myers Squibb Company ("BMS", "we", "our", "us" or "the Company") prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position of the Company as of March 31, 2024 and December 31, 2023 and the results of operations and cash flows for the three months ended March 31, 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 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 2024 and interim periods beginning January 2025 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 March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Net product sales | $ | $ | |||||||||
| Alliance revenues | |||||||||||
| Other revenues | |||||||||||
| Total Revenues | $ | $ | |||||||||
The following table summarizes GTN adjustments:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Gross product sales | $ | $ | |||||||||
GTN adjustments(a) | |||||||||||
| Charge-backs and cash discounts | ( | ( | |||||||||
| Medicaid and Medicare rebates | ( | ( | |||||||||
| Other rebates, returns, discounts and adjustments | ( | ( | |||||||||
Total GTN adjustments(b) | ( | ( | |||||||||
| Net product sales | $ | $ | |||||||||
(a) Includes reductions to GTN adjustments for product sales made in prior periods resulting from changes in estimates of $80 million and $87 million for the three months ended March 31, 2024 and 2023, respectively.
(b) Includes U.S. GTN adjustments of $6.9 billion and $5.5 billion for the three months ended March 31, 2024 and 2023, respectively.
7
The following table summarizes the disaggregation of revenue by product and region:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
Growth Portfolio | |||||||||||
| Opdivo | $ | $ | |||||||||
| Orencia | |||||||||||
| Yervoy | |||||||||||
| Reblozyl | |||||||||||
| Opdualag | |||||||||||
| Abecma | |||||||||||
| Zeposia | |||||||||||
| Breyanzi | |||||||||||
| Camzyos | |||||||||||
| Sotyktu | |||||||||||
| Augtyro | |||||||||||
| Krazati | |||||||||||
Other Growth products(a) | |||||||||||
Total Growth Portfolio | |||||||||||
Legacy Portfolio | |||||||||||
| Eliquis | |||||||||||
| Revlimid | |||||||||||
| Pomalyst/Imnovid | |||||||||||
| Sprycel | |||||||||||
| Abraxane | |||||||||||
Other Legacy products(b) | |||||||||||
Total Legacy Portfolio | |||||||||||
| Total Revenues | $ | $ | |||||||||
| United States | |||||||||||
| International | |||||||||||
Other(c) | |||||||||||
| 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 $182 million and $166 million for the three months ended March 31, 2024 and 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 March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Revenues from alliances | |||||||||||
| Net product sales | $ | $ | |||||||||
| Alliance revenues | |||||||||||
| Total alliance revenues | $ | $ | |||||||||
| To/(from) alliance partners | |||||||||||
| Cost of products sold | $ | $ | |||||||||
| Marketing, selling and administrative | ( | ( | |||||||||
| Research and development | |||||||||||
| Acquired IPRD | |||||||||||
| Other (income)/expense, net | ( | ( | |||||||||
| Dollars in millions | March 31, 2024 | December 31, 2023 | |||||||||
| Selected alliance balance sheet information | |||||||||||
| Receivables – from alliance partners | $ | $ | |||||||||
| Accounts payable – to alliance partners | |||||||||||
Deferred income – from alliances(a) | |||||||||||
The nature, purpose, significant rights and obligations of the parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 2023 Form 10-K. Significant developments and updates related to alliances during the three months ended March 31, 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 currently being evaluated in a Phase I clinical trial for metastatic or unresectable NSCLC. BMS paid an upfront fee of $800 million which was included in Acquired IPRD during the three months ended March 31, 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.
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 three months ended March 31, 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 to Marketing, selling and administrative and $159 million expensed in Research and development during the three months ended March 31, 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 and subject to change, including the valuation of intangible assets and 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 three months ended March 31, 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 KRASG12C 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 and other 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 and subject to change, including the valuation of intangible assets and 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 the three months ended March 31, 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 March 31, | |||||||||||||||||||||||||||||||||||
| 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 March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
Keytruda* royalties | $ | ( | $ | ( | |||||||
Tecentriq* royalties | ( | ( | |||||||||
| Contingent milestone income | ( | ||||||||||
| Amortization of deferred income | ( | ( | |||||||||
| Other royalties and licensing income | ( | ( | |||||||||
| Total | $ | ( | $ | ( | |||||||
Keytruda* Patent License Agreement
BMS and Ono are parties to a global patent license agreement with Merck related to Merck's PD-1 antibody Keytruda*. Under the agreement, Merck paid ongoing royalties on global sales of Keytruda* of 6.5 % through December 31, 2023 and is obligated to pay 2.5 % from January 1, 2024 through December 31, 2026. The companies also granted certain rights to each other under their respective patent portfolios pertaining to PD-1. Payments and royalties are shared between BMS and Ono on a 75 /25 percent allocation, respectively, after adjusting for each party's legal fees.
Other
Nimbus Change of Control Income
Note 5. OTHER (INCOME)/EXPENSE, NET
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Interest expense (Note 10) | $ | $ | |||||||||
| Royalty and licensing income (Note 4) | ( | ( | |||||||||
| Royalty income - divestiture (Note 4) | ( | ( | |||||||||
| Investment income | ( | ( | |||||||||
Litigation and other settlements (Note 4) | ( | ||||||||||
| Provision for restructuring (Note 6) | |||||||||||
| Integration expenses (Note 6) | |||||||||||
| Equity investment (gain)/losses (Note 9) | ( | ||||||||||
Acquisition expense (Note 4) | |||||||||||
| Other | ( | ||||||||||
Other (income)/expense, net | $ | $ | ( | ||||||||
13
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.
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 $500 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 March 31, | |||||||||||
| Dollars in millions | 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:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Beginning balance | $ | $ | |||||||||
| Provision for restructuring | |||||||||||
| Foreign currency translation and other | ( | ||||||||||
| Payments | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
14
Note 7. INCOME TAXES
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
(Loss)/Earnings before income taxes | $ | ( | $ | ||||||||
| Income tax 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 income tax provision of $392 million during the three months ended March 31, 2024 on a pretax loss of $11.5 billion resulted in an effective tax rate of (3.4 )%, which included the impact of a $12.1 billion one-time, non-tax deductible charge for the acquisition of Karuna. 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. Income tax payments were $187 million and $149 million for the three months ended March 31, 2024 and 2023, respectively.
BMS is currently under examination by a number of tax authorities that proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax issues for the 2008 to 2012 tax years. BMS disagrees with the IRS's positions and continues to work cooperatively with the IRS to resolve these issues. In the fourth quarter of 2022, BMS entered the IRS administrative appeals process to resolve these matters. Timing of the final resolution of these complex matters is uncertain and could have a material impact on BMS's consolidated financial statements.
It is reasonably possible that the amount of unrecognized tax benefits as of March 31, 2024 could decrease in the range of approximately $700 million to $740 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. (LOSS)/EARNINGS PER SHARE
| Three Months Ended March 31, | |||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | |||||||||
Net (loss)/earnings attributable to BMS | $ | ( | $ | ||||||||
| Weighted-average common shares outstanding – basic | |||||||||||
| Incremental shares attributable to share-based compensation plans | |||||||||||
| Weighted-average common shares outstanding – diluted | |||||||||||
(Loss)/Earnings 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 46 million for the three months ended March 31, 2024 and not material for the three months ended March 31, 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:
| March 31, 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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(a) Includes the fair value of contingent value rights associated with the Mirati acquisition as further described in —Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements.
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 $123 million as of March 31, 2024 and $44 million as of 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 March 31, 2024, and four years as of December 31, 2023.
Equity Investments
The following summarizes the carrying amount of equity investments:
| Dollars in millions | March 31, 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 March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Equity investments with readily determinable fair values | |||||||||||
Net (gain)/loss recognized | $ | ( | $ | ||||||||
Less: net (gain)/loss recognized on investments sold | ( | ||||||||||
Net unrealized (gain)/loss recognized on investments still held | ( | ||||||||||
| Equity investments without readily determinable fair values | |||||||||||
| Upward adjustments | ( | ( | |||||||||
| Impairments and downward adjustments | |||||||||||
Equity in net (income)/loss of affiliates | ( | ||||||||||
Total equity investment (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 March 31, 2024 were $197 million and $90 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 March 31, 2024, assuming market rates remain constant through contract maturities, we expect to reclassify pre-tax gains of $55 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 $1.1 billion for Japanese yen contracts as of March 31, 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 March 31, 2024.
In January 2024, we 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 March 31, 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 $786 million as of March 31, 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 months ended March 31, 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:
| March 31, 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 March 31, 2024 | Three Months Ended March 31, 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 | ( | ||||||||||||||||||||||
Forward interest rate contracts | $ | $ | ( | $ | $ | ||||||||||||||||||
The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 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 | March 31, 2024 | December 31, 2023 | |||||||||
Commercial paper borrowings | $ | $ | |||||||||
| Non-U.S. short-term debt obligations | |||||||||||
| Current portion of Long-term debt | |||||||||||
| Other | |||||||||||
| Total | $ | $ | |||||||||
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. The weighted-average effective borrowing rate on the outstanding commercial paper borrowings was 5.38 % as of March 31, 2024. In April 2024, $2.7 billion of commercial paper borrowings were repaid.
19
Long-term debt and the current portion of Long-term debt include:
| Dollars in millions | March 31, 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 $49.2 billion as of March 31, 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 three months ended March 31, 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 | $ | |||||||
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 three months ended March 31, 2023, $1.6 billion of debt matured and was repaid including $750 million of 2.750 % Notes and $890 million of 3.250 % Notes.
Interest payments were $308 million and $324 million for the three months ended March 31, 2024 and 2023, respectively, net of amounts related to interest rate swap contracts.
Credit Facilities
As of March 31, 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. 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
20
Note 11. RECEIVABLES
| Dollars in millions | March 31, 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 $229 million and $239 million for the three months ended March 31, 2024 and 2023, respectively. Receivables from the three 72
Note 12. INVENTORIES
| Dollars in millions | March 31, 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 | March 31, 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 $155 million and $146 million for the three months ended March 31, 2024 and 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 March 31, 2024 | $ | ||||
Other Intangible Assets
Other intangible assets consisted of the following:
| Estimated Useful Lives | March 31, 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 $2.3 billion during the three months ended March 31, 2024 and 2023, respectively.
Note 15. SUPPLEMENTAL FINANCIAL INFORMATION
| Dollars in millions | March 31, 2024 | December 31, 2023 | |||||||||
| Income taxes | $ | $ | |||||||||
| Research and development | |||||||||||
| Contract assets | |||||||||||
Restricted cash(a) | |||||||||||
| Other | |||||||||||
| Other current assets | $ | $ | |||||||||
| Dollars in millions | March 31, 2024 | December 31, 2023 | |||||||||
| Equity investments (Note 9) | $ | $ | |||||||||
| Operating leases | |||||||||||
| Inventories | |||||||||||
| Pension and postretirement | |||||||||||
| Research and development | |||||||||||
Restricted cash(a) | |||||||||||
Receivables and convertible notes | |||||||||||
| Other | |||||||||||
| Other non-current assets | $ | $ | |||||||||
22
| Dollars in millions | March 31, 2024 | December 31, 2023 | |||||||||
| Rebates and discounts | $ | $ | |||||||||
| Income taxes | |||||||||||
Karuna equity awards (Note 4) | |||||||||||
| Employee compensation and benefits | |||||||||||
| Research and development | |||||||||||
| Dividends | |||||||||||
| Interest | |||||||||||
| Royalties | |||||||||||
| Operating leases | |||||||||||
| Other | |||||||||||
| Other current liabilities | $ | $ | |||||||||
| Dollars in millions | March 31, 2024 | December 31, 2023 | |||||||||
| Income taxes | $ | $ | |||||||||
| Pension and postretirement | |||||||||||
| Operating leases | |||||||||||
| Deferred income | |||||||||||
| Deferred compensation | |||||||||||
Contingent value rights | |||||||||||
| Other | |||||||||||
| Other non-current liabilities | $ | $ | |||||||||
Note 16. EQUITY
The following table summarizes changes in equity for the three months ended March 31, 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 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
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The following table summarizes changes in equity for the three months ended March 31, 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 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
The following table summarizes the changes in Other comprehensive income by component:
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 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) | ( | ( | |||||||||||||||||||||||||||||||||
Amortization(b) | |||||||||||||||||||||||||||||||||||
Settlements(b) | ( | ||||||||||||||||||||||||||||||||||
| Pension and postretirement benefits | ( | ||||||||||||||||||||||||||||||||||
Unrealized losses on marketable debt securities | ( | ( | |||||||||||||||||||||||||||||||||
| 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 | March 31, 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 $183 million and $144 million as of March 31, 2024 and December 31, 2023, respectively.
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Note 17. EMPLOYEE STOCK BENEFIT PLANS
Stock-based compensation expense was as follows:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 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 $(17 ) million and $18 million for the three months ended March 31, 2024, and 2023, respectively.
The number of units granted and the weighted-average fair value on the grant date for the three months ended March 31, 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.
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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, and a decision is pending.
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 has appealed the Irish trial court's decision, and a hearing of the appeal has been scheduled for May 2024.
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 has appealed the decision, and a hearing on the appeal is scheduled for April 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 has appealed the decision of the Barcelona Commercial Court. In February 2024, the Madrid Commercial Court granted BMS’s preliminary injunctions against Teva, Sandoz and Norman 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. Proceedings relating to the preliminary injunction and the subsequent orders of the Barcelona and Madrid courts are ongoing.
In Sweden, a trial was held regarding Teva's challenge to the validity of the Swedish composition-of-matter patent and related SPC, and a decision was issued on November 2, 2022, confirming their validity and rejecting Teva's claims. Teva has appealed the decision, and a hearing on the appeal is scheduled for May 2024.
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.
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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 has received Notice Letters from Accord Healthcare, Inc. ("Accord"), MSN Laboratories Private Limited ("MSN"), Teva Pharmaceuticals, Inc. ("Teva") and Natco Pharma Limited ("Natco"), respectively, each notifying BMS that it has filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Onureg in the U.S. and challenging U.S. Patent Nos. 11,571,436 (the "'436 Patent") and 8,846,628 (the "'628 Patent"), FDA Orange Book-listed formulation patents covering Onureg, which expire in 2029 and 2030, respectively. In response, BMS filed a patent infringement action against Accord, MSN, Teva and Natco in the U.S. District Court for the District of Delaware. In November 2023, BMS and Accord entered into a confidential settlement agreement, and the case against Accord was dismissed. In February 2024, BMS and MSN entered into a confidential settlement agreement, and the case against MSN was dismissed. No trial dates have been scheduled for the Teva or Natco actions.
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 ($293 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.
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Sprycel - U.S.
BMS has received Notice Letters from Xspray Pharma AB ("Xspray"), Nanocopoeia, LLC ("Nanocopoeia"), Handa Oncology, LLC ("Handa") and Zydus Pharmaceuticals ("Zydus"), each notifying BMS that it has filed applications containing paragraph IV certifications seeking approval of a dasatinib product in the U.S. and challenging two FDA Orange Book-listed monohydrate form patents expiring in 2025 and 2026. In February 2022, BMS filed a patent infringement action against Xspray in the U.S. District Court for the District of New Jersey. In May 2022, BMS filed a patent infringement action against Nanocopoeia in the U.S. District Court for the District of Minnesota. In November 2022, BMS filed a patent infringement action against Handa in the U.S. District Court for the Northern District of California. On March 24, 2023, the Minnesota court denied a motion that Nanocopoeia had filed seeking a judgment based on the pleadings. On June 16, 2023, BMS entered into a confidential settlement agreement with Handa, settling all outstanding claims in the litigation. On September 13, 2023, BMS entered into a confidential settlement agreement with XSpray, settling all outstanding claims in the litigation. On October 10, 2023, BMS entered into a confidential settlement agreement with Nanocopoeia, settling all outstanding claims in the litigation. In October 2023, BMS filed a patent infringement action against Zydus in the U.S. District Court for the District of New Jersey. On February 20, 2024, BMS entered into a confidential settlement agreement with Zydus, settling all outstanding claims in the litigation.
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.
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, and a decision is pending.
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. 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.
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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. The motion is fully briefed and currently pending before the Court.
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.
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In October 2021, alleged former Celgene stockholders filed a complaint in the U.S. District Court for the Southern District of New York asserting claims on behalf of a putative class of Celgene stockholders who received CVRs in the BMS merger with Celgene for violations of sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") relating to the joint proxy statement. That action later was consolidated with another action filed in the same court, and a consolidated complaint thereafter was filed asserting claims on behalf of a class of CVR acquirers, whether in the BMS merger with Celgene or otherwise, for violations of sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the "Securities Act") and sections 10(b), 14(a) and 20(2) of the Exchange Act. The complaint alleged that the February 22, 2019 joint proxy statement was materially false or misleading because it failed to disclose that BMS allegedly had no intention to obtain FDA approval for liso-cel (Breyanzi) by the applicable milestone date in the CVR Agreement and that certain statements made by BMS or certain BMS officers in periodic SEC filings, earnings calls, press releases, and investor presentations between December 2019 and November 2020 were materially false or misleading for the same reason. Defendants moved to dismiss the complaint. On March 1, 2023, the Court entered an opinion and order granting defendants' motion and dismissed the complaint in its entirety. The claims under Sections 11, 12(a)(2), and 15 of the Securities Act and Section 14(a) of the Exchange Act were dismissed with prejudice. The claims under Sections 10(a) and 20(a) of the Exchange Act were dismissed with leave to file a further amended complaint, which plaintiffs filed on April 14, 2023. Defendants moved to dismiss the amended complaint and briefing on the motion was completed on June 23, 2023. 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.
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.
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Thalomid and Revlimid Litigations
Beginning in November 2014, certain putative class action lawsuits were filed against Celgene in the U.S. District Court for the District of New Jersey alleging that Celgene violated various antitrust, consumer protection, and unfair competition laws by (a) allegedly securing an exclusive supply contract for the alleged purpose of preventing a generic manufacturer from securing its own supply of thalidomide active pharmaceutical ingredient, (b) allegedly refusing to sell samples of Thalomid and Revlimid brand drugs to various generic manufacturers for the alleged purpose of bioequivalence testing necessary for ANDAs to be submitted to the FDA for approval to market generic versions of these products, (c) allegedly bringing unjustified patent infringement lawsuits in order to allegedly delay approval for proposed generic versions of Thalomid and Revlimid, and/or (d) allegedly entering into settlements of patent infringement lawsuits with certain generic manufacturers that allegedly have had anticompetitive effects. The plaintiffs, on behalf of themselves and putative classes of third-party payers, sought injunctive relief and damages. The various lawsuits were consolidated into a master action for all purposes. In March 2020, Celgene reached a settlement with the class plaintiffs. In October 2020, the Court entered a final order approving the settlement and dismissed the matter. That settlement did not resolve 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. No trial date has been scheduled.
United HealthCare Services, Inc. ("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. Celgene and BMS's motion to dismiss the Humana amended complaint applies to these other actions as well, and these other actions will proceed as described above with respect to that Humana opt-out action. No trial dates have been scheduled.
In May 2021, Molina sued Celgene and BMS in San Francisco Superior Court. Molina's complaint makes largely the same claims and allegations as were made in the now settled class action litigation. In June 2022, the San Francisco Superior Court dismissed 63 of Molina’s claims, which Molina later reasserted in the District of New Jersey as described above, and stayed the remaining 4 claims. No activity is expected in this case until disposition of the New Jersey actions.
Certain other entities that opted out of the now‑settled class action have also filed summonses related to two actions in the Philadelphia County Court of Common Pleas in connection with the allegations made by Humana and other opt‑out entities. Those actions have been placed in deferred status pending further developments in the above opt‑out cases.
In November 2022, certain specialty pharmacies filed an action as direct purchasers against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The action makes largely the same claims and allegations against Celgene and BMS as were made with respect to Revlimid in the now settled class action litigation, and seek injunctive relief and damages under the Sherman Antitrust Act. Also in November 2022, a putative class of end-payor plaintiffs filed an action against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The class complaint brings claims based on Celgene's allegedly anticompetitive settlements of Revlimid patent litigation, seeking damages under state antitrust and consumer protection laws and injunctive relief under federal antitrust law. Celgene, BMS and the generic defendants have filed consolidated motions to dismiss these two actions. 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. No trial dates have been scheduled.
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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. 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. The case against Juno will continue. No trial date has been scheduled.
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 $79 million as of March 31, 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.
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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 a 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 the CAR-T cell therapy arena with the approval of Abecma in the U.S. and EU for triple-class exposed relapsed and refractory multiple myeloma, and Breyanzi in the U.S. for adults with relapsed or refractory CLL or SLL. In addition, in oncology, Opdivo in combination with cisplatin and gemcitabine was approved in the U.S. for first-line treatment of adult patients with unresectable or metastatic muscle invasive urothelial carcinoma and 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. Refer to "—Product and Pipeline Developments" for additional updates on our pipeline.
Additionally, we completed the following acquisitions: (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 compound in a Phase I clinical trial, which is currently being evaluated for the treatment of metastatic or unresectable NSCLC. 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. We are executing 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.
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Financial Highlights
| Three Months Ended March 31, | |||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | |||||||||
| Total Revenues | $ | 11,865 | $ | 11,337 | |||||||
| Diluted (loss)/earnings per share | |||||||||||
| GAAP | $ | (5.89) | $ | 1.07 | |||||||
| Non-GAAP | (4.40) | 2.05 | |||||||||
Revenues increased by 5% for the first quarter of 2024 due to the Growth Portfolio (primarily Reblozyl) and Eliquis, partially offset by Opdivo and Revlimid. The $6.96 decrease in GAAP EPS 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 the cash settlement of unvested stock awards and lower litigation and other settlement income ($0.51). After adjusting for specified items, the $6.45 decrease in non-GAAP EPS was primarily due to the aforementioned Acquired IPRD charges and higher operating and interest expense resulting from the recent acquisitions.
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, such as those relating to calculating Medicaid Best Price, as well as 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.
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 potential legislative, policy, or administrative measures, we are unable to predict their full impact on our business. However, if implemented, these 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.
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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 expected to make changes to their tax laws and updates to international tax treaties 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.
Significant Product and Pipeline Approvals
The following is a summary of the significant approvals received in 2024 as of April 25, 2024:
| Product | Date | Approval | ||||||
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 first 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.
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RESULTS OF OPERATIONS
Regional Revenues
The composition of the changes in revenues was as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | Foreign Exchange(b) | |||||||||||||||||||
| United States | $ | 8,476 | $ | 7,952 | 7 | % | N/A | ||||||||||||||||
International | 3,190 | 3,230 | (1) | % | (4) | % | |||||||||||||||||
Other(a) | 199 | 155 | 28 | % | N/A | ||||||||||||||||||
| Total | $ | 11,865 | $ | 11,337 | 5 | % | (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 7% during the first quarter of 2024 primarily due to higher demand for Growth and Legacy Portfolio products, partially offset by lower average net selling prices for the Legacy Portfolio. Average U.S. net selling prices decreased 1% compared to the same period a year ago.
International
•International revenues decreased 1% during the first quarter of 2024 due to lower average net selling prices, partially offset by higher demand for the Growth Portfolio. The negative foreign exchange impact of 4% 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 three months ended March 31, 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 March 31, | |||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | ||||||||||||||
| Gross product sales | $ | 19,295 | $ | 17,288 | 12 | % | |||||||||||
| GTN adjustments | |||||||||||||||||
| Charge-backs and cash discounts | (2,556) | (2,091) | 22 | % | |||||||||||||
| Medicaid and Medicare rebates | (3,084) | (2,482) | 24 | % | |||||||||||||
| Other rebates, returns, discounts and adjustments | (2,096) | (1,667) | 26 | % | |||||||||||||
| Total GTN adjustments | (7,736) | (6,240) | 24 | % | |||||||||||||
| Net product sales | $ | 11,559 | $ | 11,048 | 5 | % | |||||||||||
| GTN adjustments percentage | 40 | % | 36 | % | 4 | % | |||||||||||
| U.S. | 45 | % | 41 | % | 4 | % | |||||||||||
| Non-U.S. | 21 | % | 18 | % | 3 | % | |||||||||||
Reductions to provisions for product sales made in prior periods resulting from changes in estimates were $80 million and $87 million for the three months ended March 31, 2024 and for the three months ended March 31, 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.
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Product Revenues
| Three Months Ended March 31, | |||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | ||||||||||||||
Growth Portfolio | |||||||||||||||||
| Opdivo | $ | 2,078 | $ | 2,202 | (6) | % | |||||||||||
| U.S. | 1,155 | 1,281 | (10) | % | |||||||||||||
| Non-U.S. | 923 | 921 | — | ||||||||||||||
| Orencia | 798 | 764 | 4 | % | |||||||||||||
| U.S. | 572 | 551 | 4 | % | |||||||||||||
| Non-U.S. | 226 | 213 | 6 | % | |||||||||||||
| Yervoy | 583 | 508 | 15 | % | |||||||||||||
| U.S. | 368 | 312 | 18 | % | |||||||||||||
| Non-U.S. | 215 | 196 | 10 | % | |||||||||||||
| Reblozyl | 354 | 206 | 72 | % | |||||||||||||
| U.S. | 293 | 156 | 88 | % | |||||||||||||
| Non-U.S. | 61 | 50 | 22 | % | |||||||||||||
| Opdualag | 206 | 117 | 76 | % | |||||||||||||
| U.S. | 198 | 116 | 71 | % | |||||||||||||
| Non-U.S. | 8 | 1 | * | ||||||||||||||
| Abecma | 82 | 147 | (44) | % | |||||||||||||
| U.S. | 52 | 118 | (56) | % | |||||||||||||
| Non-U.S. | 30 | 29 | 3 | % | |||||||||||||
| Zeposia | 110 | 78 | 41 | % | |||||||||||||
| U.S. | 72 | 51 | 41 | % | |||||||||||||
| Non-U.S. | 38 | 27 | 41 | % | |||||||||||||
| Breyanzi | 107 | 71 | 51 | % | |||||||||||||
| U.S. | 87 | 58 | 50 | % | |||||||||||||
| Non-U.S. | 20 | 13 | 54 | % | |||||||||||||
| Camzyos | 84 | 29 | * | ||||||||||||||
| U.S. | 77 | 29 | * | ||||||||||||||
| Non-U.S. | 7 | — | N/A | ||||||||||||||
| Sotyktu | 44 | 16 | * | ||||||||||||||
| U.S. | 34 | 15 | * | ||||||||||||||
| Non-U.S. | 10 | 1 | * | ||||||||||||||
| Augtyro | 6 | — | N/A | ||||||||||||||
| U.S. | 6 | — | N/A | ||||||||||||||
| Non-U.S. | — | — | N/A | ||||||||||||||
| Krazati | 21 | — | N/A | ||||||||||||||
| U.S. | 21 | — | N/A | ||||||||||||||
| Non-U.S. | — | — | N/A | ||||||||||||||
Other Growth Products(a) | 319 | 280 | 14 | % | |||||||||||||
| U.S. | 148 | 144 | 3 | % | |||||||||||||
| Non-U.S. | 171 | 136 | 26 | % | |||||||||||||
Total Growth Portfolio | $ | 4,792 | $ | 4,418 | 8 | % | |||||||||||
| U.S. | 3,083 | 2,831 | 9 | % | |||||||||||||
| Non-U.S. | 1,709 | 1,587 | 8 | % | |||||||||||||
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| Three Months Ended March 31, | |||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | ||||||||||||||
Legacy Portfolio | |||||||||||||||||
| Eliquis | $ | 3,720 | $ | 3,423 | 9 | % | |||||||||||
| U.S. | 2,821 | 2,527 | 12 | % | |||||||||||||
| Non-U.S. | 899 | 896 | — | ||||||||||||||
| Revlimid | 1,669 | 1,750 | (5) | % | |||||||||||||
| U.S. | 1,453 | 1,523 | (5) | % | |||||||||||||
| Non-U.S. | 216 | 227 | (5) | % | |||||||||||||
| Pomalyst/Imnovid | 865 | 832 | 4 | % | |||||||||||||
| U.S. | 597 | 541 | 10 | % | |||||||||||||
| Non-U.S. | 268 | 291 | (8) | % | |||||||||||||
| Sprycel | 374 | 429 | (13) | % | |||||||||||||
| U.S. | 282 | 289 | (2) | % | |||||||||||||
| Non-U.S. | 92 | 140 | (34) | % | |||||||||||||
| Abraxane | 217 | 239 | (9) | % | |||||||||||||
| U.S. | 145 | 161 | (10) | % | |||||||||||||
| Non-U.S. | 72 | 78 | (8) | % | |||||||||||||
Other Legacy Products (b) | 228 | 246 | (7) | % | |||||||||||||
| U.S. | 95 | 80 | 19 | % | |||||||||||||
| Non-U.S. | 133 | 166 | (20) | % | |||||||||||||
Total Legacy Portfolio | $ | 7,073 | $ | 6,919 | 2 | % | |||||||||||
| U.S. | 5,393 | 5,121 | 5 | % | |||||||||||||
| Non-U.S. | 1,680 | 1,798 | (7) | % | |||||||||||||
Total Revenues | $ | 11,865 | $ | 11,337 | 5 | % | |||||||||||
| U.S. | 8,476 | 7,952 | 7 | % | |||||||||||||
| Non-U.S. | 3,389 | 3,385 | — | ||||||||||||||
* 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 decreased 10% during the first quarter of 2024 primarily due to changes in sales channel inventory and timing of customer orders, partially offset by higher average net selling prices.
•International revenues were flat during the first quarter of 2024 and were driven by higher demand as a result of additional indication launches and core indications offset by foreign exchange impacts of 9%. Excluding foreign exchange impacts, revenues increased 9%.
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 4% during the first quarter of 2024 primarily due to higher demand.
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•International revenues increased 6% during the first quarter of 2024 due to higher demand partially offset by foreign exchange impacts of 7% and lower average net selling prices. Excluding foreign exchange impacts, revenues increased by 13%.
•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 18% during the first quarter of 2024 due to higher demand and average net selling prices.
•International revenues increased 10% during the first quarter of 2024 due to higher demand, partially offset by foreign exchange impacts of 7% and lower average net selling prices. Excluding foreign exchange impacts, revenues increased by 17%.
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 88% during the first quarter of 2024 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 71% during the first quarter of 2024 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 four 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 56% during the first quarter of 2024 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 41% during the first quarter of 2024 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 large B-cell lymphoma after one or more lines of systemic therapy, including diffuse large B-cell lymphoma not otherwise specified, high-grade B-cell lymphoma, primary mediastinal large B-cell lymphoma, and FL grade 3B.
•U.S. revenues increased 50% during the first quarter of 2024 primarily due to higher demand.
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 more than doubled during the first quarter of 2024 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 more than doubled during the first quarter of 2024 primarily due to higher demand.
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Augtyro (repotrectinib) — a kinase inhibitor indicated for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC. Augtyro was launched in December 2023.
Krazati (adagrasib) — a highly selective and potent oral small-molecule inhibitor of the KRASG12C mutation, indicated for the treatment of adult patients with KRASG12C-mutated locally advanced or metastatic NSCLC, as determined by an FDA-approved test, who have received at least one prior systemic therapy. Krazati was launched in December 2022.
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 12% during the first quarter of 2024 primarily due to higher demand.
•International revenues were flat during the first quarter of 2024 due to higher demand offset by lower average net selling price and foreign exchange impact of 1%. Excluding foreign exchange impacts, revenues increased by 1%.
•Following the May 2021 expiration of regulatory exclusivity for Eliquis in Europe and the court decision in the UK finding the UK apixaban composition of matter patent and related SPC invalid, generic manufacturers have begun marketing generic versions of Eliquis in the UK and in Portugal, and may seek to market generic versions of Eliquis in additional countries in Europe, prior to the expiration of our patents, which has led to additional infringement and invalidity actions involving our Eliquis patents being filed in various countries in Europe. Most recently, in France, Norway, Sweden and Switzerland, courts held in BMS's favor, confirming the validity of the composition of matter patent and related SPCs in those countries. We believe in the innovative science behind Eliquis and the strength of our intellectual property, which we will defend against infringement. Refer to "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies—Intellectual Property" for further information.
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 5% during the first quarter of 2024 primarily due to lower average net selling prices.
•International revenues decreased 5% during the first quarter of 2024 primarily due to generic erosion across several European countries and foreign exchange impacts of 4%. Excluding foreign exchange impacts, revenues decreased by 1%.
•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. Annual global revenues for Revlimid in 2024 are expected to be in the range of $4.5 billion to $5.0 billion.
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 10% during the first quarter of 2024 due to higher demand and average net selling prices.
•International revenues decreased 8% during the first quarter of 2024 primarily due to lower average net selling prices, lower demand and foreign exchange impacts of 1%. Excluding foreign exchange impacts, revenues decreased by 7%.
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 decreased 2% during the first quarter of 2024 due to lower average net selling prices.
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•International revenues decreased 34% during the first quarter of 2024 primarily due to lower demand as a result of generic erosion, lower average net selling price and foreign exchange impacts of 4%. Excluding foreign exchange impacts, revenues decreased by 30%.
•In the U.S., BMS entered into settlement agreements with certain third parties to sell generic dasatinib products beginning in September 2024, or earlier in certain circumstances. In the EU, generic dasatinib products have entered the market. In Japan, the composition of matter patent has been extended to 2024 for the treatment of non-imatinib-resistant CML, but generics have been approved for other indications.
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 10% during the first quarter of 2024 primarily due to lower average net selling prices, partially offset by higher demand.
Other Legacy Portfolio Products — includes other mature brands.
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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 March 31, 2024, for our U.S. distribution channels, and as of December 31, 2023, for our non-U.S. distribution channels.
In the U.S., we generally determine our months on hand estimates using inventory levels of product on hand and the amount of out-movement provided by our three largest wholesalers, which accounted for approximately 84% of total gross sales of U.S. products during the three months ended March 31, 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.
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 three months ended March 31, 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.
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Expenses
| Three Months Ended March 31, | |||||||||||||||||
| Dollars in millions | 2024 | 2023 | % Change | ||||||||||||||
Cost of products sold(a) | $ | 2,932 | $ | 2,566 | 14 | % | |||||||||||
| Marketing, selling and administrative | 2,367 | 1,762 | 34 | % | |||||||||||||
| Research and development | 2,695 | 2,321 | 16 | % | |||||||||||||
| Acquired IPRD | 12,949 | 75 | * | ||||||||||||||
| Amortization of acquired intangible assets | 2,357 | 2,256 | 4 | % | |||||||||||||
| Other (income)/expense, net | 81 | (413) | * | ||||||||||||||
| Total Expenses | $ | 23,381 | $ | 8,567 | * | ||||||||||||
* In excess of +/- 100%.
(a) Excludes amortization of acquired intangible assets.
Cost of Products Sold
Cost of products sold increased by $366 million in the first quarter of 2024 primarily due to higher product costs ($253 million) and higher profit sharing and royalty expense ($151 million) driven by product mix.
Marketing, Selling and Administrative
Marketing, selling and administrative expense increased by $605 million in the first quarter of 2024 primarily due to the impact of recent acquisitions ($426 million, including the cash settlement of unvested stock awards and other related expenses of $372 million) and timing of charitable giving ($160 million).
Research and Development
Research and development expense increased by $374 million in the first quarter of 2024 primarily due to the impact of recent acquisitions ($451 million, including the cash settlement of unvested stock awards and other related expenses of $348 million) and higher clinical grants and supplies ($91 million), partially offset by the purchase of a priority review voucher ($95 million) in 2023.
Acquired IPRD
Acquired IPRD charges resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights were as follows:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Karuna asset acquisition (Note 4) | $ | 12,122 | $ | — | |||||||
| SystImmune upfront fee (Note 3) | 800 | — | |||||||||
| Evotec designation and opt in license fee | 25 | 50 | |||||||||
| Other | 2 | 25 | |||||||||
| Acquired IPRD | $ | 12,949 | $ | 75 | |||||||
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets increased by $101 million in the first quarter of 2024 primarily due to the intangible assets acquired through the Mirati and RayzeBio acquisitions and approval of Augtyro in the fourth quarter of 2023. The Revlimid acquired marketed product right will be fully amortized in the fourth quarter of 2024 resulting in an annual reduction of amortization expense of approximately $5.5 billion in 2025.
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Other Expense/(Income), Net
Other (income)/expense, net changed by $494 million in the first quarter of 2024 primarily due to litigation and other settlements, equity investments, interest expense, and other items discussed below.
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Interest expense | $ | 425 | $ | 288 | |||||||
| Royalty and licensing income | (161) | (363) | |||||||||
| Royalty income - divestitures | (271) | (188) | |||||||||
| Investment income | (183) | (102) | |||||||||
| Litigation and other settlements | 2 | (325) | |||||||||
| Provision for restructuring | 220 | 67 | |||||||||
| Integration expenses | 71 | 67 | |||||||||
| Equity investment (gain)/losses | (102) | 155 | |||||||||
| Acquisition expenses | 49 | — | |||||||||
| Other | 31 | (12) | |||||||||
Other (income)/expense, net | $ | 81 | $ | (413) | |||||||
•Interest expense increased in the first quarter of 2024 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 first quarter of 2024 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 increased during the first quarter of 2024 primarily due to higher average cash and marketable debt securities balances.
•Litigation and other settlements included $400 million of income related to the Nimbus' TYK2 program change of control provision and additional settlement costs related to commercial disputes regarding intellectual property matters in 2023. 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 first quarter of 2024 primarily due to the recent acquisitions.
•Equity investments generated gains in the first 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. The Company expects to record an additional settlement charge of approximately $100 million in the third quarter of 2024 when the plan is fully terminated.
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Income Taxes
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Earnings before income taxes | $ | (11,516) | $ | 2,770 | |||||||
| Income tax provision | 392 | 503 | |||||||||
| Effective tax rate | (3.4) | % | 18.2 | % | |||||||
| Impact of specified items | (5.6) | % | (2.7) | % | |||||||
| Effective tax rate excluding specified items | (9.0) | % | 15.5 | % | |||||||
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 income tax provision of $392 million in the first quarter of 2024 on a pretax loss of $11.5 billion resulted in an effective tax rate of (3.4)% which included the impact of a $12.1 billion one-time, non-tax deductible charge for the acquisition of Karuna. This 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 the amortization of acquired intangible assets, foreign currency changes on certain net operating loss and other carryforwards in 2024, cash settlement of unvested stock awards and other specified items. The effective tax rate was also unfavorably impacted by changes in income tax reserves including an $89 million tax reserve release related to the resolution of Celgene’s 2009-2011 IRS audits in the first quarter of 2023, and to a lesser extent, the phased implementation of Pillar Two (global minimum tax) and lower excess tax benefits applicable to employee stock awards during the first quarter of 2024.
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 internal transfers of intangible and other assets to streamline our legal entity structure subsequent 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 April 25, 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.
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Specified items were as follows:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Inventory purchase price accounting adjustments | $ | 8 | $ | 53 | |||||||
| Site exit and other costs | 14 | 1 | |||||||||
| Cost of products sold | 22 | 54 | |||||||||
Acquisition related charges(a) | 372 | — | |||||||||
| Site exit and other costs | 6 | — | |||||||||
| Marketing, selling and administrative | 378 | — | |||||||||
| IPRD impairments | — | 20 | |||||||||
| Priority review voucher | — | 95 | |||||||||
Acquisition related charges(a) | 348 | — | |||||||||
| Site exit and other costs | 1 | — | |||||||||
| Research and development | 349 | 115 | |||||||||
| Amortization of acquired intangible assets | 2,357 | 2,256 | |||||||||
Interest expense(b) | (13) | (14) | |||||||||
| Litigation and other settlements | — | (335) | |||||||||
| Provision for restructuring | 220 | 67 | |||||||||
| Integration expenses | 71 | 67 | |||||||||
| Equity investment (income)/losses | (102) | 150 | |||||||||
| Acquisition expenses | 49 | — | |||||||||
| Other | 10 | (5) | |||||||||
| Other (income)/expense, net | 235 | (70) | |||||||||
| Increase to pretax income | 3,341 | 2,355 | |||||||||
| Income taxes on items above | (340) | (293) | |||||||||
| Increase to net earnings | $ | 3,001 | $ | 2,062 | |||||||
(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 March 31, | |||||||||||
| Dollars in millions, except per share data | 2024 | 2023 | |||||||||
Net (loss)/earnings attributable to BMS | |||||||||||
| GAAP | $ | (11,911) | $ | 2,262 | |||||||
| Specified items | 3,001 | 2,062 | |||||||||
| Non-GAAP | $ | (8,910) | $ | 4,324 | |||||||
| Weighted-average common shares outstanding – diluted | 2,023 | 2,113 | |||||||||
Diluted (loss)/earnings per share attributable to BMS | |||||||||||
| GAAP | $ | (5.89) | $ | 1.07 | |||||||
| Specified items | 1.49 | 0.98 | |||||||||
| Non-GAAP | $ | (4.40) | $ | 2.05 | |||||||
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our net debt position was as follows:
| Dollars in Millions | March 31, 2024 | December 31, 2023 | |||||||||
| Cash and cash equivalents | $ | 9,330 | $ | 11,464 | |||||||
| Marketable debt securities – current | 340 | 816 | |||||||||
| Marketable debt securities – non-current | 367 | 364 | |||||||||
| Total cash, cash equivalents and marketable debt securities | 10,037 | 12,644 | |||||||||
| Short-term debt obligations | (6,190) | (3,119) | |||||||||
| Long-term debt | (49,487) | (36,653) | |||||||||
| Net debt position | $ | (45,640) | $ | (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 first quarter of 2024, our net debt position increased by $18.5 billion primarily driven by payments for recent acquisitions, collaborations and milestones of $20.1 billion and $1.2 billion of dividend payments, partially offset by cash provided by operations of $2.8 billion.
During the first quarter of 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.
Dividend payments were $1.2 billion during the three months ended March 31, 2024. 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 in 2024 and 2025. We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities, research and development and other facility-related activities.
There were no borrowings outstanding under our $5.0 billion revolving credit facility as of March 31, 2024 and December 31, 2023. In January 2024, we extended the credit facility to January 2029. Additionally, in February 2024, we entered into a $2.0 billion 364-day revolving credit facility. 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. No borrowings were outstanding under the $2.0 billion revolving credit facility as of March 31, 2024.
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. As of March 31, 2024, $3.0 billion was outstanding under the commercial paper program. In April 2024, $2.7 billion was repaid.
Cash Flows
The following is a discussion of cash flow activities:
| Three Months Ended March 31, | |||||||||||
| Dollars in millions | 2024 | 2023 | |||||||||
| Cash flow provided by/(used in): | |||||||||||
| Operating activities | $ | 2,834 | $ | 2,970 | |||||||
| Investing activities | (19,618) | (210) | |||||||||
| Financing activities | $ | 14,644 | $ | (3,050) | |||||||
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Operating Activities
The $136 million decrease in cash provided by operating activities compared to 2023 was primarily due to acquisition-related expenses, including cash settlement of unvested stock awards, of $600 million, partially offset by higher customer collections of $500 million (net of rebates and discounts).
Investing Activities
The $19.4 billion increase in cash used in investing activities compared to 2023 was due to $20.0 billion of higher acquisition, collaboration and milestone payments in 2024 partially offset by changes in the amount of marketable debt securities held of $616 million.
Financing Activities
The $17.7 billion increase in cash provided by financing activities compared to 2023 was primarily due to higher debt borrowings of $16.0 billion in 2024 to fund recent acquisitions compared to debt repayments of $1.6 billion in 2023.
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 first quarter of 2024 as of April 25, 2024:
| Product | Indication | Date | Developments | ||||||||
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. | ||||||||
Multiple Myeloma | March 2024 | Announced the 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. The approval is based on results from the Phase III KarMMa-3 trial. Abecma is the first CAR-T cell immunotherapy approved in the EU for use in earlier lines of therapy for relapsed and refractory multiple myeloma. | |||||||||
Augtyro | Solid Tumor | February 2024 | Announced FDA acceptance of the sNDA for Augtyro for the treatment of adult and pediatric patients 12 years of age and older with solid tumors that have a NTRK gene fusion and are locally advanced or metastatic or where surgical resection is likely to result in severe morbidity. The acceptance is based on results from the registrational Phase I/II TRIDENT-1 trial and the CARE study. The FDA granted the application priority review and assigned a PDUFA goal date of June 15, 2024. | ||||||||
NSCLC and Solid Tumor | January 2024 | Announced EMA validation of the marketing authorization application for Augtyro as a treatment for ROS1 TKI-naïve and -pretreated adult patients with ROS1-positive locally advanced or metastatic NSCLC and TKI-naïve and -pretreated adult and pediatric patients 12 years and older with NTRK-positive locally advanced or metastatic solid tumors. The application was based on results from the registrational Phase I/II TRIDENT-1 trial and CARE study. | |||||||||
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| Product | Indication | Date | Developments | ||||||||
Breyanzi | Leukemia | March 2024 | Announced accelerated FDA 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. The approval is based on the Phase I/II open-label, single-arm TRANSCEND CLL 004 trial. | ||||||||
Lymphoma | January 2024 | Announced the FDA accepted sBLAs for Breyanzi to expand into new indications to include the treatment of adult patients with relapsed or refractory follicular lymphoma (FL) and relapsed or refractory mantle cell lymphoma (MCL) after a Bruton tyrosine kinase inhibitor. The FDA granted both applications Priority Review and assigned a PDUFA goal date of May 23, 2024, for Breyanzi in relapsed or refractory FL and May 31, 2024, for Breyanzi in relapsed or refractory MCL. In addition, Japan's Ministry of Health, Labour and Welfare has also accepted the company's supplemental sNDA for Breyanzi for the treatment of relapsed or refractory FL. In relapsed or refractory FL, the applications for Breyanzi in the U.S. and Japan are based on results from the TRANSCEND FL study. In relapsed or refractory MCL, the application for Breyanzi in the U.S. is based on results from the MCL cohort of the TRANSCEND NHL 001 study. | |||||||||
| 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. | ||||||||
Krazati | Colorectal Cancer | April 2024 | Announced that data from the cohorts evaluating Krazati in combination with cetuximab of the Phase I/II KRYSTAL-1 study for the treatment of patients with previously treated KRASG12C-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. | ||||||||
NSCLC | March 2024 | Announced that the results from the Phase III KRYSTAL-12 study evaluating Krazati as a monotherapy in patients with pretreated locally advanced or metastatic NSCLC harboring a KRASG12C mutation, met the primary endpoint of progression-free survival and the key secondary endpoint of overall response rate as assessed by Blinded Independent Central Review at final analysis for these endpoints. The study remains ongoing to assess the additional key secondary endpoint of overall survival. | |||||||||
Colorectal Cancer | February 2024 | Announced the FDA acceptance of the sNDA for Krazati in combination with cetuximab for the treatment of patients with previously treated KRASG12C-mutated locally advanced or metastatic colorectal cancer. The acceptance was based on the results of the Phase I/II KRYSTAL-1 trial. The FDA granted the application priority review and assigned a PDUFA goal date of June 21, 2024. | |||||||||
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| Product | Indication | Date | Developments | ||||||||
Opdivo | Urothelial Carcinoma | March 2024 | Announced FDA 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 results from the Phase III CheckMate -901 trial evaluating Opdivo in combination with cisplatin and gemcitabine followed by Opdivo monotherapy, compared to cisplatin-gemcitabine alone, for patients with previously untreated unresectable or metastatic urothelial carcinoma. | ||||||||
NSCLC | February 2024 | Announced FDA acceptance of the sBLA for neoadjuvant Opdivo for the perioperative treatment of resectable stage IIA to IIIB NSCLC. The FDA assigned a PDUFA goal date of October 8, 2024. In addition, the European Medicines Agency (EMA) validated the type II variation application for neoadjuvant Opdivo with chemotherapy followed by surgery and adjuvant Opdivo for the perioperative treatment of resectable stage IIA to IIIB NSCLC. Application validation confirms the submission is complete and begins the EMA’s centralized review procedure. The FDA’s sBLA acceptance and the EMA’s application validation are based on results from the Phase 3 CheckMate -77T trial. | |||||||||
Renal Cell Carcinoma | January 2024 | Announced data from the Phase III CheckMate -67T trial, evaluating subcutaneous nivolumab co-formulated with Halozyme’s proprietary recombinant human hyaluronidase compared to intravenous Opdivo in patients with advanced or metastatic clear cell RCC who have received prior systemic therapy. Data demonstrated noninferiority for the co-primary endpoints of Cavgd28 (time-averaged Opdivo serum concentration over 28 days) and Cminss (trough serum concentration at steady state) compared to intravenous Opdivo. In addition, subcutaneous nivolumab displayed non-inferior objective response rate as assessed by Blinded Independent Central Review versus intravenous Opdivo. | |||||||||
| January 2024 | Announced four-year follow-up results from the CheckMate -9ER trial evaluating Opdivo in combination with Cabometyx* (cabozantinib) vs. sunitinib in patients with previously untreated advanced or metastatic RCC continued to show superior progression-free survival and objective response rates in patients treated with Opdivo plus Cabometyx* over sunitinib, regardless of risk classification based on IMDC scores. Superior overall survival was also observed in patients treated with the combination. | ||||||||||
Opdivo+Yervoy | Hepatocellular Carcinoma | March 2024 | Announced that Phase III CheckMate -9DW trial evaluating Opdivo plus Yervoy as a first-line treatment for patients with advanced hepatocellular carcinoma who have not received a prior systemic therapy met its primary endpoint of improved overall survival compared to investigator’s choice of sorafenib or lenvatinib at a pre-specified interim analysis. | ||||||||
Colorectal Cancer | January 2024 | Announced that the Phase III CheckMate -8HW trial evaluating Opdivo plus Yervoy compared to investigator’s choice of chemotherapy as a first-line treatment for patients with microsatellite instability-high or mismatch repair deficient metastatic colorectal cancer met the dual primary endpoint of progression-free survival (PFS) as assessed by Blinded Independent Central Review (BICR) at a pre-specific interim analysis. The study is ongoing to assess the second dual primary endpoint of PFS per BICR in patients receiving Opdivo plus Yervoy compared to Opdivo alone across all lines of therapy, as well as secondary endpoints. In addition, data from the Phase III CheckMate -8HW trial showed that the combination of Opdivo plus Yervoy reduced the risk of disease progression or death by 79% versus chemotherapy as a first-line treatment for patients with microsatellite instability–high or mismatch repair deficient metastatic colorectal cancer (MSIH/dMMR mCRC) compared to chemotherapy. | |||||||||
Renal Cell Carcinoma | January 2024 | Announced that eight-year data from the Phase III CheckMate -214 trial evaluating Opdivo plus Yervoy versus sunitinib continued to demonstrate long-term survival results, reducing the risk of death by 28% in patients with previously untreated advanced or metastatic RCC, regardless of IMDC risk group. Patients treated with Opdivo plus Yervoy maintained superior survival and more durable response benefits compared to those who received sunitinib in both patients with intermediate- and poor-risk prognostic factors and across all randomized patients. | |||||||||
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| Product | Indication | Date | Developments | ||||||||
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. | ||||||||
| January 2024 | Announced that Japan's Ministry of Health, Labour and Welfare granted manufacturing and marketing approval for Reblozyl for MDS-related anemia. The approval is based on the results of the global Phase III COMMANDS trial and the Phase III MEDALIST study, as well as a Japanese Phase II study (Study MDS-003) in red blood cell transfusion-independent low-risk MDS patients. | ||||||||||
Zeposia | Multiple Sclerosis | March 2024 | Announced that data from the Phase III DAYBREAK open-label extension trial demonstrated the long-term efficacy and safety profile of Zeposia in patients with relapsing forms of multiple sclerosis. In the DAYBREAK long-term extension study, treatment with Zeposia demonstrated a low annualized relapse rate of 0.098 and 67% of patients were relapse-free at six years. An analysis of DAYBREAK data showed nearly 97% of followed patients were relapse-free at 90 days post Zeposia discontinuation. Patients that did relapse showed no evidence of rebound effect. | ||||||||
Crohn's disease | March 2024 | Following initial analysis of results from the first of two induction studies in the Phase III YELLOWSTONE trial evaluating Zeposia in adult patients with moderate-to-severe active Crohn’s disease, it was determined that the study did not meet its primary endpoint of clinical remission at Week 12. The safety profile of Zeposia in this study was consistent with that observed in previously reported trials. | |||||||||
Ulcerative Colitis | February 2024 | Announced that Japan's Ministry of Health, Labour and Welfare has accepted the Japanese New Drug Application for Zeposia for the treatment of moderate-to-severe ulcerative colitis, based on results from the Japanese Phase II/III RPC01-3013 study. | |||||||||
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 three months ended March 31, 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."
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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.
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 March 31, 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 March 31, 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.
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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 March 31, 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 | |||||||||||||||||||||||
| January 1 to 31, 2024 | 35,289 | $ | 51.92 | — | $ | 5,014 | |||||||||||||||||
| February 1 to 29, 2024 | 19,976 | $ | 49.31 | — | $ | 5,014 | |||||||||||||||||
| March 1 to 31, 2024 | 2,361,853 | $ | 53.73 | — | $ | 5,014 | |||||||||||||||||
Three months ended March 31, 2024 | 2,417,118 | — | |||||||||||||||||||||
(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 March 31, 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,"
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Item 6. EXHIBITS
Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).
| Exhibit No. | Description | |||||||
4a. | ||||||||
4b. | ||||||||
4c. | ||||||||
4d. | ||||||||
4e. | ||||||||
4f. | ||||||||
4g. | ||||||||
4h. | ||||||||
4i. | ||||||||
4j. | ||||||||
| 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.
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SUMMARY OF ABBREVIATED TERMS
Bristol-Myers Squibb Company and its consolidated subsidiaries may be referred to as Bristol Myers Squibb, BMS, the Company, we, our or us in this Quarterly Report on Form 10-Q, unless the context otherwise indicates. Throughout this Quarterly Report on Form 10-Q we have used terms which are defined below:
| 2023 Form 10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 2023 | Mirati | Mirati Therapeutics, Inc. | ||||||||
2024 Senior Unsecured Notes | Aggregate principal amount of $13.0 billion of unsecured senior notes issued by BMS in February 2024 | MPM | malignant pleural mesothelioma | ||||||||
aGVHD | acute graft-versus-host disease | NKT | natural killer T cells | ||||||||
| ANDA | Abbreviated New Drug Application | NDA | New Drug Application | ||||||||
| AstraZeneca | AstraZeneca PLC | NSCLC | non-small cell lung cancer | ||||||||
BCMA | B-cell maturation antigen-directed | Nimbus | Nimbus Therapeutics | ||||||||
| CAR-T | chimeric antigen receptor T-cell | NVAF | non-valvular atrial fibrillation | ||||||||
| Celgene | Celgene Corporation | OECD | Organization for Economic Co-operation and Development | ||||||||
| CERCLA | U.S. Comprehensive Environmental Response, Compensation and Liability Act | Ono | Ono Pharmaceutical Co., Ltd | ||||||||
CGDP | Coverage Gap Discount Program | Otsuka | Otsuka Pharmaceutical Co., Ltd. | ||||||||
| CML | chronic myeloid leukemia | PD-1 | programmed cell death protein 1 | ||||||||
| CRC | colorectal carcinoma | PD-L1 | programmed death-ligand 1 | ||||||||
| EC | European Commission | PDUFA | Prescription Drug User Fee Act | ||||||||
| EPS | earnings per share | PsA | psoriatic arthritis | ||||||||
| ESA | erythropoiesis stimulating agent | Quarterly Report on Form 10-Q | Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 | ||||||||
| EU | European Union | R&D | research and development | ||||||||
| Exchange Act | the Securities Exchange Act of 1934 | 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 | Section 174 | Guidance on amortization of specified research or experimental expenditures under Section 174 Notice 2023-63 | ||||||||
IMDC | International Metastatic - Renal Cell Carcinoma Database Consortium | sNDA | Supplemental New Drug Application | ||||||||
| 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 | Turning Point | Turning Point Therapeutics, Inc. | ||||||||
| JIA | juvenile idiopathic arthritis | UC | ulcerative colitis | ||||||||
| Juno | Juno Therapeutics, Inc. | UK | United Kingdom | ||||||||
Karuna | Karuna Therapeutics, Inc. | U.S. | United States | ||||||||
| MDL | multi-district litigation | USPTO | U.S. Patent and Trademark Office | ||||||||
| MDS | myelodysplastic syndromes | VAT | value added tax | ||||||||
Merck | Merck & Co. | ||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BRISTOL-MYERS SQUIBB COMPANY (REGISTRANT) | |||||||||||
| Date: | April 25, 2024 | By: | /s/ Christopher Boerner, Ph.D. | ||||||||
Christopher Boerner, Ph. D. Chairman of the Board and Chief Executive Officer | |||||||||||
| Date: | April 25, 2024 | By: | /s/ David V. Elkins | ||||||||
David V. Elkins Chief Financial Officer | |||||||||||
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