UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended December 31 , 2023
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission file number 001-37702
(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) | |||||||
(805 ) 447-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol (s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý 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 ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ý
The approximate aggregate market value of voting and non-voting stock held by non-affiliates of the registrant was $118,556,278,405 as of June 30, 2023.(A)
(A)Excludes 901,685 shares of common stock held by directors and executive officers, and any stockholders whose ownership exceeds ten percent of the shares outstanding, at June 30, 2023. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, directly or indirectly, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant.
(Number of shares of common stock outstanding as of February 9, 2024)
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the registrant’s Proxy Statement with respect to the 2024 Annual Meeting of Stockholders to be held on May 31, 2024, are incorporated by reference into Part III of this annual report.
INDEX
| Page No. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 1B. | ||||||||
| Item 1C. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
| Item 7. | ||||||||
| Item 7A. | ||||||||
| Item 8. | ||||||||
| Item 9. | ||||||||
| Item 9A. | ||||||||
| Item 9B. | ||||||||
Item 9C. | ||||||||
| Item 10. | ||||||||
| Item 11. | ||||||||
| Item 12. | ||||||||
| Item 13. | ||||||||
| Item 14. | ||||||||
| Item 15. | ||||||||
| Item 16. | ||||||||
i
Defined Terms and Products
Defined terms
We use several terms in this Form 10-K, including but not limited to those that are finance, regulation and disease-state related as well as names of other companies, which are given below.
| Term | Description | ||||
| 2017 Tax Act | Tax Cuts and Jobs Act of 2017 | ||||
| AbbVie | AbbVie Inc. | ||||
| ALL | acute lymphoblastic leukemia | ||||
| Amended 2009 Plan | Amended and Restated 2009 Equity Incentive Plan | ||||
| AOCI | accumulated other comprehensive income (loss) | ||||
| ASCVD | atherosclerotic cardiovascular disease | ||||
| ASR | Accelerated Share Repurchase | ||||
| AstraZeneca | AstraZeneca plc | ||||
| BeiGene | BeiGene, Ltd. | ||||
| Bergamo | Laboratorio Quimico Farmaceutico Bergamo Ltda | ||||
BiTE® | bispecific T-cell engager | ||||
| BLA | Biologics License Application | ||||
| BPCIA | Biologics Price Competition and Innovation Act of 2009 | ||||
| CCPA | California Consumer Privacy Act of 2018 | ||||
| CDT | Cybersecurity & Digital Trust | ||||
| Celgene | Celgene Corporation | ||||
| CGRP | calcitonin gene-related peptide | ||||
| ChemoCentryx | ChemoCentryx, Inc. | ||||
| chemotherapy | anticancer medicines | ||||
| CHMP | Committee for Medicinal Products for Human Use | ||||
| CIO | Chief Information Officer | ||||
| CISO | Chief Information Security Officer | ||||
| CMS | Centers for Medicare & Medicaid Services | ||||
| COSO | Committee of Sponsoring Organizations of the Treadway Commission | ||||
| COVID-19 | coronavirus disease 2019 | ||||
CRC | colorectal cancer | ||||
| CRCC | Corporate Responsibility and Compliance Committee | ||||
| CV | cardiovascular | ||||
| DLL3 | delta-like ligand 3 | ||||
| DOJ | U.S. Department of Justice | ||||
| DTI | Digital, Technology & Innovation | ||||
| EC | European Commission | ||||
| Eczacıbaşı | EIS Eczacıbaşı İlaç, Sınai ve Finansal Yatırımlar Sanayi ve Ticaret A.Ş. | ||||
| EMA | European Medicines Agency | ||||
| EPS | earnings per share | ||||
| ESG | environmental, social and governance | ||||
| EU | European Union | ||||
| FASB | Financial Accounting Standards Board | ||||
| FCPA | U.S. Foreign Corrupt Practices Act | ||||
| FDA | U.S. Food and Drug Administration | ||||
| FDCA | Federal Food, Drug, and Cosmetic Act | ||||
| Fitch | Fitch Ratings, Inc. | ||||
| Five Prime | Five Prime Therapeutics, Inc. | ||||
ii
| Term | Description | ||||
| FTC | Federal Trade Commission | ||||
| GAAP | U.S. generally accepted accounting principles | ||||
| GDPR | General Data Protection Regulation | ||||
| GEJ | gastroesophageal junction | ||||
| Gensenta | Gensenta İlaç Sanayi ve Ticaret A.Ş. | ||||
| HHS | U.S. Department of Health & Human Services | ||||
| Horizon | Horizon Therapeutics plc | ||||
| IGF-1R | insulin-like growth factor-1 receptor | ||||
| IL | interleukin | ||||
| IND | Investigational New Drug Application | ||||
| IPR&D | in-process research and development | ||||
| IRA | Inflation Reduction Act | ||||
| IRS | Internal Revenue Service | ||||
| Janssen | Janssen Biotech, Inc. | ||||
Kyowa Kirin | Kyowa Kirin Co., Ltd. | ||||
| KRAS | Kirsten rat sarcoma viral oncogene | ||||
| LDL-C | low-density lipoprotein cholesterol | ||||
| LIBOR | London Interbank Offered Rate | ||||
| Lilly | Eli Lilly and Company | ||||
| Lp(a) | lipoprotein(a) | ||||
| MAA | Marketing Authorisation Application | ||||
| mCRC | metastatic colorectal cancer | ||||
| MD&A | management’s discussion and analysis | ||||
| Moody’s | Moody’s Investors Service, Inc. | ||||
| mOS | median overall survival | ||||
| mPFS | median progression-free survival | ||||
| MRD | minimal residual disease | ||||
| Neumora | Neumora Therapeutics, Inc. | ||||
| NOL | net operating loss | ||||
| Novartis | Novartis Pharma AG | ||||
| NSCLC | non-small cell lung cancer | ||||
| OECD | Organisation for Economic Co-operation and Development | ||||
| OIG | Office of Inspector General | ||||
| ORR | objective response rate | ||||
| PBM | pharmacy benefit manager | ||||
| PCSK9 | proprotein convertase subtilisin/kexin type 9 | ||||
| PDAB | Prescription Drug Affordability Board | ||||
| PDE4 | phosphodiesterase 4 | ||||
| PDUFA | Prescription Drug User Fee Action | ||||
| PFS | progression-free survival | ||||
| PSUs | performance share units | ||||
| R&D | research and development | ||||
| RANKL | receptor activator of nuclear factor kappa-B ligand | ||||
| RAR | Revenue Agent Report | ||||
| RAS | Rat sarcoma viral oncogene | ||||
| REMS | risk evaluation and mitigation strategy | ||||
| ROU | right-of-use | ||||
| ROW | rest of world | ||||
iii
| Term | Description | ||||
| RSUs | restricted stock units | ||||
| S&P | Standard & Poor’s Financial Services LLC | ||||
| SCLC | small cell lung cancer | ||||
| SEC | U.S. Securities and Exchange Commission | ||||
| SG&A | selling, general and administrative | ||||
| siRNA | small interfering RNA | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| TED | thyroid eye disease | ||||
| Teneobio | Teneobio, Inc. | ||||
| U.S. Treasury | U.S. Department of Treasury | ||||
| USPTO | U.S. Patent and Trademark Office | ||||
| UTB | unrecognized tax benefit | ||||
iv
Products
The brand names of our products, our delivery devices and certain of our product candidates and their associated generic names are given below.
| Term | Description | ||||
| ACTIMMUNE | ACTIMMUNE® (interferon gamma-1b)(1) | ||||
| Aimovig | Aimovig® (erenumab-aooe) | ||||
| AMJEVITA/AMGEVITA | AMJEVITA® (adalimumab-atto)/AMGEVITA™ (adalimumab) | ||||
| Aranesp | Aranesp® (darbepoetin alfa) | ||||
| AutoTouch | AutoTouch® | ||||
| AVSOLA | AVSOLA® (infliximab-axxq) | ||||
| BEKEMV | BEKEMV™ (eculizumab) | ||||
| BLINCYTO | BLINCYTO® (blinatumomab) | ||||
| BUPHENYL | BUPHENYL® (sodium phenylbutyrate)(1) | ||||
| Corlanor | Corlanor® (ivabradine) | ||||
| DUEXIS | DUEXIS® (ibuprofen and famotidine)(1) | ||||
| ENBREL | Enbrel® (etanercept) | ||||
| ENBREL Mini | ENBREL Mini® | ||||
| EPOGEN | EPOGEN® (epoetin alfa) | ||||
| EVENITY | EVENITY® (romosozumab-aqqg) | ||||
| IMLYGIC | IMLYGIC® (talimogene laherparepvec) | ||||
| KANJINTI | KANJINTI® (trastuzumab-anns) | ||||
| KRYSTEXXA | KRYSTEXXA® (pegloticase)(1) | ||||
| KYPROLIS | KYPROLIS® (carfilzomib) | ||||
| LUMAKRAS/LUMYKRAS | LUMAKRAS®/LUMYKRAS™ (sotorasib) | ||||
| Maridebart cafraglutide | Maridebart cafraglutide (formerly AMG 133) | ||||
| MVASI | MVASI® (bevacizumab-awwb) | ||||
| Neulasta | Neulasta® (pegfilgrastim) | ||||
| NEUPOGEN | NEUPOGEN® (filgrastim) | ||||
| Nplate | Nplate® (romiplostim) | ||||
| Onpro | Onpro® | ||||
| Otezla | Otezla® (apremilast) | ||||
| Parsabiv | Parsabiv® (etelcalcetide) | ||||
| PENNSAID | PENNSAID® 2% (diclofenac sodium topical solution)(1) | ||||
| PROCYSBI | PROCYSBI® (cysteamine bitartrate)(1) | ||||
| Prolia | Prolia® (denosumab) | ||||
| Pushtronex | Pushtronex® | ||||
| QUINSAIR | QUINSAIR® (levofloxacin)(1) | ||||
| RAVICTI | RAVICTI® (glycerol phenylbutyrate)(1) | ||||
| RAYOS | RAYOS® (prednisone)(1) | ||||
| Repatha | Repatha® (evolocumab) | ||||
| RIABNI | RIABNI® (rituximab-arrx) | ||||
| Sensipar/Mimpara | Sensipar®/Mimpara™ (cinacalcet) | ||||
| SureClick | SureClick® | ||||
| TAVNEOS | TAVNEOS® (avacopan) | ||||
| TEPEZZA | TEPEZZA® (teprotumumab-trbw)(1) | ||||
v
| Term | Description | ||||
| TEZSPIRE | TEZSPIRE® (tezepelumab-ekko) | ||||
| UPLIZNA | UPLIZNA® (inebilizumab-cdon)(1) | ||||
| Vectibix | Vectibix® (panitumumab) | ||||
| Wezlana | WEZLANA™ (ustekinumab-auub) | ||||
| Xaluritamig | Xaluritamig (formerly AMG 509) | ||||
| XGEVA | XGEVA® (denosumab) | ||||
____________
(1) Products were acquired from our Horizon acquisition on October 6, 2023.
Products referenced in this report that are not included in the above list are trademarks of their respective owners. They are Avastin®, BESPONSA®, Cosentyx®, DARZALEX®, ERBITUX®, EYLEA®, Herceptin®, HUMIRA®, KEYTRUDA®, LEQVIO®, POMALYST®/IMNOVID®, PRALUENT®, PROCRIT®, PROMACTA®/REVOLADE™, Remicade®, REVLIMID®, RINVOQ®, Rituxan®/MabThera®, Skyrizi®, SOLIRIS®, SOTYKTU®, STELARA®, Taltz®, Teribone™, Tremfya®, VELCADE® and Xeljanz®.
vi
PART I
| Item 1. | BUSINESS | ||||
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) discovers, develops, manufactures and delivers innovative medicines to fight some of the world’s toughest diseases. Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that dramatically improve people’s lives, while also reducing the social and economic burden of disease. We helped launch the biotechnology industry more than 40 years ago and have grown to be one of the world’s leading independent biotechnology companies. Our robust pipeline includes potential first-in-class medicines at all stages of development. We have a presence in approximately 100 countries worldwide.
Amgen was incorporated in California in 1980 and became a Delaware corporation in 1987. Amgen operates in one business segment: human therapeutics.
Significant Developments
Following is a summary of significant developments affecting our business that have occurred and that we have reported since the filing of our Annual Report on Form 10-K for the year ended December 31, 2022.
Acquisition of Horizon Therapeutics plc
In October 2023, we completed our acquisition of Horizon for $116.50 per share in cash, representing a total transaction price of $27.8 billion. Horizon is a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs of patients impacted by rare, autoimmune and severe inflammatory diseases. The acquisition aligns with Amgen’s core strategy of delivering innovative medicines that make a significant difference for patients suffering from serious diseases and strengthens Amgen’s rare disease portfolio by adding first-in-class, early-in-lifecycle medicines, including TEPEZZA for thyroid eye disease (TED), KRYSTEXXA for chronic refractory gout and UPLIZNA for neuromyelitis optica spectrum disorder. See Item 1A. Risk Factors—Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions.
Products/Pipeline
Tarlatamab
In October 2023, we announced results from the global Phase 2 DeLLphi-301 study, evaluating tarlatamab, an investigational delta-like ligand 3 (DLL3) targeting BiTE® (bispecific T-cell engager) molecule, in patients with advanced stage small cell lung cancer (SCLC) who had failed two or more prior lines of treatment. With a median follow-up of 10.6 months, an intention-to-treat analysis that included 100 patients at the selected 10 mg dose, tarlatamab demonstrated an objective response rate (ORR; primary endpoint) of 40%. For key secondary endpoints, median progression-free survival (mPFS) was 4.9 months, and median overall survival (mOS) was 14.3 months. There were no new safety signals observed compared to the Phase 1 study. Additionally in October 2023, the FDA granted tarlatamab Breakthrough Therapy Designation for the treatment of adult patients with extensive-stage SCLC with disease progression on or after platinum-based chemotherapy.
In December 2023, we announced the FDA accepted and granted Priority Review for the Company’s BLA for tarlatamab, with a PDUFA date of June 12, 2024.
LUMAKRAS/LUMYKRAS
In December 2023, we announced that the FDA completed its review of our supplemental New Drug Application seeking full approval of LUMAKRAS, resulting in a Complete Response Letter. The review was based on the CodeBreaK 200 trial results for the treatment of adults with previously treated locally advanced or metastatic KRAS G12C-mutated non-small cell lung cancer (NSCLC). The FDA also issued a new postmarketing requirement (PMR) for an additional confirmatory study to support full approval that will be completed no later than February 2028. Additionally, the FDA concluded that the dose comparison PMR issued at the time of LUMAKRAS’s accelerated approval has been fulfilled. LUMAKRAS at 960 mg once-daily will remain the dose for patients with KRAS G12C-mutated NSCLC under accelerated approval.
In October 2023, we announced positive data from the global Phase 3 CodeBreaK 300 trial. This global Phase 3 study evaluated two doses of LUMAKRAS/LUMYKRAS (960 mg or 240 mg) in combination with Vectibix versus investigator’s choice of therapy (trifluridine and tipiracil, or regorafenib) in patients with chemorefractory G12C-mutated mCRC.
1
In June 2023, based on data from the previous CodeBreaK 101 study, the FDA granted Breakthrough Therapy Designation to LUMAKRAS in combination with Vectibix for the treatment of patients with metastatic KRAS G12C-mutated CRC, as determined by an FDA approved test, who have received prior chemotherapy.
Marketing, Distribution and Selected Marketed Products
The largest concentration of our sales and marketing forces is based in the United States and Europe. We also commercialize and market our products into other geographic territories, including Japan, China and other parts of Asia, Latin America and the Middle East by using our own affiliates, by acquiring existing third-party businesses or product rights or by collaborating with third parties. This international footprint allows us to deliver our medicines to more patients globally. See Business Relationships for our significant alliances. Whether we use our own sales and marketing forces or a third party’s services varies across these markets. Such use typically depends on several factors, including the nature of entry into the new market, the size of an opportunity and operational capabilities. Together with our collaborators, we market our products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals and pharmacies.
In the United States, substantially all of our sales are to pharmaceutical wholesale distributors, which are the principal means of distributing our products to healthcare providers. We also market certain products through direct-to-consumer channels, including print, television and online media. For further discussion, see Government Regulation—Regulation in the United States—Regulation of Product Marketing and Promotion. Outside the United States, we sell principally to healthcare providers and/or pharmaceutical wholesale distributors depending on the distribution practice in each country. In the Asia Pacific region, we also sell our products in partnership with other companies, including Astellas Pharma Inc., BeiGene, Takeda Pharmaceutical Company Limited, Daiichi Sankyo Co., Ltd. and Kyowa Kirin.
Our product sales to three large wholesalers, McKesson Corporation, Cencora, Inc. (formerly AmerisourceBergen) and Cardinal Health, Inc., each individually accounted for more than 10% of total revenues for each of the years 2023, 2022 and 2021. On a combined basis, these wholesalers accounted for 79%, 82% and 82% of worldwide gross revenues for 2023, 2022 and 2021, respectively. We monitor the financial condition of our larger customers and limit our credit exposure by setting credit limits and, in certain circumstances, by requiring letters of credit or obtaining credit insurance.
2
Our products are marketed around the world, with the United States as our largest market. The following chart shows our product sales by principal product, and the table below (dollar amounts in millions) shows product sales by geography for the years 2023, 2022 and 2021.
| 2023 | 2022 | 2021 | ||||||||||||||||||||||||
| Product Sales by Geography: | ||||||||||||||||||||||||||
| U.S. | $ | 19,272 | 72 | % | $ | 17,743 | 72 | % | $ | 17,286 | 71 | % | ||||||||||||||
| ROW | 7,638 | 28 | % | 7,058 | 28 | % | 7,011 | 29 | % | |||||||||||||||||
| Total | $ | 26,910 | 100 | % | $ | 24,801 | 100 | % | $ | 24,297 | 100 | % | ||||||||||||||
____________
(1) TEPEZZA and KRYSTEXXA were acquired from our Horizon acquisition on October 6, 2023, and include product sales from the acquisition date through December 31, 2023.
(2) Consists of product sales of our non-principal products, as well as sales prior to the divestiture of our Bergamo and Gensenta subsidiaries in the second quarter of 2023 and fourth quarter of 2022, respectively.
3
Prolia
We market Prolia in many countries around the world. Prolia contains the same active ingredient as XGEVA but is approved for different indications, patient populations, dose and frequency of administration. Prolia was launched in the United States and Europe in 2010. In the United States, it is used primarily in the indication for the treatment of postmenopausal women with osteoporosis at high risk of fracture and for treatment to increase bone mass in men with osteoporosis at high risk of fracture. In Europe, Prolia is used primarily for the treatment of osteoporosis in postmenopausal women and men at increased risk of fracture.
ENBREL
We market ENBREL, a tumor necrosis factor blocker, in the United States and Canada. ENBREL was launched in 1998 and is used primarily in indications for the treatment of adult patients with moderately to severely active rheumatoid arthritis, patients with chronic moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy and patients with active psoriatic arthritis.
Otezla
We market Otezla, a small molecule that inhibits phosphodiesterase 4 (PDE4), in many countries around the world. Otezla was acquired from Bristol Myers Squibb Company in November 2019 after their acquisition of Celgene. Otezla is an oral therapy approved for the treatment of adults with plaque psoriasis across all severities (in the United States, Japan and Australia) and moderate-to-severe plaque psoriasis (in other global markets, including Europe), for adults with active psoriatic arthritis and for adults with oral ulcers associated with Behçet’s disease.
XGEVA
We market XGEVA in many countries around the world. XGEVA was launched in 2010 and is used primarily in the indication for prevention of skeletal-related events (pathological fracture, radiation to bone, spinal cord compression or surgery to bone) in patients with bone metastases from solid tumors and multiple myeloma.
Repatha
We market Repatha, a PCSK9 inhibitor, in many countries around the world. Repatha was launched in 2015 and is indicated to reduce the risks of myocardial infarction, stroke and coronary revascularization in adults with established CV disease. Repatha is also indicated to reduce low-density lipoprotein cholesterol (LDL-C) in adults with primary hyperlipidemia, including heterozygous familial hypercholesterolemia (HeFH).
Nplate
We market Nplate in many countries around the world. Nplate was launched in 2008 and is indicated to treat thrombocytopenia in patients with immune thrombocytopenia (ITP) who have had an insufficient response to corticosteroids, immunoglobulins or splenectomy.
KYPROLIS
We market KYPROLIS primarily in the United States and Europe. KYPROLIS was launched in 2012 and is indicated in combination with (i) dexamethasone, (ii) lenalidomide plus dexamethasone, (iii) daratumumab plus dexamethasone, (iv) daratumumab plus hyaluronidase-fihj plus dexamethasone, and (v) isatuximab plus dexamethasone for the treatment of patients with relapsed or refractory multiple myeloma who have received one to three prior lines of therapy. It is also approved as a single agent for patients with relapsed or refractory multiple myeloma who have received one or more previous therapies.
Aranesp
We market Aranesp primarily in the United States and Europe. Aranesp was launched in 2001 and is indicated to treat a lower-than-normal number of red blood cells (anemia) caused by chronic kidney disease (CKD) in both patients on dialysis and patients not on dialysis. Aranesp is also indicated for the treatment of anemia due to concomitant myelosuppressive chemotherapy in certain patients with nonmyeloid malignancies and when chemotherapy will be used for at least two months after starting Aranesp.
4
EVENITY
Together with our collaboration partners, we market EVENITY in many countries around the world. EVENITY was launched in the United States and Japan in 2019. In the United States, it is used in the indication for the treatment of osteoporosis in postmenopausal women at high risk for fracture, defined as a history of osteoporotic fracture, or multiple risk factors for fracture; or patients who have failed or are intolerant to other available osteoporosis therapy. In Japan, EVENITY is used primarily in the indication for the treatment of osteoporosis in postmenopausal women and men at high risk of fracture.
Vectibix
We market Vectibix in many countries around the world. Vectibix was launched in 2006 and is indicated for the treatment of patients with wild-type RAS metastatic colorectal cancer (mCRC, cancer that has spread outside the colon and rectum). RAS status is determined by an FDA-approved test.
BLINCYTO
We market BLINCYTO in many countries around the world. BLINCYTO was launched in 2014 and has proven efficacy in a wide range of patients with CD19-positive B-cell precursor acute lymphoblastic leukemia (ALL), including those who are MRD(–) or MRD(+) in frontline consolidation, and those with relapsed or refractory (R/R) disease. ALL is a cancer of the blood in which a particular kind of white blood cell is growing out of control.
TEPEZZA
Subsequent to the closing of our Horizon acquisition, we market TEPEZZA primarily in the United States. TEPEZZA is a fully human monoclonal antibody and a targeted inhibitor of the insulin-like growth factor-1 receptor (IGF-1R) that is the first and only FDA approved medicine for the treatment of thyroid eye disease (TED). TED is a serious, progressive and vision-threatening rare autoimmune condition. While TED often occurs in people living with hyperthyroidism or Graves’ disease, it is a distinct disease that is caused by autoantibodies activating an IGF-1R-mediated signaling complex on cells within the retro-orbital space. This leads to a cascade of negative effects, which may cause long-term, irreversible eye damage. As TED progresses, it causes serious damage, including proptosis (eye bulging), strabismus (misalignment of the eyes) and diplopia (double vision), and in some cases can lead to blindness. Historically, patients have had to live with TED until the inflammation subsides, after which they are often left with permanent and vision-impairing consequences and may require multiple surgeries that do not completely return the patient to their pre-disease state.
KRYSTEXXA
Subsequent to the closing of our Horizon acquisition, we market KRYSTEXXA in the United States. KRYSTEXXA is the first and only FDA-approved medicine for the treatment of chronic refractory gout. Chronic refractory gout occurs in patients who have failed to normalize serum uric acid (sUA) and whose signs and symptoms are inadequately controlled with conventional therapies, such as xanthine oxidase inhibitors (XOIs), at the maximum medically appropriate dose, or for whom these drugs are contraindicated.
Other Marketed Products
We also market a number of other products in various markets worldwide, including but not limited to Neulasta, MVASI, AMJEVITA/AMGEVITA, TEZSPIRE, Parsabiv, Aimovig, LUMAKRAS/LUMYKRAS, EPOGEN, KANJINTI, TAVNEOS, RAVICTI, UPLIZNA and PROCYSBI.
Patents
The following table lists our outstanding material patents for the indicated product by territory, general subject matter and latest expiry date. Certain of the European patents are subjects of supplemental protection certificates that provide additional protection for the products in certain European countries beyond the dates listed in the table. See footnotes to the patent table below.
One or more patents with the same or earlier expiry dates may fall under the same general subject matter and are not listed separately.
| Product | Territory | General subject matter | Expiration | |||||||||||||||||
Prolia®/XGEVA® (denosumab) | U.S. | RANKL antibodies, including sequences | 2/19/2025 | |||||||||||||||||
| Europe | RANKL antibodies, including sequences(1) | 6/25/2022 | ||||||||||||||||||
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| Product | Territory | General subject matter | Expiration | |||||||||||||||||
Enbrel® (etanercept) | U.S. | Formulations and methods of preparing formulations | 10/19/2037 | |||||||||||||||||
| U.S. | Fusion protein and pharmaceutical compositions | 11/22/2028 | ||||||||||||||||||
| U.S. | DNA encoding fusion protein and methods of making fusion protein | 4/24/2029 | ||||||||||||||||||
Otezla® (apremilast) | U.S. | Compositions and compounds | 2/16/2028 | |||||||||||||||||
| Europe | Compositions, compounds and methods of treatment(1) | 3/20/2023 | ||||||||||||||||||
Repatha® (evolocumab) | U.S. | Antibodies(2) | 8/22/2028 | |||||||||||||||||
| U.S. | Methods of treatment | 11/22/2030 | ||||||||||||||||||
| Europe | Compositions(1) | 8/22/2028 | ||||||||||||||||||
| Europe | Methods of treatment | 5/10/2032 | ||||||||||||||||||
| Europe | Formulation | 5/3/2033 | ||||||||||||||||||
Nplate® (romiplostim) | U.S. | Formulation | 2/12/2028 | |||||||||||||||||
| Europe | Thrombopoietic compounds(1) | 10/22/2019 | ||||||||||||||||||
| Europe | Formulation | 4/20/2027 | ||||||||||||||||||
KYPROLIS® (carfilzomib) | U.S. | Compositions and compounds | 12/7/2027 | |||||||||||||||||
| U.S. | Methods of treatment | 4/14/2025 | ||||||||||||||||||
| U.S. | Methods of making | 5/8/2033 | ||||||||||||||||||
| Europe | Compositions, compounds and methods of treatment(1) | 12/7/2025 | ||||||||||||||||||
Aranesp® (darbepoetin alfa) | U.S. | Glycosylation analogs of erythropoietin proteins | 5/15/2024 | |||||||||||||||||
EVENITY® (romosozumab-aqqg) | U.S. | Antibodies | 4/25/2026 | |||||||||||||||||
| U.S. | Methods of treatment | 4/9/2033 | ||||||||||||||||||
| U.S. | Formulation and methods of using formulation | 5/11/2031 | ||||||||||||||||||
| Europe | Antibodies(1) | 4/28/2026 | ||||||||||||||||||
| Europe | Methods of treatment | 4/18/2032 | ||||||||||||||||||
| Europe | Formulation and methods of using formulation | 5/11/2031 | ||||||||||||||||||
BLINCYTO® (blinatumomab) | U.S. | Pharmaceutical compositions and bifunctional polypeptides | 4/6/2030 | |||||||||||||||||
| U.S. | Method of administration | 9/28/2027 | ||||||||||||||||||
| Europe | Bifunctional polypeptides(1) | 11/26/2024 | ||||||||||||||||||
| Europe | Method of administration | 11/6/2029 | ||||||||||||||||||
TEZSPIRE® (tezepelumab-ekko) | U.S. | Polypeptides(2) | 2/3/2029 | |||||||||||||||||
| U.S. | Methods of treatment | 8/23/2038 | ||||||||||||||||||
| Europe | Polypeptides(1) | 9/9/2028 | ||||||||||||||||||
TEPEZZA® (teprotumumab-trbw) | U.S. | IGF-1R antibodies(3) | 3/3/2029 | |||||||||||||||||
Parsabiv® (etelcalcetide) | U.S. | Compound and pharmaceutical composition | 2/7/2031 | |||||||||||||||||
| U.S. | Formulation | 6/27/2034 | ||||||||||||||||||
| U.S. | Methods of making | 8/9/2035 | ||||||||||||||||||
| Europe | Compound and pharmaceutical composition(1) | 7/29/2030 | ||||||||||||||||||
| Europe | Formulation | 6/27/2034 | ||||||||||||||||||
Aimovig® (erenumab-aooe) | U.S. | CGRP receptor antibodies | 5/17/2032 | |||||||||||||||||
| U.S. | Methods of treatment | 4/22/2036 | ||||||||||||||||||
| U.S. | Compositions and pharmaceutical formulations | 4/1/2039 | ||||||||||||||||||
| Europe | CGRP receptor antibodies(1) | 12/18/2029 | ||||||||||||||||||
| Europe | Methods of treatment | 8/10/2035 | ||||||||||||||||||
LUMAKRAS®/LUMYKRAS™ (sotorasib) | U.S. | Compounds and pharmaceutical compositions | 5/21/2038 | |||||||||||||||||
| U.S. | Crystalline form, pharmaceutical compositions and methods of treatment | 5/20/2040 | ||||||||||||||||||
| U.S. | Methods of treatment | 9/15/2040 | ||||||||||||||||||
| Europe | Compounds, pharmaceutical compositions and methods of treatment | 5/21/2038 | ||||||||||||||||||
KRYSTEXXA® (pegloticase) | U.S. | Polypeptides and pharmaceutical compositions | 4/11/2026 | |||||||||||||||||
U.S. | Methods of treatment | 6/25/2030 | ||||||||||||||||||
TAVNEOS® (avacopan) | U.S. | Compounds and pharmaceutical compositions(2) | 2/3/2031 | |||||||||||||||||
| U.S. | Crystalline and amorphous forms and pharmaceutical compositions | 5/29/2041 | ||||||||||||||||||
UPLIZNA® (inebilizumab-cdon) | U.S. | CD19 antibodies and pharmaceutical compositions(2) | 3/7/2030 | |||||||||||||||||
| Europe | CD19 antibodies, pharmaceutical compositions and methods of treatment(1) | 9/7/2027 | ||||||||||||||||||
(1)A European patent with this subject matter may also be entitled to supplemental protection in one or more countries in Europe, and the length of any such extension will vary by country. For example, supplementary protection certificates have been issued related to the indicated products for patents in at least the following countries:
•denosumab — France, Germany, Italy, Spain and the United Kingdom, expiring in 2025
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•apremilast — France, Germany, Italy, Spain and the United Kingdom expiring in 2028
•carfilzomib — France, Germany, Italy, Spain and the United Kingdom expiring in 2030
•evolocumab — France, expiring in 2030 and Spain and the United Kingdom, expiring in 2031
•romiplostim — France, Germany, Italy, Spain and the United Kingdom, expiring in 2024
•romosozumab — France, Germany, Italy, Spain and the United Kingdom, expiring in 2031
•blinatumomab — France, Germany, Italy and Spain, expiring in 2029
•erenumab — France, Italy, Spain and the United Kingdom, expiring in 2033
•etelcalcetide — France, Germany, Italy, Spain and the United Kingdom, expiring in 2031
•tezepelumab — France and Italy, expiring in 2033
•inebilizumab — Italy and Spain, expiring in 2032
(2)A patent with this subject matter may be entitled to patent term extension in the United States.
(3)We have biologic exclusivity in the United States covering teprotumumab-trbw that will expire in 2032.
Competition
We operate in a highly competitive environment. A number of our marketed products are indicated for disease areas in which other products or treatments are currently available or are being pursued by our competitors through R&D activities. Additionally, some competitor-marketed products target the same genetic pathways as our recently launched marketed products or are currently in development. This competition could impact the pricing and market share of our products. We continue to pursue ways of increasing the value of our medicines through innovations, which can include expanding the disease areas for which our products are indicated and finding new methods to make the delivery or manufacture of our medicines easier and less costly. Such activities can offer important opportunities for differentiation. We plan to continue pursuing innovation efforts to strengthen our competitive position. Such position may be based on, among other things, safety, efficacy, reliability, availability, patient convenience, delivery devices, price, reimbursement, access to and timing of market entry and patent position and expiration.
Certain of the existing patents on our principal products have expired, and we face new and increasing competition, including from biosimilars and generics. A biosimilar is another version of a biological product for which marketing approval is sought or has been obtained based on a demonstration that it is “highly similar” to the original reference product. We have experienced adverse effects from biosimilar competition on our originator product sales. Companies have launched versions of EPOGEN, NEUPOGEN, Neulasta and ENBREL (Canada only) with U.S. ENBREL biosimilars approved but not launched. Once multiple biosimilar versions of one of our originator products have launched, competition has intensified rapidly, resulting in greater net price declines for both the reference and the biosimilar products and a greater effect on product sales. See also Government Regulation—Regulation in the United States—Approval of Biosimilars.
We also have our own biosimilar products both in the United States and outside of U.S. markets that are competing against branded and biosimilar versions of our competitors’ products. In 2019, Amgen launched MVASI, a biosimilar to Avastin, and KANJINTI, a biosimilar to Herceptin; and in 2018, Amgen launched AMGEVITA, a biosimilar to HUMIRA, in markets outside the United States. In 2020, we launched AVSOLA, a biosimilar to Remicade; and in 2021, we launched RIABNI, a biosimilar to Rituxan. In 2023, we launched AMJEVITA, a biosimilar to HUMIRA, in the United States, and BEKEMV, a biosimilar to SOLIRIS, in the EU. Additionally, in 2023, Amgen received FDA approval for Wezlana, a biosimilar to STELARA, which we expect to launch in the United States in 2025. We expect additional biosimilar competition against both our branded and biosimilar products in the future across markets.
Although biosimilars compete on price, we believe many patients, providers and payers will continue to place high value on the reputation, supply reliability and safety of our products. As additional biosimilar competitors come to market, we will continue to leverage our global experience to distinguish against both branded and biosimilar competitors.
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Although most of our products are biologics, some are small molecule products, including Otezla, KYPROLIS and LUMAKRAS/LUMYKRAS. Because the FDA approval process permits generic manufacturers to rely on the safety and efficacy data of the innovator product rather than having to conduct their own costly and time-consuming clinical trials, generic manufacturers can often develop and market their competing versions of our small molecule products at much lower prices. For example, following loss of exclusivity of patents directed to cinacalcet, the active ingredient in our small molecule calcimimetic Sensipar, we lost a significant share of the market and corresponding revenues in a very short period of time. See Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements.
The introduction of new products, the development of new processes or technologies by competitors or the emergence of new information about existing products may result in (i) increased competition for our marketed products, even for those protected by patents and/or (ii) reductions in the prices we receive from selling our products. In addition, the development of new treatment options or standards of care may reduce the use of our products or may limit the utility and application of ongoing clinical trials of our product candidates. (As used in this document, the term clinical trials may include prospective clinical trials, observational studies, registries and other studies.) See Item 1A. Risk Factors—Our products face substantial competition and our product candidates are also likely to face substantial competition and Item 1A. Risk Factors—We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.
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The following table reflects our significant competitors for our principal products and is not exhaustive.
| Product | Territory | Competitor-marketed product | Competitors | |||||||||||||||||
Prolia(1) | U.S., Europe & Asia Pacific | Bisphosphonates, including generics | Various | |||||||||||||||||
| ENBREL | U.S. | HUMIRA† | AbbVie | |||||||||||||||||
| U.S. | Xeljanz | Pfizer Inc. | ||||||||||||||||||
U.S. | RINVOQ | AbbVie | ||||||||||||||||||
Canada | Etanercept biosimilars | Various | ||||||||||||||||||
| Otezla | U.S. & Europe | HUMIRA† | AbbVie | |||||||||||||||||
| U.S. & Europe | Cosentyx | Novartis | ||||||||||||||||||
| U.S. & Europe | Taltz | Lilly | ||||||||||||||||||
| U.S. & Europe | Tremfya | Janssen(2) | ||||||||||||||||||
| U.S. & Europe | Skyrizi | AbbVie | ||||||||||||||||||
| U.S. & Europe | SOTYKTU | Bristol Myers Squibb (BMS) | ||||||||||||||||||
| U.S. & Europe | Topical products | Various | ||||||||||||||||||
XGEVA | U.S. & Europe | Zoledronate generics | Various | |||||||||||||||||
Repatha | U.S., Europe & Asia Pacific | PRALUENT | Regeneron Pharmaceuticals, Inc. Sanofi | |||||||||||||||||
U.S. & Europe | LEQVIO | Novartis | ||||||||||||||||||
Nplate | U.S. & Europe | PROMACTA/REVOLADE | Novartis | |||||||||||||||||
| KYPROLIS | U.S. | VELCADE | Millennium Pharmaceuticals, Inc.(3) | |||||||||||||||||
| U.S. & Europe | REVLIMID(4) | Various | ||||||||||||||||||
| U.S. & Europe | POMALYST/IMNOVID | Celgene(5) | ||||||||||||||||||
| U.S. & Europe | DARZALEX | Janssen(2) | ||||||||||||||||||
| Aranesp | U.S. | PROCRIT(6) | Janssen(2) | |||||||||||||||||
| U.S. & Europe | Epoetin alfa biosimilars | Various | ||||||||||||||||||
| EVENITY | U.S. | Bisphosphonates, including generics | Various | |||||||||||||||||
| Japan | Teribone | Asahi Kasei Pharma | ||||||||||||||||||
Vectibix | U.S. & Europe | Avastin | F. Hoffmann-La Roche Ltd (Roche) | |||||||||||||||||
| U.S. | KEYTRUDA | Merck & Co., Inc. | ||||||||||||||||||
| U.S. & Europe | ERBITUX | Lilly | ||||||||||||||||||
U.S. & Europe | Chemotherapy regime | Various | ||||||||||||||||||
BLINCYTO | U.S. & Europe | BESPONSA | Pfizer Inc. | |||||||||||||||||
U.S. & Europe | Chemotherapy regime | Various | ||||||||||||||||||
† Approved biosimilars available.
(1)Other biosimilars under regulatory review in the United States, Europe and Asia Pacific.
(2)A subsidiary of Johnson & Johnson.
(3)A subsidiary of Takeda Pharmaceutical Company Limited.
(4)REVLIMID also includes generics.
(5)A subsidiary of Bristol Myers Squibb Company.
(6)PROCRIT competes with Aranesp in supportive cancer care and predialysis settings.
TEPEZZA and KRYSTEXXA currently do not face any direct competitors in the United States or Europe. TEPEZZA faces competition from other therapies, such as corticosteroids, which have been used on an off-label basis to alleviate some of the symptoms of TED. TEPEZZA and KRYSTEXXA may face competition from competitor medicines currently in clinical trials. See TEPEZZA and KRYSTEXXA sections above and Government Regulation—Regulation of Orphan Medicines.
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Reimbursement
Sales of our products are dependent on the availability and extent of coverage and reimbursement from third-party payers. In many markets around the world, these payers, including government health systems, private health insurers and other organizations, remain focused on reducing the cost of healthcare; and their efforts have intensified, in part, as a result of uncertain macroeconomic conditions, rising healthcare costs and pressures on healthcare budgets. Drugs remain heavily scrutinized for cost containment. As a result, payers are becoming more restrictive regarding the use of biopharmaceutical products and are scrutinizing the prices of these products while requiring a higher level of clinical evidence to support the benefits such products bring to patients and the broader healthcare system. These pressures become intensified when our products become subject to competition, including from biosimilars.
In the United States, healthcare providers and other entities such as pharmacies and PBMs are reimbursed for covered services and products they deliver through both private-payer and government healthcare programs such as Medicare and Medicaid. We provide negotiated rebates to healthcare providers, private payers, government payers and PBMs. In addition, we are required to (i) provide rebates or discounts on our products that are reimbursed through certain government programs, including Medicare and Medicaid, and (ii) provide discounts to qualifying healthcare providers under the federal 340B Drug Pricing Program.
Both private and some government payers use formularies to manage access to and utilization of drugs. A drug’s inclusion and favorable positioning on a formulary are essential to ensure patients have access to a particular drug. Even when access is available, some patients abandon their prescriptions for economic reasons. Payers continue to institute cost reduction and containment measures that lower drug utilization and/or spending altogether and/or shift a greater portion of the costs to patients. Such measures include, but are not limited to, more-limited benefit plan designs, higher patient co-pays or coinsurance obligations, limitations on patients’ use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs), stricter utilization management criteria (such as prior authorization and step therapy) before a patient may get access to a drug, higher-tier formulary placement that increases the level of patient out-of-pocket costs and formulary exclusion, which effectively encourages patients and providers to seek alternative treatments or pay 100% of the cost of a drug. The use of such measures by PBMs and insurers has continued to intensify and has thereby limited Amgen product usage and sales. Furthermore, during the past few years, many PBMs and insurers have consolidated, resulting in a smaller number of PBMs and insurers overseeing a large portion of total covered lives in the United States. As a result, PBMs and insurers have greater market power and negotiating leverage to mandate stricter utilization criteria and/or exclude drugs from their formularies in favor of competitor drugs or alternative treatments. In highly competitive treatment markets such as the markets for ENBREL, Otezla, Repatha and Aimovig, PBMs are also able to exert negotiating leverage by requiring incremental rebates from manufacturers in order for them to gain and/or maintain their formulary position.
In addition to market actions taken by private and government payers in the United States, policy makers in both of the major U.S. political parties have supported policies to lower drug costs. See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. Although the IRA was enacted in August 2022, the environment remains dynamic, and the Administration and Congress continues to consider drug pricing legislation. The IRA includes provisions requiring that beginning on January 1, 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby manufacturers must accept a price established by the government or face penalties on all U.S. sales (starting with 10 drugs in 2026, adding 15 in 2027 and 2028, and adding 20 in 2029 and subsequent years such that by 2031 approximately 100 drugs could be subject to such set prices). In August 2023, ENBREL, a product in which the rights to the BLA are held by our wholly owned subsidiary Immunex Corporation, was selected for the first round of 10 drugs subject to price setting that will be applicable beginning January 1, 2026. As of January 1, 2024, Medicare Part D has been redesigned to cap beneficiary out-of-pocket costs and, beginning January 1, 2025, Federal reinsurance will be reduced in the catastrophic phase (resulting in a shift and increase of such costs to Part D plans and manufacturers, including by requiring manufacturer discounts on certain drugs). Further, beginning October 1, 2022, manufacturers owe rebates on drugs reimbursed under Medicare Part D if price increases outpace inflation, and beginning January 1, 2023, owe rebates on drugs reimbursed under Medicare Part B if price increases outpace inflation.
Other potential policies cover a wide range of areas, including allowing the importation of drugs from other countries; increasing transparency in drug pricing; using third-party value assessments to determine drug prices; and changes to government rebate programs. For example, on January 5, 2024, the FDA authorized Florida to move forward with its importation program proposal, which excludes biologics. The Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, requires manufacturers of certain Part B–covered drugs packaged in single-use containers to give refunds to the government starting in 2023 for discarded amounts. CMS also issued a proposed Medicaid Drug Rebate Program rule that, if finalized, would require manufacturers to aggregate or “stack” all rebates, discounts or other price concessions made to separate, unrelated entities across the pharmaceutical supply chain on a given unit of product to determine the “Best Price,” a
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metric that is used to determine Medicaid rebates and 340B statutory rates. Further, at the state level, seven states (Colorado, Maine, New Hampshire, Maryland, Minnesota, Oregon and Washington) have enacted laws that establish PDABs to identify drugs that pose affordability challenges, and in four states (Colorado, Maryland, Minnesota and Washington) include authority for the state PDAB to set upper payment limits on certain drugs for in-state patients, payers, and providers.
In many countries other than the United States, government-sponsored healthcare systems are the primary payers for drugs and biologics. With increasing budgetary constraints and/or difficulty in understanding the value of medicines, governments and payers in many countries are applying a variety of measures to exert downward price pressure. These measures can include mandatory price controls, price referencing, therapeutic-reference pricing, increases in mandates, incentives for generic substitution and biosimilar usage and government-mandated price cuts. In this regard, many countries have health technology assessment organizations that use formal economic metrics such as cost-effectiveness to determine prices, coverage and reimbursement of new therapies; and these organizations are expanding in both established and emerging markets. Many countries also limit coverage to populations narrower than those specified on our product labels or impose volume caps to limit utilization. We expect that countries will continue taking aggressive actions to seek to reduce expenditures on drugs and biologics. Similarly, fiscal constraints may also affect the extent to which countries are willing to approve new and innovative therapies and/or allow access to new technologies. The EU is currently undergoing a review and possible revision of its pharmaceutical legislation. Various proposals are now being considered with a possible first reading in the EU Parliament in the first quarter of 2024, with full implementation not expected until 2027 or possibly later. The new legislation, if implemented, will likely have a significant impact on the landscape for access and pricing decisions within Member States. There are both positive and negative aspects to the current proposals being debated within the EU Commission and Parliament, including various proposals which could alter the intellectual property protection regime in Europe. Nevertheless, the legislation, if implemented, is unlikely to significantly impact the difficult financial situation facing many Member States and is, therefore, not likely to improve the overall business climate for biopharmaceutical firms operating in the EU.
The dynamics and developments discussed above create pressures on the pricing and potential usage of our products and on the industry. Given the diverse interests in play between payers, biopharmaceutical manufacturers, policy makers, healthcare providers and independent organizations, if and whether the parties involved can achieve alignment on the matters discussed above remain unclear, and the outcome of any such alignment is difficult to predict. We remain focused on pricing our products responsibly and delivering breakthrough treatments for unmet medical needs. Amgen is committed to working with the entire healthcare community to ensure continued innovation and to facilitate patient access to needed medicines. We do this by:
•investing billions of dollars annually in R&D;
•pricing our medicines to reflect the value they provide;
•developing more affordable therapeutic choices in the form of high-quality and reliably supplied biosimilars;
•partnering with payers to share risk and accountability for health outcomes;
•providing patient support and education programs;
•helping patients in financial need access our medicines; and
•working with policy makers, patients and other stakeholders to establish a sustainable healthcare system with access to affordable care and in which patients and their healthcare professionals are the primary decision makers.
See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability and Item 1A. Risk Factors—Guidelines and recommendations published by various organizations can reduce the use of our products.
Manufacturing, Distribution and Raw Materials
Manufacturing
We believe we are a leader in the manufacture of biologics and that our manufacturing capabilities represent a competitive advantage. The products we manufacture consist of both biologics and small molecule drugs. The majority of our products are biologics that are produced in living cells and that are inherently complex due to naturally occurring molecular variations. Highly specialized knowledge and extensive process and product characterization are required to transform laboratory-scale processes into reproducible commercial manufacturing processes. Further, our expertise in the manufacture of biologics positions us well for leadership in the global biosimilars market. For additional information regarding manufacturing facilities, see Item 2. Properties.
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We have been innovating our manufacturing facilities designed to extend our manufacturing advantage by optimizing our manufacturing network and/or by mitigating risks while continuing to ensure adequate supply of our products. For example, our licensed next-generation biomanufacturing plants operating in Singapore and West Greenwich, Rhode Island, incorporate multiple innovative technologies into a single facility. Next-generation biomanufacturing plants require smaller manufacturing footprints and offer greater environmental benefits, including reduced consumption of water and energy and lower levels of carbon emissions. Within such plants, the equipment is portable and smaller, which provides greater flexibility and speed in the manufacture of different medicines simultaneously. This enables Amgen to respond to changing demands for its medicines with increased agility. The Singapore site also has a plant that has been approved by several agencies, including the FDA and EMA, to produce small molecule drugs for commercial manufacturing.
Our internal manufacturing network has commercial production capabilities for bulk manufacturing, formulation, fill, finish, tableting and device assembly. These activities are performed within the United States and its territory in our Puerto Rico, Rhode Island and California facilities as well as internationally in our Ireland, Netherlands and Singapore facilities. In addition, we use third-party contract manufacturers to supplement the capacity or capability of our commercial manufacturing network.
To support our clinical trials, we manufacture product candidates primarily at our California facilities. We also use third-party contract manufacturers to supplement the capacity or capability of our overall clinical manufacturing network.
See Item 1A. Risk Factors for a discussion of the factors that could adversely impact our manufacturing operations and the global supply of our products.
Distribution
We operate distribution centers in Puerto Rico, Kentucky, California and the Netherlands for worldwide distribution of the majority of our commercial and clinical products. We also use third-party distributors to supplement distribution of our products worldwide.
Other
In addition to the manufacturing and distribution activities noted above, each of our manufacturing locations includes key manufacturing support functions such as quality control, process development, engineering, procurement, production scheduling and warehousing. Certain of those manufacturing and distribution activities are highly regulated by the FDA as well as international regulatory agencies. See Government Regulation—Regulation in the United States—Regulation of Manufacturing Standards.
Manufacturing Initiatives
As discussed above, we have been expanding capacity and advancing new innovations with multiple ongoing projects.
Our next-generation biomanufacturing plant at our West Greenwich, Rhode Island, campus, the first of its kind in the United States, has been approved by the FDA and EMA. This plant expands our capacity to manufacture certain products for U.S. and global markets, as we receive regulatory approval in those markets.
In November 2021, we broke ground for our newest biomanufacturing plant located in New Albany, Ohio, which received FDA licensure for commercial production in January 2024. This final product assembly and packaging plant will support the growing demand for Amgen’s medicines and will use state-of-the-art technologies.
In March 2022, we broke ground for our new multi-product drug substance manufacturing facility in Holly Springs, North Carolina. The new plant will support both traditional stainless steel-fed batch manufacturing and next-generation single-use technologies, allowing flexibility in the production of multiple products in one plant.
Subsequent to the Horizon acquisition, we are evaluating Horizon’s supply chains and pursuing activities to further improve resiliency and efficiency. See Item 1A. Risk factors—Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions.
Amgen continues to embed environmental sustainability into the upfront design, development and execution of our new facilities. The new facility under construction in North Carolina and our recently FDA approved facility in Ohio contain many examples of environmental advances, including on-site photovoltaic renewable energy generation at both sites. We expect our North Carolina facility’s carbon, waste and water footprints to be substantially lower than those at a traditional drug substance
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manufacturing plant, and we expect lower footprints per unit produced as well at our Ohio facility compared with existing similar facilities.
See Item 1A. Risk Factors—Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
Raw Materials and Medical Devices
Certain raw materials, medical devices (including companion diagnostics) and components necessary for the commercial and/or clinical manufacturing of our products are provided by and are the proprietary products of unaffiliated third-party suppliers, certain of which may be our only sources for such materials. We currently attempt to manage the risk associated with such suppliers by means of inventory management, relationship management and evaluation of alternative sources when feasible. We also monitor the financial condition of certain suppliers and their ability to supply our needs. See Item 1A. Risk Factors—We rely on third-party suppliers for certain of our raw materials, medical devices and components.
We perform various procedures to help authenticate the sources of raw materials, including intermediary materials used in the manufacture of our products; the procedures include verification of country of origin and are incorporated into the manufacturing processes we and our third-party contract manufacturers perform.
To better ensure supply, Amgen has a risk mitigation strategy that uses a combination of methods, including multiple sources or backup inventory of critical raw materials. As part of our ongoing business continuity efforts, we continue to closely monitor our inventory levels and have taken additional measures to mitigate against raw material supply interruption. See Item 1A. Risk Factors for a discussion of the factors that could adversely impact our manufacturing operations and the global supply of our products.
Government Regulation
Regulation by government authorities in the United States and other countries is a significant factor in the production and marketing of our products and our ongoing R&D activities. To clinically test, manufacture and market products for therapeutic use, we must satisfy mandatory procedures and safety and effectiveness standards established by various regulatory bodies. Compliance with these standards is complex, and failure to comply with any of these standards can result in significant implications. See Item 1A. Risk Factors for a discussion of factors, including global regulatory implications, that can adversely impact our development and marketing of commercial products.
Regulation in the United States
In the United States, the Public Health Service Act; the FDCA; and the regulations promulgated thereunder as well as other federal and state statutes and regulations govern, among other things, the production, research, development, testing, manufacture, quality control, labeling, storage, record keeping, approval, advertising, promotion and distribution of our products in addition to the reporting of certain payments and other transfers of value to healthcare professionals and teaching hospitals.
Clinical Development and Product Approval. Drug development in our industry is complex, challenging and risky, and failure rates are high. Product development cycles are typically very long—approximately 10 to 15 years from discovery to market. A potential new medicine must undergo many years of preclinical and clinical testing to establish its safety and efficacy for use in humans at appropriate dosing levels and with an acceptable risk–benefit profile. We continue to work toward reducing cycle times by applying our expertise in human genetics and innovation in technology, clinical trials and real-world evidence.
After laboratory analysis and preclinical testing in animals, we file an IND with the FDA to begin human testing. Typically, we undertake an FDA-designated three-phase human clinical testing program.
•In phase 1, we conduct small clinical trials to investigate the safety and proper dose ranges of our product candidates in a small number of human subjects.
•In phase 2, we conduct clinical trials to investigate side-effect profiles and the efficacy of our product candidates in a patient population larger than phase 1 but still relatively small, who have the disease or condition under study.
•In phase 3, we conduct clinical trials to investigate the short- and long-term safety and efficacy of our product candidates, compared to commonly used treatments, in a large number of patients who have the disease or condition under study.
The FDA monitors the progress of each trial conducted under an IND and may, at its discretion, reevaluate, alter, suspend or terminate the testing based on data accumulated to that point and the FDA’s risk–benefit assessment with regard to the
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patients enrolled in the trial. The results of preclinical and clinical trials are submitted to the FDA in the form of either a BLA for biologic products or a New Drug Application for small molecule products. We are not permitted to market or promote a new product until the FDA has approved our marketing application.
Approval of Biosimilars. The Affordable Care Act authorized the FDA to approve biosimilars via a separate, abbreviated pathway. The pathway allows sponsors of a biosimilar to seek and obtain regulatory approval based in part on the nonclinical-trial and clinical-trial data of an originator product to which the biosimilar has been demonstrated to be “highly similar” and to have no clinically meaningful differences with regard to safety, purity and potency. The relevance of demonstrating “similarity” is that in many cases, biosimilars can be brought to market without conducting the full suite of clinical trials typically required of originators, because risk–benefit has previously been established. To preserve incentives for future innovation, the law establishes a period of exclusivity for originators’ products, which in general prohibits biosimilars from gaining FDA approval based in part on reliance on or reference to the originator’s data in their application to the FDA for 12 years after initial FDA approval of the originator product. The law does not change the duration of patents granted on biologic products. As part of the implementation of the abbreviated approval pathway for biosimilars, the FDA released a number of guidance documents, some of which remain in draft form. See Item 1A. Risk Factors—We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.
Regulation of Product Marketing and Promotion. The FDA regulates the marketing and promotion of drug products. Our product promotions for approved product indications must comply with the statutory standards of the FDCA and the FDA’s implemented regulations and guidance. The FDA’s review of marketing and promotional activities encompasses but is not limited to direct-to-consumer advertising, healthcare-provider-directed advertising and promotion, sales representative communications to healthcare professionals, promotional programming and promotional activities involving electronic media. The FDA may also review industry-sponsored scientific and educational activities that make representations regarding product safety or efficacy in a promotional context. The FDA may take enforcement action against a company for violations of the FDA’s advertising and labeling laws and regulations. Enforcement action may include product seizures, injunctions, civil or criminal penalties or regulatory letters, which may require corrective advertising or other corrective communications to healthcare professionals. Failure to comply with the FDA’s regulations also can result in adverse publicity or increased scrutiny of company activities by the U.S. Congress or other legislators. Additionally, as described below, such failure may lead to additional liability under U.S. healthcare fraud and abuse laws.
Regulation of Manufacturing Standards. The FDA regulates and inspects the equipment, facilities, laboratories and processes used in the manufacturing and testing of products prior to granting approval to market products. If after receiving approval from the FDA we make a material change in manufacturing equipment, location or process, additional regulatory review may be required. We also must adhere to current Good Manufacturing Practice regulations and product-specific regulations enforced by the FDA through its facilities inspection program. The FDA conducts regular, periodic visits to reinspect our equipment, facilities, laboratories and processes following an initial approval.
Regulation of Combination Products. Combination products are defined by the FDA as products composed of two or more regulated components (e.g., a biologic and/or drug and a device). Biologics/drugs and devices each have their own regulatory requirements, and combination products may have additional requirements. A number of our marketed products meet this definition and are regulated under this framework, and we expect that a number of our pipeline product candidates will be evaluated for regulatory approval under this framework as well.
Regulation of Orphan Medicines. Orphan drugs are defined by the FDA as products intended to treat a rare disease or condition that affects less than 200,000 persons in the United States. A company must request orphan drug designation prior to filing and, if granted for being the first medicine to treat such a rare disease, means the FDA will not approve another sponsor’s marketing application for the same drug for the same indication for seven years. Orphan drug exclusivity will not bar approval of another medicine for the same indication if it is shown to be clinically superior. In the United States, a number of our products, including products such as TEPEZZA and UPLIZNA acquired in connection with the Horizon acquisition, have orphan drug exclusivity under this framework.
Regulation outside the United States
In EU countries as well as in the United Kingdom, Switzerland, Canada, Australia and Japan, regulatory requirements and approval processes are similar in principle to those in the United States.
In the EU, there are currently two potential tracks for seeking marketing approval for a product not authorized in any EU member state: a decentralized procedure and a centralized procedure. In the decentralized procedure, identical applications for marketing authorization are submitted simultaneously to the national regulatory agencies. Regulatory review is led by one member state (the reference-member state), and its assessment—based on safety, quality and efficacy—is reviewed and approved (assuming there are no concerns that the product poses a serious risk to public health) by the other member states
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from which the applicant is seeking approval (the concerned-member states). The decentralized procedure leads to a series of single national approvals in all relevant countries. In the centralized procedure, which is required of all products derived from biotechnology, a company submits a single MAA to the EMA, which conducts an evaluation of the dossier, drawing upon its scientific resources across Europe. If the drug product is proven to fulfill requirements for quality, safety and efficacy, the EMA’s CHMP adopts a positive opinion, which is transmitted to the EC for final decision on granting of the marketing authorization. Even though the EC generally follows the CHMP’s opinion, it is not bound to do so. Subsequent commercialization is enabled by country-by-country reimbursement approval.
In the EU, biosimilars are approved under a specialized pathway of the centralized procedure. As with the U.S. pathway, an applicant seeks and obtains regulatory approval for a biosimilar once the data exclusivity period for the original reference product has expired, relying in part on the data submitted for the originator product together with data evidencing that the biosimilar is “highly similar” with regard to quality, safety and efficacy to the original reference product authorized in the European Economic Area. See Item 1A. Risk Factors—We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.
In the EU, Regulation (EC) No 141/2000, as implemented by Regulation (EC) No. 847/2000, provides that a medicine can be designated as an orphan medicinal product by the EC if its sponsor can establish that: (i) the product is intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions; (ii) either (a) such conditions affect not more than 5 in 10,000 persons in the EU when the application is made, or (b) the product without the benefits derived from orphan status, would not generate sufficient return in the EU to justify the necessary investment in developing the medicinal product; and (iii) there exists no satisfactory authorized method of diagnosis, prevention, or treatment of the condition that has been authorized in the EU, or even if such method exists, the product will be of significant benefit to those affected by that condition. An application for the designation of a medicinal product as an orphan medicinal product may be submitted at any stage of development of the medicinal product but before the filing of an MAA. A marketing authorization for an orphan medicinal product may only include indications designated as orphan. For non-orphan indications treated with the same active pharmaceutical ingredient, a separate marketing authorization has to be sought. Approved orphan drugs in the EU receive 10 years of market exclusivity for the approved indication in all EU member states. We currently have orphan medicinal product designation for BLINCYTO in the EU and intend to seek medicinal product designation for a number of our products in the future.
Other countries such as those in Latin America and the Middle East have review processes and data requirements similar to those of the EU and in some cases can rely on prior marketing approval from U.S. or EU regulatory authorities. The regulatory process in these countries may include manufacturing/testing facility inspections, testing of drug product upon importation and other domestic requirements.
In Asia Pacific, a number of countries such as China, Japan, South Korea and Taiwan may require local clinical-trial data for bridging purposes as part of the drug registration process in addition to global clinical trials, which can add to overall drug development and registration timelines. In most of the Asian markets, registration timelines depend on marketing approval in the United States or the EU. In some markets in Asia, such as China, Indonesia and Thailand, regulatory timelines can be less predictable. The regulatory process may also include manufacturing/testing facility inspections, testing of drug product upon importation and other domestic requirements. Countries such as Australia and Japan have more-mature systems that would allow for submissions under more-competitive time frames. With regard to biosimilars, several of these countries have pathways to register biosimilars (e.g., Australia, India, Singapore, South Korea and Taiwan), and biosimilar products are already present on the markets (e.g., Australia and South Korea).
In some countries, such as Japan and those in the EU, medical devices may be subject to regulatory regimes whereby manufacturers must establish that their medical devices conform to essential requirements set out in the law for the particular device category. For example, in the EU, with limited exceptions, medical devices placed on the market must bear the Conformité Européenne marking to indicate their conformity with legal requirements.
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Postapproval Phase
After approval, we continue to monitor adverse events and product complaints reported following the use of our products through routine postmarketing surveillance and studies when applicable. We report such events to the appropriate regulatory agencies as required by local regulations for individual cases and aggregate reports. We proactively monitor (according to good pharmacovigilance practices) and ensure the implementation of signal detection, assessment and the communication of adverse events that may be associated with the use of our products. We also proactively monitor product complaints through our quality systems, which includes assessing our drug delivery devices for device complaints, adverse events and malfunctions. We may also be required by regulatory agencies to conduct further clinical trials on our marketed products as a condition of their approval or to provide additional information on safety and efficacy. Health regulators, including the FDA, have authority to mandate labeling changes to products at any point based on new safety information or as part of an evolving label change to a particular class of products.
Health regulators, including the FDA, also have authority both before and after approval to require that a company implement a risk management program for a product to ensure that the benefits of the drug outweigh the risks. Each risk management program is unique and varies depending on the specific factors required. In the United States, such a risk management program is known as a REMS, and we currently have REMSs for Prolia, Nplate and BLINCYTO.
Other Regulation
We are also subject to various laws pertaining to healthcare fraud and abuse, including antikickback laws and false-claims laws. Antikickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for or to induce the referral of business, including the purchase or prescribing of a particular drug that is reimbursed by a state or federal program. False-claims laws prohibit knowingly and willingly presenting or causing to be presented for payment to third-party payers (including Medicare and Medicaid) any claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary items or services. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as by the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid). Liability under false-claims laws may also arise when violation of certain laws or regulations related to the underlying product (e.g., a violation regarding improper promotional activity or unlawful payments) contributes to the submission of a false claim.
On April 25, 2019, we entered into a settlement agreement with the DOJ and the OIG of the HHS to settle certain allegations related to our support of independent charitable organizations that provide patients with financial assistance to access medicines. Additionally, we entered into a corporate integrity agreement that requires us to both maintain a corporate compliance program and undertake a set of defined corporate integrity obligations for a period of five years. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations or court decisions addressing some of our practices, it is possible that in the future, our practices might be further challenged under antikickback or similar laws.
The FCPA prohibits U.S. corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. The scope of the FCPA arguably includes interactions with certain healthcare professionals in many countries. Other countries have enacted similar anticorruption laws and/or regulations. Failure by our employees, agents, contractors, vendors, licensees, partners or collaborators to comply with the FCPA and other anticorruption laws and/or regulations could result in significant civil or criminal penalties.
We are subject to various laws and regulations globally with regard to privacy and data protection. These laws and regulations involve the collection, storage, handling, use, disclosure, transfer and security of personal data. The legislative and regulatory environments regarding privacy and data protection are continually evolving and developing because these issues are subjects of increasing amounts of attention in countries globally. For example, we are subject to the EU’s GDPR, which became effective on May 25, 2018; the CCPA, which became effective on January 1, 2020; the California Privacy Rights Act of 2020, which amended the CCPA and became effective on January 1, 2023; and China’s Personal Information Protection Law, which became effective on November 1, 2021. Other jurisdictions where we operate have enacted or proposed similar legislation and/or regulations, such as consumer privacy laws that went into effect in Virginia, Colorado, Utah, Connecticut and Florida in 2023. Consumer privacy laws were also passed in 11 other states, with the earliest effective dates later this year, and proposed in three additional states. In April 2023, a new type of state privacy law focused on protection of consumer health data emerged in Washington with the enactment of the My Health My Data Act, with similar legislation passed subsequently in Nevada. Both these new consumer health privacy laws become effective March 31, 2024. Failure to comply with these current and future laws could result in significant penalties.
Our business has been and will continue to be subject to various other U.S. and foreign laws, rules and regulations, including provisions of the IRA. See Reimbursement section above.
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Research and Development and Selected Product Candidates
We focus our R&D on novel human therapeutics for the treatment of serious illness. We capitalize on our strengths in human genetics, novel biology and protein engineering. We leverage our biologic expertise and seek to choose the optimal modality for a drug target and disease. And we use cutting-edge science and technology to study subtle biological mechanisms in search of therapies that will improve the lives of those who suffer from diseases.
Our discovery research programs may therefore yield targets that lead to the development of human therapeutics delivered as large molecules, small molecules, other combination modalities or new modalities. We have reshaped our portfolio and have increasingly focused our efforts on human genetics when possible to enhance the likelihood of success.
With regard to our clinical trial activities, we are continuously monitoring the possible impacts from health-related events, including changes from new COVID-19 variants; we are working to mitigate effects on future study enrollment in our clinical trials; and we are evaluating the impact in all relevant countries. We remain focused on supporting our active clinical sites in their providing care for patients and in our providing investigational drug supply.
For the years ended December 31, 2023, 2022 and 2021, our R&D expenses were $4.8 billion, $4.4 billion and $4.8 billion, respectively.
We have major R&D centers in Thousand Oaks and San Francisco, California, and Deerfield, Illinois; Iceland; and the United Kingdom, as well as smaller research centers and development facilities globally. See Item 2. Properties.
Our clinical trial activities are conducted by both our internal staff and third-party contract clinical trial service providers. To increase the number and diversity of patients available for enrollment in our clinical trials, we have opened clinical sites and will continue opening clinical sites and enrolling patients in a number of geographic locations. See Government Regulation—Regulation in the United States—Clinical Development and Product Approval for a discussion of government regulation over clinical development. Also see Item 1A. Risk Factors—We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications.
Some of our competitors are actively engaged in R&D in areas in which we have products or in which we are developing product candidates or new indications for existing products. For example, we compete with other clinical trials for eligible patients, which may limit the number of available patients who meet the criteria for certain clinical trials. The competitive marketplace for our product candidates is greatly dependent on the timing of entry into the market. Early entry may have important advantages in gaining product acceptance, thereby contributing to a product’s eventual success and profitability. Accordingly, we expect that in some cases, the relative speed with which we can develop products, complete clinical testing, receive regulatory approval and supply commercial quantities of a product to the market will be important to our competitive position.
In addition to product candidates and marketed products generated from our internal R&D efforts, we acquire companies, acquire and license certain product and R&D technology rights and establish R&D arrangements with third parties to enhance our strategic position within our industry by strengthening and diversifying our R&D capabilities, product pipeline and marketed product base. In pursuing these R&D arrangements and licensing or acquisition activities, we face competition from other pharmaceutical and biotechnology companies that also seek to license or acquire technologies, product candidates or marketed products from those entities performing the R&D.
The following table shows a selection of certain of our product candidates by phase of development in our therapeutic areas of focus as of January 31, 2024, unless otherwise indicated. Additional product candidate information can be found on our website at www.amgen.com. (The website address is not intended to function as a hyperlink, and the information contained on our website is not intended to be a part of this filing.) The information in this section does not include other, nonregistrational clinical trials that we may conduct for purposes other than for submission to regulatory agencies for their approval of a new product indication.
We may conduct nonregistrational clinical trials for various reasons, including to evaluate real-world outcomes or to collect additional safety information with regard to the use of products.
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| Molecule | Investigational indication | |||||||
| Phase 3 programs | ||||||||
| AMJEVITA | Interchangeability | |||||||
| Bemarituzumab | GEJ adenocarcinoma | |||||||
| BLINCYTO | Ph-negative B-cell precursor acute lymphoblastic leukemia | |||||||
Dazodalibep | Sjögren’s Syndrome | |||||||
| EVENITY | Male osteoporosis | |||||||
| LUMAKRAS/LUMYKRAS | Advanced colorectal cancer; NSCLC | |||||||
| Nplate | Chemotherapy-induced thrombocytopenia | |||||||
| Olpasiran | Cardiovascular disease | |||||||
| Otezla | Palmoplantar pustulosis | |||||||
| Repatha | Cardiovascular disease | |||||||
| Rocatinlimab | Atopic dermatitis | |||||||
Tarlatamab | Small cell lung cancer | |||||||
TEPEZZA | Active TED in Japan; Chronic/Low CAS TED in Japan | |||||||
| TEZSPIRE | Chronic rhinosinusitis with nasal polyps; Eosinophilic esophagitis; Severe asthma | |||||||
UPLIZNA | IgG4-related disease; Myasthenia gravis | |||||||
Wezlana | Investigational biosimilar to STELARA (ustekinumab) | |||||||
ABP 206 | Investigational biosimilar to OPDIVO (nivolumab) | |||||||
| ABP 938 | Investigational biosimilar to EYLEA (aflibercept) | |||||||
| ABP 959 | Investigational biosimilar to SOLIRIS (eculizumab) | |||||||
| Phase 2 programs | ||||||||
Bemarituzumab | Other tumors | |||||||
Daxdilimab | Dermatomyositis or anti-synthetase inflammatory myositis; discoid lupus erythematosus | |||||||
Efavaleukin alfa | Ulcerative colitis | |||||||
Fipaxalparant | Diffuse cutaneous systemic sclerosis; idiopathic pulmonary fibrosis | |||||||
| LUMAKRAS/LUMYKRAS | Other solid tumors with KRAS G12C mutations | |||||||
Maridebart cafraglutide | Obesity | |||||||
Ordesekimab | Celiac disease | |||||||
| TEZSPIRE | Chronic obstructive pulmonary disease; Chronic spontaneous urticaria | |||||||
| Phase 1 programs | ||||||||
| Bemarituzumab | NSCLC | |||||||
| Tarlatamab | Neuroendocrine prostate cancer | |||||||
TEPEZZA | Subcutaneous administration for TED | |||||||
Xaluritamig | Prostate cancer | |||||||
| AMG 104 | Asthma | |||||||
| AMG 193 | Solid tumors | |||||||
AMG 305 | Solid tumors | |||||||
AMG 329 | Autoimmune disease | |||||||
| AMG 355 | Solid tumors | |||||||
| AMG 651 | Solid tumors | |||||||
| AMG 786 | Obesity | |||||||
| AMG 794 | Solid tumors | |||||||
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| Phase 3 | Clinical trials investigate the short- and long-term safety and efficacy of our product candidates, compared to commonly used treatments, in a large number of patients who have the disease or condition under study. | ||||
| Phase 2 | Clinical trials investigate side-effect profiles and efficacy of product candidates in a larger patient population than phase 1, but still relatively small, who have the disease or condition under study. | ||||
| Phase 1 | Clinical trials investigate the safety and proper dose ranges of product candidates in a small number of human subjects. | ||||
Phase 3 Product Candidate Program Changes
As of January 31, 2023, we had 18 phase 3 programs. As of January 31, 2024, we have 24 phase 3 programs, as five phase 3 programs were acquired from Horizon, three programs initiated phase 3 studies, one program was approved by the FDA and one program concluded. These changes are set forth in the following table.
| Molecule | Investigational indication | Program change | ||||||||||||
Dazodalibep | Sjögren’s Syndrome | Horizon acquired program | ||||||||||||
| KYPROLIS | Weekly dosing for relapsed multiple myeloma | Concluded—program did not meet its primary endpoint | ||||||||||||
| LUMAKRAS/LUMYKRAS | NSCLC in combination with chemotherapy | Initiated phase 3 study | ||||||||||||
Otezla | Genital psoriasis | Approved by the FDA | ||||||||||||
Tarlatamab | Small cell lung cancer | Initiated phase 3 study | ||||||||||||
TEPEZZA | Active TED (OPTIC-J); Chronic/Low CAS TED in Japan | Horizon acquired programs | ||||||||||||
UPLIZNA | IgG4-related disease; Myasthenia gravis | Horizon acquired programs | ||||||||||||
ABP 206 | Biosimilar to OPDIVO | Initiated phase 3 study | ||||||||||||
Phase 3 Product Candidate Patent Information
The following table describes our composition-of-matter patents that have been issued thus far for our product candidates in phase 3 development that have yet to be approved for any indication in the United States or the EU. Patents for products already approved for one or more indications in the United States or the EU but that are currently undergoing phase 3 clinical trials for additional indications have been previously described. See Marketing, Distribution and Selected Marketed Products—Patents.
| Molecule | Territory | General subject matter | Estimated expiration* | |||||||||||||||||
Bemarituzumab | U.S. | Polypeptides | 2029 | |||||||||||||||||
| Europe | Polypeptides | 2029 | ||||||||||||||||||
Dazodalibep | U.S. | Polypeptides | 2034 | |||||||||||||||||
| Europe | Polypeptides | 2032 | ||||||||||||||||||
| Olpasiran | U.S. | Compounds | 2036 | |||||||||||||||||
| Europe | Compounds | 2036 | ||||||||||||||||||
| Rocatinlimab | U.S. | Polypeptides | 2027 | |||||||||||||||||
| Europe | Polypeptides | 2026 | ||||||||||||||||||
Tarlatamab | U.S. | Polypeptides | 2036 | |||||||||||||||||
| Europe | Polypeptides | 2036 | ||||||||||||||||||
* Patent expiration estimates are based on issued patents, which may be challenged, invalidated or circumvented by competitors. The estimates do not include any term adjustments, extensions or supplemental protection certificates that may be obtained in the future and thereby extend these dates. Corresponding patent applications are pending in other jurisdictions. Additional patents may be filed or issued and may provide additional exclusivity for the product candidate or its use. In addition to patent exclusivity, the product candidates may be protected by regulatory exclusivities upon approval in some countries. For example, new chemical entities would receive a five year exclusivity period and new molecular entities would receive a 12 year exclusivity period in the United States, whereas new chemical and molecular entities would receive a 10 year exclusivity period in Europe.
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Phases 3 and 2 Program Descriptions
The following provides additional information about selected products and product candidates that have advanced into human clinical trials.
AMJEVITA
AMJEVITA is a biosimilar to HUMIRA, which is a monoclonal antibody that inhibits binding of tumor necrosis factor (TNF) alpha to cell surface TNF receptor / TNF-alpha.
Bemarituzumab
Bemarituzumab is a monoclonal antibody that inhibits fibroblast growth factor receptor 2b (FGFR2b). It is being investigated for the treatment of advanced gastroesophageal junction (GEJ) adenocarcinoma and advanced solid tumors other than advanced squamous NSCLC.
BLINCYTO
BLINCYTO is an anti-CD19 x anti-CD3 BiTE® molecule. It is being investigated in newly diagnosed adults aged 40 and older with Ph negative B-cell precursor ALL.
Daxdilimab
Daxdilimab is a fully human monoclonal antibody against ILT7 that depletes certain dendritic cells. It is being investigated for the treatment of both dermatomyositis and anti-synthetase inflammatory myositis and discoid lupus erythematosus.
Dazodalibep
Dazodalibep is a fusion protein binding CD40L on T cells, blocking their interaction with CD40-expressing B cells. It is being investigated for the treatment of Sjögren’s syndrome.
Efavaleukin alfa
Efavaleukin alfa is an interleukin (IL)-2 mutein Fc fusion protein. It is being investigated for the treatment of ulcerative colitis.
EVENITY
EVENITY is a monoclonal antibody that inhibits the action of sclerostin. It is being evaluated as a treatment for male osteoporosis. EVENITY is being developed in collaboration with UCB.
Fipaxalparant
Fipaxalparant is a molecule that blocks lysophosphatidic acid receptor 1 (LPAR1). It is being investigated for the treatment of diffuse cutaneous systemic sclerosis and idiopathic pulmonary fibrosis.
LUMAKRAS/LUMYKRAS
LUMAKRAS/LUMYKRAS is a KRASG12C small molecule inhibitor. It is being investigated as treatment for a variety of solid tumors, including NSCLC, colorectal cancer and other solid tumor cancers.
In October 2023, we announced positive data from the global Phase 3 CodeBreaK 300 trial. This global Phase 3 study evaluated two doses of LUMAKRAS/LUMYKRAS (960 mg or 240 mg) in combination with Vectibix versus investigator’s choice of therapy (trifluridine and tipiracil, or regorafenib) in patients with chemorefractory G12C-mutated mCRC.
In June 2023, based on data from the previous CodeBreaK 101 study, the FDA granted Breakthrough Therapy Designation to LUMAKRAS in combination with Vectibix for the treatment of patients with metastatic KRAS G12C-mutated CRC, as determined by an FDA approved test, who have received prior chemotherapy.
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Maridebart cafraglutide
Maridebart cafraglutide is a gastric inhibitory polypeptide receptor (GIPR) antagonist and glucagon-like peptide 1 (GLP-1) receptor agonist. It is being investigated for the treatment of obesity.
Nplate
Nplate is a thrombopoietin receptor agonist (TPO-RA). It is being investigated for the treatment of chemotherapy-induced thrombocytopenia (CIT).
Olpasiran
Olpasiran is an siRNA that lowers Lp(a). It is being investigated in phase 3 for the treatment of ASCVD.
Ordesekimab
Ordesekimab is a monoclonal antibody that inhibits the action of IL-15. It is being investigated for the treatment of celiac disease and is being developed in collaboration with Provention Bio, Inc.
Otezla
Otezla is a small molecule that inhibits PDE4. It is being investigated in phase 3 studies for the treatment of palmoplantar pustulosis.
Repatha
Repatha is a human monoclonal antibody that inhibits PCSK9. It is being investigated as a treatment for ASCVD in high-risk patients with high LDL-C without prior heart attack or stroke.
Rocatinlimab
Rocatinlimab is a monoclonal antibody that inhibits OX-40. It is being investigated for the treatment of moderate-to-severe atopic dermatitis. Rocatinlimab is being developed in collaboration with Kyowa Kirin.
Tarlatamab
Tarlatamab is a half-life extended (HLE) anti-DLL3 x anti-CD3 BiTE® molecule. It is being investigated for the treatment of small cell lung cancer.
In October 2023, we announced results from the global Phase 2 DeLLphi-301 study, evaluating tarlatamab, an investigational DLL3 targeting BiTE® molecule, in patients with advanced stage SCLC who had failed two or more prior lines of treatment. With a median follow-up of 10.6 months, an intention-to-treat analysis that included 100 patients at the selected 10 mg dose, tarlatamab demonstrated an ORR (primary endpoint) of 40%. For key secondary endpoints, mPFS was 4.9 months, and mOS was 14.3 months. There were no new safety signals observed compared to the Phase 1 study. Additionally in October 2023, the FDA granted tarlatamab Breakthrough Therapy Designation for the treatment of adult patients with extensive-stage SCLC with disease progression on or after platinum-based chemotherapy.
In December 2023, we announced the FDA accepted and granted Priority Review for the Company’s BLA for tarlatamab, with a PDUFA date of June 12, 2024.
TEPEZZA
TEPEZZA is a monoclonal antibody against IGF-1R. It is being investigated in phase 3 studies for patients with moderate-to-severe active TED and chronic/low clinical activity score (CAS) TED. It is also being investigated for subcutaneous administration.
TEZSPIRE
TEZSPIRE is a human monoclonal antibody that inhibits the action of thymic stromal lymphopoietin. It is being evaluated in phase 3 studies as a treatment for severe asthma, chronic rhinosinusitis with nasal polyps and eosinophilic esophagitis. It is also being investigated in phase 2 studies as a treatment for chronic obstructive pulmonary disease and chronic spontaneous urticaria. TEZSPIRE is being developed jointly in collaboration with AstraZeneca.
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UPLIZNA
UPLIZNA is a humanized, affinity-optimized, afucosylated IgG1 kappa (IgG1κ) monoclonal antibody that binds to the B cell-specific surface antigen CD19. It is being investigated for the treatment of flare in patients with IgG4-related disease and myasthenia gravis.
Wezlana
Wezlana, a biosimilar candidate to STELARA, is a monoclonal antibody that inhibits IL-12 and IL-23. It is being investigated in a phase 3 study for biosimilarity to STELARA. The reference-product primary conditions are psoriasis, psoriatic arthritis and Crohn’s disease.
ABP 206
ABP 206, a biosimilar candidate to OPDIVO, is a monoclonal antibody that binds to the receptor protein called programmed death protein 1 (PD-1).
ABP 938
ABP 938, a biosimilar candidate to EYLEA, is a vascular endothelial growth factor receptor (VEGFR) Fc fusion protein. It is being investigated in a phase 3 study for biosimilarity to EYLEA. The reference-product primary conditions are wet age-related macular degeneration (AMD), macular edema following retinal vein occlusion, diabetic macular edema and diabetic retinopathy.
ABP 959
ABP 959, a biosimilar candidate to SOLIRIS, is a monoclonal antibody that specifically binds to the complement protein C5. It is being investigated in a phase 3 study for biosimilarity to SOLIRIS. The reference-product primary conditions are paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).
Business Relationships
From time to time, we enter into business relationships, including joint ventures and collaborative arrangements, for the R&D, manufacture and/or commercialization of products and/or product candidates. In addition, we acquire product and R&D technology rights and establish R&D collaborations with third parties to enhance our strategic position within our industry by strengthening and diversifying our R&D capabilities, product pipeline and marketed-product base. These arrangements generally provide for nonrefundable upfront license fees, development and commercial-performance milestone payments, cost sharing, royalties and/or profit sharing. The activities under these collaboration agreements are performed with no guarantee of either technological or commercial success, and each is unique in nature.
Trade secret protection for our unpatented confidential and proprietary information is important to us. To protect our trade secrets, we generally require counterparties to execute confidentiality agreements upon commencement of a business relationship with us. However, others could either develop independently the same or similar information or unlawfully obtain access to our information.
BeiGene, Ltd.
In January 2020, we acquired an equity stake in BeiGene for approximately $2.8 billion in cash as part of a collaboration to expand our oncology presence in China. For additional information regarding our equity investment in BeiGene, see Part IV—Note 10, Investments, to the Consolidated Financial Statements. Under the collaboration, BeiGene began selling XGEVA in 2020, BLINCYTO in 2021 and KYPROLIS in 2022 in China, and Amgen shares profits and losses equally during the initial product-specific commercialization periods; thereafter, product rights may revert to Amgen, and Amgen will pay royalties to BeiGene on sales in China of such products for a specified period. Amgen manufactures and supplies the collaboration products to BeiGene.
In addition, we jointly develop a portion of our oncology portfolio with BeiGene, which shares in global R&D costs by providing cash and development services of up to $1.25 billion. Upon regulatory approval, BeiGene will assume commercialization rights in China for a specified period, and Amgen and BeiGene will share profits equally until certain of these product rights revert to Amgen. Upon return of the product rights, Amgen will pay royalties to BeiGene on sales in China for a specified period. For product sales outside China, Amgen will also pay royalties to BeiGene.
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AstraZeneca plc
We are in a collaboration with AstraZeneca for the development and commercialization of TEZSPIRE. Under our collaboration, both companies share global costs, profits and losses equally after payment by AstraZeneca of a mid-single-digit royalty to Amgen. AstraZeneca leads global development, and both Amgen and AstraZeneca jointly commercialize TEZSPIRE in North America. In North America, Amgen, as the principal, recognizes product sales of TEZSPIRE in the United States, and AstraZeneca, as the principal, recognizes product sales of TEZSPIRE in Canada. AstraZeneca leads commercialization for TEZSPIRE outside North America. Amgen manufactures and supplies TEZSPIRE worldwide.
UCB
We are in a collaboration with UCB for the development and commercialization of EVENITY. Under our collaboration, UCB has rights to lead commercialization for EVENITY in most countries in Europe. Amgen, as the principal, leads commercialization for EVENITY and recognizes product sales in all other territories, including the United States. Global development costs and commercialization profits and losses related to the collaboration are shared equally. Amgen manufactures and supplies EVENITY worldwide.
For financial information about our significant collaborative arrangements, see Part IV—Note 9, Collaborations, to the Consolidated Financial Statements.
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Human Capital Resources
Overview
Amgen’s approach to human capital resource management starts with our mission to serve patients. We strive to serve patients by transforming the promise of science and biotechnology into therapies that have the power to restore health or save lives. The way we approach our business is guided by the Amgen Values:
Amgen Values | |||||||||||
Be Science-Based | Compete Intensely and Win | Create Value for Patients, Staff and Stockholders | Be Ethical | ||||||||
Trust and Respect Each Other | Ensure Quality | Work in Teams | Collaborate, Communicate and Be Accountable | ||||||||
Our staff are also guided by, and receive annual training on, the Company’s Code of Conduct, which is designed to help every person who does business on our behalf worldwide (including all staff, management, consultants, contract workers and temporary workers) to understand what is expected of them.
Our industry is subject to a complex regulatory and reimbursement environment. The unique demands of our industry, together with the challenges of running an enterprise focused on the discovery, development, manufacture and commercialization of innovative medicines, requires a highly engaged and committed workforce.
As of December 31, 2023, Amgen had approximately 26,700 staff members in over 50 countries, and we have had relatively low global turnover rates compared to available industry information. We also supplement our workforce with independent contractors, contingent workers and temporary workers, as needed. Outside of the United States, some of our employees are represented by unions or works councils. We consider our staff relations to be good, supported by regular assessments of staff engagement surveys on a wide range of topics (including flexible work environments, career development, and maintaining a culture of compliance). We discuss the results of these surveys with our workforce and our Board of Directors. Reflecting our staff members’ desire to retain a flexible approach to work, we offer a flexible workspace initiative that enables many employees to work together with their manager to determine the location that best enables their work at hand, supporting virtual work as well as working in person.
Compensation, Benefits and Development
Our approach to employee compensation and benefits is designed to deliver cash, equity and benefit programs that are competitive with those offered by leading companies in the biotechnology and pharmaceutical industries, and to attract, motivate and retain talent with a focus on encouraging performance, promoting accountability and adherence to the Amgen Values and alignment with the interests of the Company’s stockholders.
Our base pay program aims to compensate staff members relative to the value of the contributions of their role, which takes into account the skills, knowledge and abilities required to perform each position, as well as the experience brought to the job. We also provide annual incentive programs to reward our staff in alignment with achievement of Company-wide goals that are established annually and designed to drive aspects of our strategic priorities that support and advance our strategy across our Company and are intended to positively position us for both near- and long-term success. The majority of our staff members are also eligible for equity award grants under our long-term incentive program that are designed to align the interests of our staff members with those of our stockholders. For senior level staff, a significant proportion of equity award value is dependent on Company performance.
All staff participate in a regular performance measurement process through which staff receive performance and development feedback, and pay is aligned to performance. The Amgen Values and Leadership Attributes (Inspire, Accelerate, Integrate and Adapt) are an integral part of the performance assessments of our staff members, and these evaluations serve as an important information tool and basis for compensation decisions.
To support the development of our staff, we provide a variety of programs, including leadership development programs, classroom-based and virtual instructor-led courses, and self-paced learning options as well as mentoring, networking and coaching opportunities.
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Our benefit programs are generally broad-based, promote health and overall well-being and emphasize saving for retirement. All regular U.S. staff members are eligible to participate in the same core health and welfare and retirement savings plans. Other U.S. employee benefits include adoption assistance, paid parental leave programs, access to childcare, employee assistance programs, employee stock purchase plan, flexible spending accounts, life, long-term care and business travel accident insurance, short and long-term disability benefits, wellness benefits and work-life resources and referrals. Comparable programs and benefits are available globally, with the same health and well-being intent, and consistent with local statutory requirements.
Our Compensation and Management Development Committee provides oversight of our compensation plans, policies and programs.
Safety and Wellness
Creating a safe and healthy workplace for our staff is an important priority at Amgen. Our goal is to have a world class safety record through safety leadership, risk management practices and integrating safety throughout our business processes. To foster our safety culture, we implement a comprehensive safety program and reinforce desired safety behaviors, driving to understand and mitigate the root cause of safety incidents and manage and control variability. We use leading indicators to assess the effectiveness of our safety programs and make course corrections as needed. Additionally, we perform formal executive management review of functional safety performance for Operations, Global Commercial Operations and R&D on a quarterly basis with a focus on identifying early signals and taking action to drive continuous improvement.
Our CRCC provides general oversight of our safety programs and initiatives.
Culture
We believe that a diverse and inclusive culture fosters innovation, which supports our ability to serve patients. Further, we also believe our global presence is strengthened by having a workforce that reflects the diversity of the patients we serve(1). Our Diversity, Inclusion and Belonging Council is led by our executive leadership and is responsible for overseeing our strategy to further a diverse and inclusive workplace. We offer a variety of diversity, inclusion and belonging programs and have continued to launch enhanced resources that guide staff on the role they play in creating an inclusive culture. Further, we continue to incorporate diversity, inclusion and belonging considerations into our business operations, including clinical trial design and procurement, to broaden access to patients and suppliers to the benefit of our business.
Each of Amgen’s Employee Resource Groups is sponsored by senior executive leadership. Our Employee Resource Groups promote leadership, development and belonging for members while also working to positively impact our business by leading business initiatives and providing diverse perspectives and experience.
(1) Amgen is an equal opportunity employer and does not make employment decisions based on race, gender, ethnicity, or any other protected characteristic.
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Global Employee Resource Groups | |||||
| Amgen Asian Association (AAA) | Amgen Black Employee Network (ABEN) | ||||
| Ability Bettered through Leadership and Education (ABLE), a resource group for those with disabilities, visible and invisible, including those conditions also experienced by the patients that Amgen serves | |||||
| Amgen Early Career Professionals (AECP) | Amgen International Network (AIN) | ||||
| Amgen Latin Employee Network (ALEN) | Amgen PRIDE – LGBTQ and Allies Network (PRIDE) | ||||
Amgen South Asian Network (ASAN) | Amgen Veterans Employees Network (AVEN) | ||||
| Recognition of Indigenous Peoples, Values and Environmental Resources (RIVER) | |||||
| Women Empowered to be Exceptional (WE2) | Women in STEM Enrichment (WISE) | ||||
Building on the successful execution of our 2022 ESG goal under our annual incentive plan, our enhanced ESG goal for 2023 was designed to advance our progress on key ESG initiatives, including by driving measurable achievement of our Representation in Clinical Research (RISE) objectives that seek to improve the diversity and representation of racial and ethnic minority populations in our clinical trial research to help us develop medicines that are studied in participants who better reflect the populations affected by serious illness, and further expanding the number of leaders accountable for establishing, documenting and executing on diversity, inclusion and belonging action plans.
As of December 31, 2023, women comprised approximately 53% of our global workforce, and ethnic minorities accounted for approximately 50% of our U.S. and Puerto Rico-based workforce. In our effort to attract and retain the best talent, we seek out and support talent across the globe, including in underrepresented populations, consistent with our commitment to equal opportunity. In 2023, we launched our Apprenticeship Program as part of our multidimensional inclusive hiring and talent development strategy, with the first phase of the program beginning with our Manufacturing and DTI functions. Our Apprenticeship Program is a skills-based approach that proactively seeks to hire candidates from nontraditional sources and backgrounds, and is designed to invest in our future workforce through attracting, hiring and upskilling non-four-year degreed talent in the United States. Through the Apprenticeship Program, we will provide individuals with classroom-based and on-the-job training as well as mentorship opportunities needed to develop proficiency in targeted business areas and roles. We believe that our Apprenticeship Program and other skills-based approaches to hiring will provide us with access to a larger pool of highly motivated and productive talent while also providing underrepresented groups greater access to innovation economy careers.
Our 2022 Consolidated EEO-1 Report can be viewed on our website at www.amgen.com (the website address is not intended to function as a hyperlink, and the information contained in our website is not intended to be a part of this filing).
Our Compensation and Management Development Committee oversees our labor and employment policies, programs and initiatives, including those relating to diversity, inclusion and belonging.
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Information about Our Executive Officers
The executive officers of the Company as of February 14, 2024, are set forth below.
Mr. Robert A. Bradway, age 61, has served as a director of the Company since 2011 and Chairman of the Board of Directors since 2013. Mr. Bradway has been the Company’s President since 2010 and Chief Executive Officer since 2012. From 2010 to 2012, Mr. Bradway served as the Company’s President and Chief Operating Officer. Mr. Bradway joined the Company in 2006 as Vice President, Operations Strategy, and served as Executive Vice President and Chief Financial Officer from 2007 to 2010. Prior to joining the Company, Mr. Bradway was a Managing Director at Morgan Stanley in London, where, beginning in 2001, he had responsibility for the firm’s banking department and corporate finance activities in Europe. Mr. Bradway has been a director of The Boeing Company, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since 2016. He has served on the board of trustees of the University of Southern California since 2014. From 2011 to 2017, Mr. Bradway was a director of Norfolk Southern Corporation, a transportation company.
Dr. James E. Bradner, age 51, became Executive Vice President, Research and Development, and Chief Scientific Officer, in December 2023. Prior to joining the Company, from 2022 to 2023, Dr. Bradner was a clinician at the Dana-Farber Cancer Institute. From 2016 to 2022, Dr. Bradner served as President of the Novartis Institutes for BioMedical Research, where he was a member of the Executive Committee of Novartis AG. Dr. Bradner previously served on the faculty at Harvard Medical School.
Mr. Murdo Gordon, age 57, became Executive Vice President, Global Commercial Operations, in 2018. Prior to joining the Company, Mr. Gordon was Chief Commercial Officer at BMS, a pharmaceutical company, from 2016 to 2018. Mr. Gordon served as Head of Worldwide Markets at BMS from 2015 to 2016. Prior to this, Mr. Gordon served in a variety of leadership roles at BMS for more than 25 years.
Mr. Jonathan P. Graham, age 63, became Executive Vice President, General Counsel and Secretary in 2019. Mr. Graham joined the Company in 2015. From 2015 to 2019, Mr. Graham was Senior Vice President, General Counsel and Secretary. Prior to joining Amgen, from 2006 to 2015, Mr. Graham was Senior Vice President and General Counsel at Danaher Corporation. From 2004 to 2006, Mr. Graham was Vice President, Litigation and Legal Policy, at General Electric Company (GE). Prior to GE, Mr. Graham was a partner at Williams & Connolly LLP.
Mr. Peter H. Griffith, age 65, became Executive Vice President and Chief Financial Officer in 2020. Mr. Griffith joined the Company in 2019 as Executive Vice President, Finance. Prior to joining Amgen, Mr. Griffith was President of Sherwood Canyon Group, LLC, a private equity firm. From 1997 to 2019, Mr. Griffith was a partner at EY, an accounting and professional services firm, and served in a variety of senior leadership roles, with his last position being Global Vice Chair, Corporate Development. Prior to EY, Mr. Griffith was a Managing Director and head of the investment banking division of Wedbush Securities Inc.
Ms. Nancy A. Grygiel, age 56, became Senior Vice President and Chief Compliance Officer in 2020. Ms. Grygiel joined the Company in 2015. From 2016 to 2020, Ms. Grygiel was Vice President, Compliance. Prior to joining Amgen, from 2011 to 2015, Ms. Grygiel served as Vice President, Compliance, Corporate & International, at Allergan, Inc. (Allergan). Prior to Allergan, Ms. Grygiel held several management positions at Mylan Pharmaceuticals, Inc.
Ms. Rachna Khosla, age 51, became Senior Vice President, Business Development, in 2021. Ms. Khosla joined the Company in 2013 as Corporate Development Director. From 2018 to 2021, Ms. Khosla was Vice President, Business Development, and from 2016 to 2018, was Executive Director, Business Development. Prior to joining the Company, Ms. Khosla was a Director at Lazard Ltd. (Lazard) responsible for healthcare mergers and acquisitions. Prior to Lazard, Ms. Khosla held various roles in investment banking (mergers and acquisitions) and corporate venture capital at Credit Suisse Group AG, Sanofi Aventis, Aventis Capital, J.P. Morgan Chase & Co., and Salomon Brothers, Inc.
Mr. Derek Miller, age 51, became Senior Vice President, Human Resources, in 2022. Mr. Miller joined the Company in 2003 and has held human resources leadership roles supporting each of the Company’s major business functions. From 2020 to 2022, Mr. Miller was Vice President, Global Total Rewards, and from 2018 to 2020, was Vice President, Human Resources. From 2015 to 2018, Mr. Miller was an Executive Director, Human Resources. Prior to 2015, Mr. Miller served as a Senior Manager in the Human Resources organization, before his promotion to Director, Human Resources, and then to Strategy Director.
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Dr. David M. Reese, age 61, became the Company’s inaugural Executive Vice President and Chief Technology Officer, in December 2023, responsible for accelerating the use of technology and artificial intelligence across the organization. From 2018 to December 2023, Dr. Reese served as Executive Vice President, Research and Development. Dr. Reese joined the Company in 2005 and has held leadership roles in development, translational and medical sciences, and discovery research, including as Senior Vice President, Translational Sciences and Oncology, from 2017 to 2018. Prior to joining Amgen, Dr. Reese was a cofounder, president, and chief medical officer of Translational Oncology Research International, a not-for-profit academic clinical research organization, and director of Clinical Research at the Breast Cancer International Research Group. Dr. Reese previously served on the faculty at UCLA and the University of California, San Francisco.
Mr. Esteban Santos, age 56, became Executive Vice President, Operations, in 2016. Mr. Santos joined the Company in 2007 as Executive Director, Manufacturing Technologies. From 2013 to 2016, Mr. Santos was Senior Vice President, Manufacturing. From 2008 to 2013, Mr. Santos held a number of Vice President roles at the Company in engineering, manufacturing, site operations and drug product. Prior to joining the Company, Mr. Santos served as Site General Manager of J&J’s Cordis operation in Puerto Rico. Prior to J&J, Mr. Santos held several management positions in GE’s industrial and transportation businesses.
Geographic Area Financial Information
For financial information concerning the geographic areas in which we operate, see Part IV—Note 4, Revenues, and Note 12, Property, plant and equipment, to the Consolidated Financial Statements.
Investor Information
Financial and other information about us is available on our website at www.amgen.com. We make available on our website, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with or furnish it to the U.S. Securities and Exchange Commission (SEC). In addition, we have previously filed registration statements and other documents with the SEC. Any document we file may be inspected without charge at the SEC’s website at www.sec.gov. (These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing.)
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| Item 1A. | RISK FACTORS | ||||
This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. You should carefully consider the risks and uncertainties our business faces. The risks described below are not the only ones we face. Our business is also subject to the risks that affect many other companies, such as employment relations, general economic conditions, geopolitical events and international operations. Further, additional risks not currently known to us or that we currently believe are immaterial may in the future materially and adversely affect our business, operations, liquidity and stock price.
SUMMARY
Risks Related to Government Regulations and Third-Party Policies
•Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability.
•Guidelines and recommendations published by various organizations can reduce the use of our products.
•We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations.
•Our business may be affected by litigation and government investigations.
Risks Related to Economic Conditions and Operating a Global Business
•Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions.
•We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
•A breakdown of our information technology systems, cyberattack or information security breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation.
•Our sales and operations are subject to the risks of doing business internationally, including in emerging markets.
Risks Related to Competition
•Our products face substantial competition and our product candidates are also likely to face substantial competition.
•Our intellectual property positions may be challenged, invalidated or circumvented, or we may fail to prevail in current and future intellectual property litigation.
•We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.
•Concentration of sales at certain of our wholesaler distributors, and consolidation of private payers, such as insurers, and PBMs has negatively affected, and may continue to negatively affect, our business.
Risks Related to Research and Development
•We may not be able to develop commercial products despite significant investments in R&D.
•We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications.
•Our current products and products in development cannot be sold without regulatory approval.
•Some of our products are used with drug delivery or companion diagnostic devices that have their own regulatory, manufacturing and other risks.
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•Some of our pharmaceutical pipeline and our commercial product sales rely on collaborations with third parties, which may adversely affect the development and sales of our products.
Risks Related to Operations
•We perform a substantial majority of our commercial manufacturing activities at our facility in the U.S. territory of Puerto Rico and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California; significant disruptions or production failures at these facilities could significantly impair our ability to supply our products or continue our clinical trials.
•We rely on third-party suppliers for certain of our raw materials, medical devices and components.
•Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
•Our business and operations may be negatively affected by the failure, or perceived failure, of achieving our environmental, social and governance objectives.
•The effects of global climate change and related natural disasters could negatively affect our business and operations.
General Risk Factors
•Global economic conditions may negatively affect us and may magnify certain risks that affect our business.
•Our stock price is volatile.
RISKS RELATED TO GOVERNMENT REGULATIONS AND THIRD-PARTY POLICIES
Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability.
Sales of our products depend on the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans. Governments and private payers continue to pursue initiatives to manage drug utilization and contain costs. Further, pressures on healthcare budgets from the economic downturn and inflation continue and are likely to increase across the markets we serve. Payers are increasingly focused on costs, which have resulted, and are expected to continue to result, in lower reimbursement rates for our products or narrower populations for which payers will reimburse. Continued intense public scrutiny of the price of drugs and other healthcare costs, together with payer dynamics, have limited, and are likely to continue to limit, our ability to set or adjust the price of our products based on their value, which can have a material adverse effect on our business. In the United States, particularly over the past few years, a number of legislative and regulatory proposals have been introduced and/or signed into law that attempt to lower drug prices. These include the IRA legislation that enables the U.S. government to set prices for certain drugs in Medicare, redesigns Medicare Part D benefits to shift a greater portion of the costs to manufacturers and enables the U.S. government to impose penalties if drug prices are increased at a rate faster than inflation. Additional proposals focused on drug pricing continue to be debated, and additional executive orders focused on drug pricing and competition are likely to be adopted and implemented in some form. Government actions or ballot initiatives at the state level also represent a highly active area of policymaking and experimentation, including pursuit of proposals that limit drug reimbursement under state run Medicaid programs based on reference prices or permitting importation of drugs from Canada. Such state policies may also eventually be adopted at the federal level.
We are unable to predict which or how many policy, regulatory, administrative or legislative changes may ultimately be, or effectively estimate the consequences to our business if, enacted and implemented. However, to the extent that payer actions further decrease or modify the coverage or reimbursement available for our products, require that we pay increased rebates or shift other costs to us, limit or affect our decisions regarding the pricing of or otherwise reduce the use of our products, such actions could have a material adverse effect on our business and results of operations.
—Changing U.S. federal coverage and reimbursement policies and practices have affected and are likely to continue to affect access to, pricing of and sales of our products
A substantial portion of our U.S. business relies on reimbursement from federal government healthcare programs and commercial insurance plans regulated by federal and state governments. See Part I, Item 1. Business—Reimbursement. Our business has been and will continue to be affected by legislative actions changing U.S. federal reimbursement policy. For example, in 2022, the IRA was enacted and includes provisions requiring that beginning in 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby manufacturers must accept a price established by the government or face penalties on all U.S. sales (starting with ten drugs in 2026, adding 15 in 2027 and 2028, and adding 20 in 2029 and subsequent years such that by 2031 approximately 100 drugs could be subject to such set prices). The Medicare
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price setting process began on August 29, 2023 when CMS announced the first ten drugs for Medicare price setting, which includes ENBREL. Our wholly owned subsidiary, Immunex Corporation, which holds the rights to the ENBREL BLA, entered into an agreement with the U.S. government to participate in the price setting process and submitted the required data to CMS for ENBREL, including certain price, cost and patent data. The Medicare price setting process will conclude by August 1, 2024, and by September 1, 2024, CMS will publish prices that will be applicable to these ten drugs in the Medicare program beginning January 1, 2026. Also under the IRA, starting on January 1, 2024, Medicare Part D was redesigned to cap beneficiary out-of-pocket costs and, beginning January 1, 2025, Federal reinsurance will be reduced in the catastrophic phase (resulting in a shift and increase of such costs to Part D plans and manufacturers, including by requiring manufacturer discounts on certain drugs). Further, the IRA created a mechanism for CMS to collect rebates from manufacturers if price increases outpace inflation. Rebate obligations began to accrue October 1, 2022 for Medicare Part D and January 1, 2023 for Medicare Part B, but CMS has not yet issued invoices and has some discretion as to when it must bill manufacturers. We expect that several of our products will be subject to these inflation rebates, and several of our products have been on lists that are issued and updated on a quarterly basis by CMS under a related program under which Medicare beneficiaries are charged reduced coinsurance if price increases exceed inflation. The IRA’s drug pricing controls and Medicare redesign are likely to have a material adverse effect on our sales, our business and our results of operations, and such impact is expected to increase through the end of the decade and will depend on factors including the extent of our portfolio’s exposure to Medicare reimbursement, the rate of inflation over time, the number of our products selected for mandatory price setting and the timing of market entry of generic or biosimilar competition. Further, following the passage of the IRA, the environment remains dynamic and U.S. policymakers continue to demonstrate interest in health care and drug pricing changes. For example, CMS issued a proposed Medicaid Drug Rebate Program rule that, if finalized, would require manufacturers to aggregate or “stack” all rebates, discounts, or other price concessions made to separate, unrelated entities across the pharmaceutical supply chain on a given unit of product to determine the “Best Price,” a metric that is used to determine Medicaid rebates and 340B statutory rates. In early 2023, the HHS selected new healthcare payment and delivery models for testing, in response to an October 2022 Executive Order on Lowering Prescription Drug Costs for Americans, including the Accelerating Clinical Evidence Model, which could introduce new payment methods that reduce reimbursement for drugs approved under accelerated approval. That Executive Order followed a 2021 Executive Order designed to increase competition in the healthcare sector, including by calling for the FDA to develop prescription drug importation programs and the FTC to apply greater scrutiny of anticompetitive activity and responses to which include actions from the HHS (which released a report with drug pricing proposals that seek to promote competition) and from the USPTO (which has taken steps to strengthen coordination with the FDA to address impediments to generic drug and biosimilar competition). Other CMS policy changes and demonstration projects to test new care, delivery and payment models can also significantly affect how drugs, including our products, are covered and reimbursed. In the fourth quarter of 2021, HHS released a plan to address drug pricing that included potential future mandatory models that link payment for prescription drugs and biologics to certain factors, including the overall cost of care. In March 2023, the Administration released its budget plan for fiscal year 2024 that included proposals to expand the number of drugs subject to mandatory Medicare price setting under the IRA, imposing such price setting activity earlier, and extending to commercial health insurance the requirement that drug manufacturers pay rebates if price increases outpace inflation. While those proposed expansions of the IRA’s drug pricing controls have not been enacted, the proposals demonstrate that this area continues to be a focus of the Administration.
We also face risks related to the reporting of pricing data that affects reimbursement of and discounts provided for our products. U.S. government price reporting regulations are complex and may require biopharmaceutical manufacturers to update certain previously submitted data. If our submitted pricing data are incorrect, we may become subject to substantial fines and penalties or other government enforcement actions, which could have a material adverse effect on our business and results of operations. In addition, as a result of restating previously reported price data, we may be required to pay additional rebates and provide additional discounts.
—Changing reimbursement and pricing actions in various states have negatively affected and may continue to negatively affect access to and have affected and may continue to affect sales of our products
At the state level, government actions or ballot initiatives can also affect how our products are covered and reimbursed and/or create additional pressure on our pricing decisions. Existing and proposed state pricing laws have added complexity to the pricing of drugs and may already be affecting industry pricing decisions. A number of states have adopted, and many other states are considering, drug importation programs and other pricing actions, including proposals designed to require biopharmaceutical manufacturers to report to the state proprietary pricing information or provide advance notice of certain price increases.
States are also enacting laws referencing the IRA and seeking to regulate the 340B Drug Pricing Program. For example, following the passage of the IRA, bills have been proposed in multiple states that would apply the drug price caps set by HHS for Medicare to drug prices in an individual state. For Medicaid patients, states have established a Medicaid drug spending cap (New York) and implemented a new review and supplemental rebate negotiation process (Massachusetts). Seven states (Colorado, Maine, New Hampshire, Maryland, Minnesota, Oregon and Washington) have enacted laws that establish PDABs to
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identify drugs that pose affordability challenges, and four such states include authority for the state PDAB to set upper payment limits on certain drugs for in-state patients, payers and providers. So far in 2024, no fewer than 11 states have pending PDAB legislation. States with enacted PDAB laws are in various phases of implementation, with Colorado’s PDAB being the furthest along. In August 2023, the Colorado PDAB announced the first five drugs to undergo an affordability review, one of which is ENBREL. If the PDAB process determines that ENBREL is unaffordable, ENBREL could be subject to an upper payment limit as early as Q4 2024. Louisiana and Arkansas have enacted laws with mandates on manufacturers participating in 340B, and thus far in 2024, no fewer than 15 states have similar legislation pending. These bills vary, but include provisions on restricting a manufacturer’s ability to direct drugs in 340B channels, recognizing 340B contract pharmacies and a prohibition on requiring the inclusion of 340B claims modifiers. Further, in Genesis Health Care, Inc. v. Becerra, the U.S. District Court for the District of South Carolina issued an order in November 2023 that enjoins the Health Resources and Services Administration from enforcing its more restrictive interpretation of what is considered a patient under the 340B program, to the potential benefit of healthcare systems seeking to expand the application of 340B discounts.
Additionally, on January 5, 2024, the FDA authorized Florida to move forward with its importation program proposal. Colorado, Maine, New Hampshire, New Mexico, Texas and Vermont have also enacted state importation laws, and some have submitted plans for approval to the FDA. Other states could adopt similar approaches or could pursue different policy changes in a continuing effort to reduce their costs.
Ultimately, as with U.S. federal government actions, existing or future state government actions or ballot initiatives may also have a material adverse effect on our product sales, business and results of operations.
—U.S. commercial payer actions have affected and may continue to affect access to and sales of our products
Payers, including healthcare insurers, PBMs, integrated healthcare delivery systems (vertically-integrated organizations built from consolidations of healthcare insurers and PBMs) and group purchasing organizations, increasingly seek ways to reduce their costs. With increasing frequency, payers are adopting benefit plan changes that shift a greater proportion of drug costs to patients. Such measures include more limited benefit plan designs, high deductible plans, higher patient co-pay or coinsurance obligations and more significant limitations on patients’ use of manufacturer commercial co-pay assistance programs. Further, government regulation of payers may affect these trends. For example, CMS finalized a policy for plan years starting on or after January 1, 2021 that has caused commercial payers to more widely adopt co-pay accumulator adjustment programs. While the U.S. District Court for the District of Columbia struck down this policy in September 2023 and further clarified in December 2023 that its ruling had the effect of reinstating the co-pay accumulator adjustment policy from 2020, CMS and HHS have signaled that they do not intend to enforce certain restrictions from the 2020 policy that would reduce the adoption of co-pay accumulator adjustment programs. Payers, including PBMs, have sought, and continue to seek, price discounts or rebates in connection with the placement of our products on their formularies or those they manage, and to also impose restrictions on access to or usage of our products (such as Step Therapy), require that patients receive the payer’s prior authorization before covering the product, and/or chosen to exclude certain indications for which our products are approved. For example, some payers require physicians to demonstrate or document that the patients for whom Repatha has been prescribed meet their utilization criteria, and these requirements have served to limit and may continue to limit patient access to Repatha treatment. In an effort to reduce barriers to access, we reduced the net price of Repatha by providing greater discounts and rebates to payers (including PBMs that administer Medicare Part D prescription drug plans), and in response to a very high percentage of Medicare patients abandoning their Repatha prescriptions rather than paying their co-pay, we introduced a set of new National Drug Codes to make Repatha available at a lower list price. However, affordability of patient out-of-pocket co-pay cost has limited and may continue to limit patient use. Further, despite these net and list price reductions, some payers have restricted, and may continue to restrict, patient access and may seek further discounts or rebates or take other actions, such as changing formulary coverage for Repatha, that could reduce our sales of Repatha. These factors have limited, and may continue to limit, patient affordability and use, negatively affecting Repatha sales.
Further, significant consolidation in the health insurance industry has resulted in a few large insurers and PBMs, which places greater pressure on pricing and usage negotiations with biopharmaceutical manufacturers, significantly increasing discount and rebate requirements and limiting patient access and usage. For example, in the United States, as of the beginning of 2024, the top five integrated health plans and PBMs controlled about 92% of all pharmacy prescriptions. This high degree of consolidation among insurers, PBMs and other payers, including integrated healthcare delivery systems and/or with specialty or mail-order pharmacies and pharmacy retailers, has increased the negotiating leverage such entities have over us and other biopharmaceutical manufacturers and has resulted in greater price discounts, rebates and service fees realized by those payers from our business. Each of CVS, Express Scripts and United Health Group (among the top five integrated health plans and PBMs), have Rebate Management Organizations that further increase their leverage to negotiate deeper discounts. Ultimately, additional discounts, rebates, fees, coverage changes, plan changes, restrictions or exclusions imposed by these commercial payers could have a material adverse effect on our product sales, business and results of operations. Policy reforms advanced by Congress or the Administration that refine the role of PBMs in the U.S. marketplace could have downstream implications or
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consequences for our business and how we interact with these entities. For example, in June 2022, the FTC launched an inquiry into the business practices of PBMs and subsequently expanded the investigation to the three rebate management organizations owned by the three largest PBMs. In addition, multiple Congressional Committees are investigating PBM practices and have also proposed legislation that could increase transparency and reporting of these practices and/or impact rebates and service fees. The results of such inquiry could have an effect on manufacturer interactions with PBMs, resulting in changes to access for certain medicines. See Concentration of sales at certain of our wholesaler distributors, and consolidation of private payers, such as insurers, and PBMs has negatively affected, and may continue to negatively affect, our business.
Our business is also affected by policies implemented by private healthcare entities that process Medicare claims, including Medicare Administrative Contractors. For example, in the second quarter of 2022, several Medicare Administrative Contractors issued notice that TEZSPIRE would be added to their “self-administered drug” exclusion lists. Although the Medicare Administrative Contractors subsequently removed TEZSPIRE from their exclusion lists, these exclusions, if reintroduced and/or implemented, would result in Medicare beneficiaries with severe asthma losing access to TEZSPIRE coverage under Medicare Part B and potentially also under Medicare Advantage.
—Government and commercial payer actions outside the United States have affected and will continue to affect access to and sales of our products
Outside the United States, we expect countries will also continue to take actions to reduce their drug expenditures and to reduce intellectual property protections. See Part I, Item 1. Business—Reimbursement. Pressures to decrease drug expenditures may intensify as governments take actions to address budgets strained by high inflation, expenditures to respond to the COVID-19 pandemic and weak economic conditions, including in Europe where the effects of the Russia–Ukraine conflict have challenged the economies in that region. Further, the EU is currently undergoing a review and possible revision of its pharmaceutical legislation that, while full implementation is not expected before 2027, could lead to proposals that will reduce intellectual property protection for new products (including potentially shortening the duration of regulatory data exclusivity and orphan drug exclusivity protections), as well as change the reimbursement and regulatory landscape. International reference pricing has been widely used by many countries outside the United States to control costs based on an external benchmark of a product’s price in other countries. International reference pricing policies can change quickly and frequently and may not reflect differences in the burden of disease, indications, market structures or affordability differences across countries or regions. Other expenditure control practices, including but not limited to the use of revenue clawbacks, rebates and caps on product sales, are used in various foreign jurisdictions as well. In addition, countries may refuse to reimburse or may restrict the reimbursed population for a product when their national health technology assessments do not consider a medicine to demonstrate sufficient clinical benefit beyond existing therapies or to meet certain cost effectiveness thresholds. For example, despite the EMA’s approval of Repatha for the treatment of patients with established atherosclerotic disease, prior to 2020, the reimbursement of Repatha in France was limited to a narrower patient population (such as those with homozygous familial hypercholesterolemia (HoFH)) following a national health technology assessment. Many countries decide on reimbursement between potentially competing products through national or regional tenders that often result in one product receiving most or all of the sales in that country or region. Failure to obtain coverage and reimbursement for our products, a deterioration in their existing coverage and reimbursement or a decline in the timeliness or certainty of payment by payers to hospitals and other providers has negatively affected, and may further negatively affect, the ability or willingness of healthcare providers to prescribe our products for their patients and otherwise negatively affect the use of our products or the prices we realize for them. Such changes have had, and could in the future have, a material adverse effect on our product sales, business and results of operations.
Guidelines and recommendations published by various organizations can reduce the use of our products.
Government agencies promulgate regulations and guidelines directly applicable to us and to our products. Professional societies, practice management groups, insurance carriers, physicians’ groups, private health and science foundations and organizations involved in various diseases also publish guidelines and recommendations to healthcare providers, administrators and payers, as well as patient communities. Recommendations by government agencies or other groups and organizations may relate to such matters as usage, dosage, route of administration and use of related therapies. In addition, a growing number of organizations are providing assessments of the value and pricing of biopharmaceutical products, and even organizations whose guidelines have historically been focused on clinical matters have begun to incorporate analyses of the cost effectiveness of various treatments into their treatment guidelines and recommendations. Value assessments may come from private organizations that publish their findings and offer recommendations relating to the products’ reimbursement by government and private payers. Some companies and payers have announced pricing and payment decisions based in part on the assessments of private organizations. In addition, government health technology assessment organizations in many countries make reimbursement recommendations to payers in their jurisdictions based on the clinical effectiveness, cost-effectiveness and service effects of new, emerging and existing medicines and treatments. Such health technology assessment organizations have recommended, and may in the future recommend, reimbursement for certain of our products for a narrower indication than was
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approved by applicable regulatory agencies or may recommend against reimbursement entirely. See Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. The EU has adopted regulations, effective beginning in January 2025, that are intended to increase cooperation among EU member states and harmonize various procedures and standards at the EU level in assessing health technologies and in support of joint clinical assessments of health technologies and medicines. These and other such recommendations or guidelines may affect our reputation, and any recommendations or guidelines that result in decreased use, dosage or reimbursement of our products could have a material adverse effect on our product sales, business and results of operations. In addition, the perception by the investment community or stockholders that such recommendations or guidelines will result in decreased use and dosage of our products could adversely affect the market price of our common stock.
We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations.
We are subject to income and other taxes in the United States and other jurisdictions in which we do business. As a result, our provision for income taxes is derived from a combination of applicable tax rates in the various places we operate. Significant judgment is required for determining our provision for income tax.
One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. Our income tax returns are routinely examined by tax authorities in those jurisdictions. Significant disputes can and have arisen with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts, and such tax authorities (including the IRS) are becoming more aggressive in their audits and are particularly focused on such matters. In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS administrative appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021 which seek to increase our U.S. taxable income for the years 2010–2012.
In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 and asserts penalties.
We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The cases were consolidated on December 19, 2022.
We are currently also under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we are under examination by a number of state and foreign tax jurisdictions.
Final resolution of these complex tax matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse effect on the results of our operations.
See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income Taxes, and Part IV—Note 7, Income taxes, to the Consolidated Financial Statements.
Our provision for income taxes and results of operations in the future could be adversely affected by changes to our operating structure, changes in the mix of income and expenses in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities and changes in applicable tax laws, regulations or administrative interpretations thereof. The 2017 Tax Act is complex and a large volume of regulations and guidance has been issued and could be subject to different interpretations. We could face audit challenges to our application of the 2017 Tax Act.
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As previously reported, the OECD reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Effective January 1, 2024, select individual countries, including the United Kingdom and EU member countries, have enacted the global minimum tax agreement. Our legal entities in the countries that have enacted the agreement, along with their direct and indirect subsidiaries, are now subject to a 15% minimum tax rate on adjusted financial statement income. Additional provisions of the OECD agreement may come into effect in future years, and the OECD is expected to continue to release additional guidance that may impact the application and interpretation of the agreement that could further increase our tax liabilities. Other countries, including the United States and the U.S. territory of Puerto Rico, have not yet enacted the OECD agreement and implementation remains highly uncertain. The continued enactment of the agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.
The tax rates associated with certain international provisions of the 2017 Tax Act are set to increase beginning in 2026. If those changes take effect as scheduled, we anticipate that the overall U.S. tax rate on our foreign income would increase. The Administration and U.S. Congress continue to discuss various proposals that would change the international provisions of the 2017 Tax Act and other corporate provisions of U.S. tax law. Changes to existing tax law in the United States, the U.S. territory of Puerto Rico or other jurisdictions, including the changes and potential changes discussed above, could result in tax increases where we do business and could have a material adverse effect on the results of our operations.
Our business may be affected by litigation and government investigations.
We and certain of our subsidiaries are involved in legal proceedings. See Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements. Civil and criminal litigation is inherently unpredictable, and the outcome can result in costly verdicts, fines and penalties, exclusion from federal healthcare programs and/or injunctive relief that affect how we operate our business. Defense of litigation claims can be expensive, time consuming and distracting, and it is possible that we could incur judgments or enter into settlements of claims for monetary damages or change the way we operate our business, which could have a material adverse effect on our product sales, business and results of operations. In addition, product liability is a major risk in testing and marketing biotechnology and pharmaceutical products. We may face substantial product liability exposure in human clinical trials and for products we sell after regulatory approval. Product liability claims, regardless of their merits, could be costly and divert management’s attention and could adversely affect our reputation and the demand for our products. We and certain of our subsidiaries have previously been named as defendants in product liability actions for certain of our products.
We are also involved in government investigations that arise in the ordinary course of our business. In recent years, there has been a trend of increasing government investigations and litigations against companies operating in our industry, both in the United States and around the world. See Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. Our business activities outside of the United States are subject to the FCPA and similar antibribery or anticorruption laws, regulations or rules of other countries in which we operate, including the U.K. Bribery Act. We cannot ensure that all our employees, agents, contractors, vendors, licensees, partners or collaborators will comply with all applicable laws and regulations. On April 25, 2019, we entered into a settlement agreement with the DOJ and the OIG of the HHS to settle certain allegations relating to our support of independent charitable organizations that provide patients with financial assistance to access their medicines. As a result, we entered into a corporate integrity agreement with the OIG that requires us to maintain a corporate compliance program and to undertake a set of defined corporate integrity obligations through April 2024. While we expect to fully comply with all of our obligations under the corporate integrity agreement, failure to do so could result in substantial penalties and potential exclusion from government healthcare programs. We may also see new government investigations of or actions against us citing novel theories of recovery. For example, prosecutors are placing greater scrutiny on patient support programs, including commercial copay assistance programs, and further enforcement actions and investigations regarding such programs could limit our ability to provide co-pay assistance to commercial patients. Greater scrutiny has also been placed on sponsorships, speaker programs and other arrangements where healthcare professionals receive remuneration, travel or other value to participate in certain events, and further enforcement actions could limit our ability to participate in such arrangements. Any of these results could have a material adverse effect on our business and results of operations.
RISKS RELATED TO ECONOMIC CONDITIONS AND OPERATING A GLOBAL BUSINESS
Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions.
We seek innovation through significant investment in both internal R&D and external transactions, including collaborations, partnerships, alliances, licenses, joint ventures, mergers and acquisitions (collectively, acquisition activity).
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Acquisition activities may be subject to regulatory approvals or other requirements that are not within our control. Antitrust scrutiny by regulatory agencies and changes to regulatory approval process in the U.S. and foreign jurisdictions may cause approvals to take longer than anticipated to obtain, not be obtained at all, or contain burdensome conditions, which may jeopardize, delay or reduce the anticipated benefits of acquisitions to us and could impede the execution of our business strategy. There can be no assurance that such regulatory or other approvals will be obtained or that all closing conditions required in connection with our acquisition activities will be satisfied or waived, which could result in us being unable to complete the planned acquisition activities.
Acquisition activities are complex, time consuming and expensive and may result in unanticipated costs, delays or other operational or financial problems related to integrating the acquired company and business with our company, which may divert our management’s attention from other business issues and opportunities and restrict the full realization of the anticipated benefits of such transactions within the expected timeframe or at all. We may pay substantial amounts of cash, incur debt or issue equity securities to pay for acquisition activities, which could adversely affect our liquidity or result in dilution to our stockholders, respectively. For example, the primary sources of funds for our acquisition of Horizon were those received from our $24 billion of senior notes issued on March 2, 2023, together with the $4 billion drawn down from our term loan facility, and while the Company currently has investment grade credit ratings, this substantial additional indebtedness has resulted in downgrades to our credit ratings. Further, failures or difficulties in integrating or retaining new personnel or in integrating the operations of the businesses, products or assets we acquire (including related technology, research, development and commercial operations, compliance programs, manufacturing, distribution and general business operations and procedures and ESG activities) may affect our ability to realize the benefits of the transaction and grow our business and may result in us incurring asset impairment or restructuring charges. These and other challenges may arise in connection with our acquisitions of Otezla, Five Prime, Teneobio, ChemoCentryx, Horizon and/or our collaborations with BeiGene and Kyowa Kirin, or with other acquisition activities, which could have a material adverse effect on our business, results of operations and stock price.
We may not realize the anticipated strategic benefits of our acquisition of Horizon, including our efforts to leverage Amgen’s global presence and commercial and medical capabilities in inflammation and nephrology to accelerate revenue growth of Horizon’s products. Our assumptions and estimates about the future revenue growth of Horizon’s products may prove to be incorrect. Sales of our rare disease products acquired through our acquisition of Horizon will depend on our ability to increase awareness and educate physicians on the rare conditions that such medicines are designed to treat, as well as successfully identifying target patients and educating them about our treatments. We may also face greater than expected challenges associated with rare disease drug development (such as challenges obtaining patients for clinical trials and/or regulatory approvals) and reimbursement (such as obtaining reimbursement of orphan drugs by public health systems). We are in the process of integrating the Horizon business into ours, including a large number of complex operational and administrative systems, to form a unified combined company, including with respect to human resources, intellectual property management, research and development activities, finance, accounting and internal control processes and systems, sales operations, product distribution, commercialization efforts, information and information security systems, compliance programs and policies and supply chain systems and third party relationships (including vendors and third party manufacturers). For example, Horizon adds more than 30 contract manufacturing organizations (CMOs) to our operations, many of which are single source suppliers (including the CMO that produces TEPEZZA drug substance and the CMO that produces all of our KRYSTEXXA drug substance in Israel that is affected by the current conflict in Israel and Gaza). Business integrations generally, and our integration of Horizon specifically, are complex, time consuming and expensive, and we may experience unanticipated costs, delays or other operational or financial challenges. These integration efforts may also divert our management’s attention and resources away from other business operations, which may disrupt to some degree our ongoing business. Failure to successfully integrate the Horizon business into ours and/or achieve its anticipated strategic benefits may result in our incurring significant asset impairment or restructuring charges, and could have a material adverse effect on our business, results of operations and stock price.
We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
The capital and credit markets may experience extreme volatility and disruption, which may lead to uncertainty and liquidity issues for both borrowers and investors. For example, in early 2020, there were significant disruptions in the commercial paper market and several borrowers were unable to obtain funding at normal rates or maturities, which resulted in a significant increase in draws of corporate credit lines with banks. Similarly, the bond markets experienced extreme volatility in terms of interest rates and credit spreads, with several days without new issuances of corporate bonds.
While we have historically accessed capital markets to supplement our existing funds and cash generated from operations to satisfy our needs for capital expenditures, debt service requirements, to pay dividends and repurchase stock, and engage in other business initiatives, including acquisitions and licensing activities, in 2023, we substantially increased our outstanding indebtedness in connection with our acquisition of Horizon, which may limit our ability to timely obtain additional financing on desired terms. See Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the
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operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions. While our plans include reducing our debt leverage levels before returning to the capital or credit markets for new funds, if we are required to access the capital and credit markets at an inopportune time, including when adverse capital and credit market conditions prevail, we may be unable to obtain financing on favorable terms, or at all, which could have a material adverse effect on our business and results of operations or our ability to complete business acquisitions. Changes in credit ratings issued by nationally recognized credit-rating agencies could also adversely affect our ability to obtain capital and credit market financing and the cost of such financing and have an adverse effect on the market price of our securities.
A breakdown of our information technology systems, cyberattack or information security breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation.
To achieve our business objectives, we rely on sophisticated information technology systems, including hardware, software, technology infrastructure, online sites and networks for both internal and external operations, mobile applications, cloud services and network-connected control systems, some of which are managed, hosted, provided or serviced by third parties. Internal or external events that compromise the confidentiality, integrity and availability of our systems and data may significantly interrupt the operation of our business, result in significant costs and/or adversely affect our reputation.
Our information technology systems are highly integrated into our business, including our R&D efforts, our clinical and commercial manufacturing processes and our product sales and distribution processes. Further, as the majority of our employees work remotely for some portion of their jobs in our hybrid work environment, our reliance on our and third-party information technology systems has increased substantially and is expected to continue to increase. Remote and hybrid working arrangements, including those of at many third-party providers, can increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. The complexity and interconnected nature of software, hardware and our systems make them vulnerable to breakdown or other service interruptions, and to software errors or defects, misconfiguration and other security vulnerabilities. Upgrades or changes to our systems or the software that we use have resulted and we expect, in the future, will result in the introduction of new cybersecurity vulnerabilities and risks. In 2022, we identified a number of security vulnerabilities introduced into our information systems as a result of flaws that we subsequently identified in software that we had purchased and installed, and these flaws required that we apply emergency patches to certain of our systems. While we did not experience any significant adverse effects as a result of these vulnerabilities, there can be no assurance that we will timely identify and address future vulnerabilities. Our systems are also subject to frequent perimeter network reconnaissance and scanning, phishing and other cyberattacks. For example, as a result of our cybersecurity monitoring of the Horizon legacy information systems, we detected phishing activity in the accounts of two Horizon executives. These accounts were de-activated, the incidents were investigated and the determination was made separately by both our internal cybersecurity team and our external digital forensics and incident response supplier that no confidential information had been exfiltrated. As the cyber-threat landscape evolves, these attacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to detect and increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security controls, evade detection and remove forensic evidence. Such attacks could include the use of harmful and virulent malware, including ransomware or other denials of service, which can be deployed through various means, including the software supply chain, e-mail, malicious websites and/or the use of social engineering/phishing.
We have also experienced denial of service attacks against our network, and, although such attacks did not succeed, there can be no assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful in the future. Attacks such as those experienced by government entities (including those that approve and/or regulate our products, such as the EMA) and other multi-national companies, including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and could have a material adverse effect on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing, selling and/or distributing our products. For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines and vaccines. As a result of the cyberattack, its orders and sales for certain products were negatively affected. In late 2020, SolarWinds Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems. In 2022, Okta, Inc., a provider of software that helps companies manage user authentication, disclosed that several hundred of its corporate customers were vulnerable to a security breach that allowed attackers to access Okta’s internal network. Although this breach did not have a significant effect on our business, there can be no assurance that a similar future breach would not result in a material adverse effect on our business or results of operations.
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Our systems also contain and use a high volume of sensitive data, including intellectual property, trade secrets and other proprietary business information, financial information, regulatory information, strategic plans, sales trends and forecasts, litigation materials and/or personal identifiable information belonging to us, our staff, our patients, customers and/or other parties. In some cases, we utilize third-party service providers to collect, process, store, manage or transmit such data, which have increased our risk. Intentional or inadvertent data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers (including providers of information technology-specific services), business partners, nation states (including groups associated with or supported by foreign intelligence agencies), organized crime organizations, “hacktivists” or others, create risks that our sensitive data may be exposed to unauthorized persons, our competitors or the public. System vulnerabilities and/or cybersecurity breaches experienced by our third-party service providers have constituted a substantial share of the information security risks that have affected us. For example, in the first half of 2021, a supplier experienced a data breach in which an unauthorized third party acquired access to certain information provided to the supplier in the course of its provision of services to us, including business documents and certain personally identifiable patient information (not including social security or other financial or health insurance information). As required, we promptly notified the applicable state attorneys general and the individuals whose personally identifiable information was affected of this data breach at the supplier. In the third quarter of 2022, another service provider experienced a similar cybersecurity breach in which an attacker exfiltrated certain data (including non-significant Amgen data) from the service provider’s systems. Although these supplier data breaches have not resulted in material adverse effects on our business, there can be no assurance that a similar future cybersecurity incident would not result in a material adverse effect on our business or results of operations. Further, the timeliness of our awareness of a cybersecurity incident affects our ability to respond to and work to mitigate the severity of such events. For example, in 2020 and 2022, two of our vendors experienced cyberattacks and each initially reported to us that neither event involved our data. However, upon further investigation, they each subsequently informed us that the attackers had accessed limited, non-significant Amgen information. Although neither of these breaches had a significant adverse effect on our business, in the future we may again not receive timely reporting of cybersecurity events and such events could have a material adverse effect on our business.
Cyberattackers are also increasingly exploiting vulnerabilities in commercially available software from shared or open-source code. We rely on third party commercial software that have had and may have such vulnerabilities, but as use of open-source code is frequently not disclosed, our ability to fully assess this risk to our systems is limited. For example, in December 2021, a remote code execution vulnerability was discovered in a software library that is widely used in a variety of commercially available software and services. Although this vulnerability has not resulted in any significant adverse effects on us, there can be no assurances that a similar future vulnerability in the software and services that we use would not result in a material adverse effect on our business or results of operations.
Domestic and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our partners with business services and companies we have acquired or may acquire face similar risks. Security breaches of their systems or service outages have adversely affected systems and could, in the future, affect our systems and security, leave us without access to important systems, products, raw materials, components, services or information, or expose our confidential data or sensitive personal information. For example, in 2019, two vendors that perform testing and analytical services that we use in developing and manufacturing our products experienced cyberattacks, and in April and September of 2020, vendors that provide us with information technology services and clinical data services, respectively, each experienced ransomware attacks. Although there was no breach of our systems, each of these incidents required us to disconnect our systems from those vendors’ systems. While we were able to reconnect our systems following restoration of these vendors’ capabilities without significantly affecting product availability, a more extended service outage affecting these or other vendors, particularly where such vendor is the single source from which we obtain the services, could have a material adverse effect on our business or results of operations. In addition, we distribute our products in the United States primarily through three pharmaceutical wholesalers, and a security breach that impairs the distribution operations of our wholesalers could significantly impair our ability to deliver our products to healthcare providers and patients. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and sensitive data.
Although we have experienced system breakdowns, attacks and information security breaches, we do not believe such breakdowns, attacks and breaches have had a material adverse effect on our business or results of operations. We will continue to experience varying degrees of cyberattacks and other incidents in the future. Even though we continue to invest in the monitoring, protection and resilience of our critical and/or sensitive data and systems, there can be no assurances that our efforts will detect, prevent or fully recover systems or data from all breakdowns, service interruptions, attacks and/or breaches of our systems that could adversely affect our business and operations and/or result in the loss or exposure of critical, proprietary, private, confidential or otherwise sensitive data, which could result in material financial, legal business or reputational harm to us or negatively affect our stock price. While we maintain cyber-liability insurance, our insurance is not sufficient to cover us against all losses that could potentially result from a service interruption, breach of our systems or loss of our critical or sensitive data.
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We are also subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating to the collection, storage, handling, use, disclosure, transfer and security of personal data. The legislative and regulatory environment regarding privacy and data protection is continuously evolving and developing and the subject of significant attention globally. For example, we are subject to the EU’s GDPR, which became effective in May 2018, and the CCPA, which became effective in January 2020, both of which provide for substantial penalties for noncompliance. The CCPA was amended in late 2020, to create the California Privacy Rights Act to create opt in requirements for the use of sensitive personal data and the formation of a new dedicated agency for the enforcement of the law, the California Privacy Protection Agency. Similar consumer privacy laws went into effect in Virginia, Colorado, Utah, Connecticut and Florida in 2023. Consumer privacy laws were also passed in eleven other states, with the earliest effective dates later this year, and proposed in three additional states. Outside the United States, other jurisdictions where we operate have passed, or continue to propose, similar legislation and/or regulations. For example, in China, the Personal Information Protection Law and the Data Security Law, which regulate data processing activities associated with personal and nonpersonal data, are in effect and build upon the existing Cybersecurity Law. Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.
Our sales and operations are subject to the risks of doing business internationally, including in emerging markets.
As we continue our expansion efforts in emerging markets around the world, through acquisitions and licensing transactions as well as through the development and introduction, both independently and through collaborations such as our collaboration with BeiGene, of our products in new markets, we face numerous risks to our business. There is no guarantee that our efforts and strategies to expand sales in emerging markets will succeed. Our international business, including in China and emerging market countries, may be especially vulnerable to periods of global and local political, legal, regulatory and financial instability, including issues of geopolitical relations, the imposition of international sanctions in response to certain state actions and/or sovereign debt issues, and management of health policy in response to pressures such as global pandemics. If relations between the United States and other governments deteriorate, our business and investments in such markets may also be adversely affected. We may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements including those previously utilized by companies we partner with or acquire in emerging markets. See We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications. Our expansion efforts in China and emerging markets around the world are dependent upon the establishment of an environment that is predictable, navigable and supportive of biopharmaceutical innovation, sustained access for our products and predictable pricing controls. For example, China continues to strengthen regulations on the collection, use and transmission of Chinese human genetic resources, and has expanded regulations on the conduct of biotechnology R&D activities in China. Between 2020 and 2022, we experienced delays in our applications to the Human Genetic Resources Administration of China that sought approval to conduct clinical trials in China. Our international operations and business may also be subject to less protective intellectual property or other applicable laws, diverse data privacy and protection requirements, changing tax laws and tariffs, trade restrictions or other barriers designed to protect industry in the home country against foreign competition, far-reaching antibribery and anticorruption laws and regulations and/or evolving legal and regulatory environments. For example, recent cross-border data transfer compliance requirements in China may also impose additional costs of doing business, including costs associated with localizing operations.
In response to the ongoing armed conflict in Ukraine, the U.S. government, numerous state governments, the EU and other countries in which we conduct business have imposed a wide range of economic sanctions that restrict commerce and business dealings with Russia, certain regions of Ukraine and certain entities and individuals. Additionally, the armed conflict in the Middle East that has been ongoing since October 2023 has caused regional disruptions to economic activity. For a description of the conflict’s impact on our third-party contract manufacturing of KRYSTEXXA, see Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions. These conflicts may also precipitate or amplify the other risks described herein, including risks relating to cybersecurity, global economic conditions, clinical trials and supply chains, which could adversely affect our business, operations and financial condition and results.
As we expand internationally, we are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. While we have a program in place that is designed to reduce our exposure to foreign currency exchange rate fluctuations through foreign currency hedging arrangements, our hedging efforts do not completely offset the effect of these fluctuations on our revenues and earnings. Overall, the legal and operational challenges of our international business operations, along with government controls, the challenges of attracting and retaining qualified personnel and obtaining and/or maintaining necessary regulatory or pricing approvals of our products, may result in material adverse effects on our international product sales, business and results of operations.
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RISKS RELATED TO COMPETITION
Our products face substantial competition and our product candidates are also likely to face substantial competition.
We operate in a highly competitive environment. See Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition. We expect that our products and product candidates will compete with existing drugs, new drugs currently in development, drugs currently approved for other indications that may later be approved for the same indications as those of our products and drugs approved for other indications that are used off-label. Large pharmaceutical companies and generics manufacturers of pharmaceutical products have expanded into, and are expected to continue expanding into, the biotechnology field, and some pharmaceutical companies and generics manufacturers have formed partnerships to pursue biosimilars. With the proliferation of companies pursuing biopharmaceuticals, several of our biosimilar products have entered, and a number of our product candidates may enter, markets with one or more competitors or with competitors soon to arrive. In addition, some of our competitors may have technical, competitive or other advantages over us for the development of technologies and processes or greater experience in particular therapeutic areas, and consolidation among pharmaceutical and biotechnology companies can enhance such advantages. These advantages may make it difficult for us to compete with them successfully to discover, develop and market new products and for our current products to compete with new products or new product indications they may bring to market. As a result, our products have been competing and may continue to compete, and our product candidates may compete, against products or product candidates that offer higher rebates or discounts, lower prices, equivalent or superior efficacy, better safety profiles, easier administration, earlier market availability or other competitive features. If we are unable to compete effectively, this could reduce our sales, which could have a material adverse effect on our business and results of operations.
Our intellectual property positions may be challenged, invalidated or circumvented, or we may fail to prevail in current and future intellectual property litigation.
Our success depends in part on our ability to obtain and defend patent rights and other intellectual property rights that are important to the commercialization of our products and product candidates. The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and often involve complex legal, scientific and factual questions. Driven by cost pressures, efforts to limit or weaken patent protection for our industry are increasing. For example, the COVID-19 pandemic has resulted in increased interest in compulsory licenses, march-in rights or other governmental interventions, both in the United States and internationally, related to the procurement of drugs, and the World Trade Organization has agreed to a waiver of COVID-19 vaccine intellectual property protections through the Trade-Related Aspects of Intellectual Property Rights waiver process. Also, in December 2023, the Administration released a proposed framework that would consider price as a factor when determining whether to exercise march-in rights pursuant to the Bayh-Dole Act with respect to drugs or other taxpayer-funded inventions. Third parties have challenged and may continue to challenge, invalidate or circumvent our patents (including any patent applications, term extensions, term adjustments and supplemental protection certificates) relating to our products, product candidates and technologies. See Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements. Challenges to patents may come from potential competitors or from parties other than those who seek to market a potentially-infringing product. In addition, our patent positions might not protect us against competitors with similar products or technologies because competing products or technologies may not infringe our patents. For certain of our product candidates, there are third parties who have patents or pending patent applications that they may claim necessitate payment of a royalty or prevent us from commercializing these product candidates in certain territories. Further, disputes may arise with third parties from whom we have licensed rights to intellectual property necessary for the development and commercialization of some of our products. For example, we are in a dispute with Roche regarding a license agreement that we acquired through our acquisition of Horizon for patents and know-how for TEPEZZA. Patent disputes are frequent, costly and can preclude, delay or increase the cost of commercialization of products. We have been in the past, are currently and expect to be in the future, involved in patent litigation. These matters have included, and may in the future include, litigation with manufacturers of products that purport to be biosimilars of certain of our products for patent infringement, invalidity, unenforceability and failure to comply with certain provisions of the BPCIA. A determination made by a court, agency or tribunal concerning infringement, validity, enforceability, injunctive or economic remedy, or the right to patent protection, for example, are typically subject to appellate or administrative review. Upon review, such initial determinations may be afforded little or no deference by the reviewing tribunal and may be affirmed, reversed or made the subject of reconsideration through further proceedings. A patent dispute or litigation has not discouraged, and may not in the future discourage, a potential violator from bringing the allegedly infringing product to market prior to a final resolution of the dispute or litigation. The period from inception until resolution of a patent dispute or litigation is subject to the availability and schedule of the court, agency or tribunal before which the dispute or litigation is pending. We have been, and may in the future be, subject to competition during this period and may not be able to recover fully from the losses, damages and harms we incur from infringement by the competitor product even if we prevail. Moreover, if we lose or settle current or future litigations at certain stages or entirely, we could be subject to competition and/or significant liabilities, be required to enter into third-party licenses for the infringed product or technology or be required to
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cease using the technology or product in dispute. In addition, we cannot guarantee that such licenses will be available on terms acceptable to us, or at all.
Further, under the Hatch–Waxman Act, our products approved by the FDA under the FDCA have been, and may in the future be, the subject of patent litigation with generics competitors before expiry of the five-year period of data exclusivity provided for under the Hatch-Waxman Act and prior to the expiration of the patents listed for the product. Likewise, our innovative biologic products have been, and may in the future be, the subject of patent litigation prior to the expiration of our patents and, with respect to competitors seeking approval as a biosimilar or interchangeable version of our products, prior to the 12-year exclusivity period provided under the BPCIA. In addition, we have faced, and may in the future face, patent litigation involving claims that our biosimilar product candidates infringe the patents of other companies, including those that manufacture, market or sell the applicable reference products or who are developing or have developed other biosimilar versions of such products. Alternatively, patents held by other entities have contributed, and may in the future contribute, to a decision by us to not pursue all of the same labeled indications as are held by these companies. While we have attempted, and expect to continue to attempt, to challenge the patents held by other companies, our efforts may be unsuccessful. For examples of and information related to our patent litigation, see Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements.
Certain of the existing patents on our products have expired or will soon expire. See Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents. As our patents expire, competitors are able to legally produce and market similar products or technologies, including biosimilars, which has had, and may continue to have, a material adverse effect on our product sales, business and results of operations. In addition, competitors have been, and may continue to be, able to invalidate, design around or otherwise circumvent our patents and sell competing products.
We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.
We currently face competition from biosimilars and generics in most of the territories in which we operate, including the United States and Europe, and we expect to face increasing biosimilar and/or generics competition this year and beyond. Expiration or successful challenge of applicable patent rights or expiration of an applicable exclusivity period has accelerated such competition, and we expect to face more litigation regarding the validity and/or scope of our patents. Our products have also experienced greater competition from lower cost biosimilars or generics that come to market when branded products that compete with our products lose their own patent protection. To the extent that governments adopt more permissive regulatory approval standards and competitors are able to obtain broader or expedited marketing approval for biosimilars and generics, the rate of increased competition for our products would likely accelerate.
In the EU, biosimilars are evaluated for marketing authorization pursuant to a set of general and product class-specific guidelines. In addition, in an effort to spur biosimilar utilization and/or increase potential healthcare savings, some EU countries and some Canadian provinces have adopted, or are considering the adoption of, biosimilar uptake measures such as physician prescribing quotas or automatic pharmacy substitution of biosimilars for the corresponding reference products. Some EU countries impose automatic price reductions upon market entry of one or more biosimilar competitors. In September 2022, the EMA and the EU Heads of Medicines’ Agencies (HMA) issued a joint statement providing that biosimilar medicines approved in the EU are “interchangeable” with their reference products and other biosimilars of the same reference product. This EMA-HMA statement could further contribute to the prescribing of biosimilars and to greater competition in Europe. While the degree of competitive effects of biosimilar competition differs between EU countries and between products, in the EU the overall use of biosimilars and the rate at which product sales of innovative products are being affected by biosimilar competition is increasing.
In the United States, the BPCIA authorizes the FDA to approve biosimilars via a separate, abbreviated pathway. See Item 1. Business—Government Regulation—Regulation in the United States—Approval of Biosimilars. In the United States, the FDA has approved numerous biosimilars, including biosimilar versions of Neulasta, EPOGEN and ENBREL, and a growing number of companies have announced that they are also developing biosimilar versions of our products. For example, six biosimilar versions of Neulasta are now approved in the United States, including an on-body injector presentation that was approved in December 2023 for a Neulasta biosimilar, and we expect that other biosimilar versions of Neulasta may be marketed or receive approval in the future. Impact to our Neulasta sales has accelerated as additional competitors have launched. See Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition. Manufacturers of biosimilars have attempted, and may in the future attempt, to compete with our products by offering lower list prices, greater discounts or rebates, or contracts that offer longer-term pricing or a broader portfolio of other products. Companies pursuing development of biosimilar versions of our products have challenged and may continue to challenge our patents well in advance of the expiration of our material patents. For examples of and information related to our biosimilars and generics patent litigation, see Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements. See Our
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intellectual property positions may be challenged, invalidated or circumvented, or we may fail to prevail in current and future intellectual property litigation.
The U.S. biosimilar pathway includes the option for biosimilar products that meet certain criteria to be approved as interchangeable with their reference products. Some companies currently developing or already marketing biosimilars may seek to obtain interchangeable status from the FDA, which could potentially allow pharmacists to substitute those biosimilars for our reference products without prior approval from the prescriber in most states under state law. The FDA approved the first interchangeable biosimilar in 2021 and has subsequently granted interchangeability designations to additional biosimilars, including without always requiring a switching study. For example, in August 2022, the FDA designated a monoclonal antibody biosimilar as interchangeable without requiring a switching study to support the interchangeability determination, and has continued to make other such designations of interchangeability on a case-by-case basis.
In addition, critics of the 12-year exclusivity period in the biosimilar pathway law will likely continue to seek to shorten the data exclusivity period and/or to encourage the FDA to interpret narrowly the law’s provisions regarding which new products receive data exclusivity. In 2019, the Administration agreed to remove from the United States-Mexico-Canada Agreement a requirement for at least 10 years of data exclusivity for biologic products. Also, the FDA is considering whether subsequent changes to a licensed biologic would be protected by the remainder of the reference product’s original 12-year exclusivity period (a concept known in the generic drug context as “umbrella exclusivity”). If the FDA were to decide that umbrella exclusivity does not apply to biological reference products or were to make other changes to the exclusivity period, this could expose us to biosimilar competition at an earlier time. There also have been, and may continue to be, legislative and regulatory efforts to promote competition through policies enabling easier generic and biosimilar approval and commercialization, including efforts to lower standards for demonstrating biosimilarity or interchangeability, eliminate the standard for interchangeability and declare by law that all biosimilars are de facto interchangeable with their reference products, limit patents that may be litigated and/or patent settlements, implement preferential reimbursement policies for biosimilars and pass new laws requiring more disclosure in the FDA’s Orange Book and Purple Book. For example, in 2021 the FDA sent a letter to the USPTO describing ways to strengthen coordination between the two agencies, offered training to help identify prior art, and seeking USPTO’s views on practices that extend market exclusivities, whether pharmaceutical patent examiners need additional resources, and the effect of post-grant challenges at the Patent Trial and Appeal Board on drug patents. The USPTO responded in July 2022 with a letter to the FDA stating that it is prepared to create formal mechanisms to collaborate with the FDA on patent issues that may affect the timing of generic and biosimilar entry. In January 2023, the USPTO held a joint listening session with the FDA on USPTO-FDA collaboration efforts.
Upon the expiration or loss of patent protection and/or applicable exclusivity for one of our products, we can lose the majority of revenues for that product in a very short period of time. See Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition. Additionally, if one of our products is the subject of an FDA Written Request for pediatric studies and we are unable to adequately complete these studies, we may not obtain the pediatric exclusivity award that extends unexpired regulatory exclusivity for the product (and existing patents for a small molecule product) by an additional six months. Further, in 2023, FDA draft guidance contemplates that the agency may no longer grant pediatric exclusivity for studies conducted solely to fulfill Pediatric Research Equity Act (PREA) requirements.
While we are unable to predict the precise effects of biosimilars and generics on our products, we are currently facing and expect to face greater competition in the United States, Europe and elsewhere as a result of biosimilar and generic competition and, in turn, downward pressure on our product prices and sales. This competition has had, and could increasingly have, a material adverse effect on our product sales, business and results of operations. State laws may also have an impact on our business. For example, California is the first state to have passed legislation, effective on January 1, 2020, against “pay for delay” settlements of patent infringement claims filed by manufacturers of generics or biosimilars where anything of value is given in exchange for settlement. Under this law, such settlement agreements are presumptively anticompetitive. The law may result in prolonged litigation and fewer settlements. Similar legislation based on California’s law continues to be introduced in other states, including Connecticut and New York. Efforts to target such settlements are also active at the federal level, including legislation introduced such as the Preserving Access to Affordable Generics and Biosimilars Act that adopts California’s anticompetitive presumption approach.
Concentration of sales at certain of our wholesaler distributors, and consolidation of private payers, such as insurers, and PBMs has negatively affected, and may continue to negatively affect, our business.
Certain of our distributors, customers and payers have substantial purchasing leverage, due to the volume of our products they purchase or the number of patient lives for which they provide coverage. The substantial majority of our U.S. product sales is made to three pharmaceutical product wholesaler distributors: McKesson Corporation, Cencora, Inc. (formerly AmerisourceBergen Corporation) and Cardinal Health, Inc. These distributors, in turn, sell our products to their customers, which include physicians or their clinics, dialysis centers, hospitals and pharmacies. Similarly, as discussed above, there has been significant consolidation in the health insurance industry, including that a small number of PBMs now oversee a
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substantial percentage of total covered lives in the United States. See Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. For example, the five largest PBMs in the United States are now part of major health insurance providers, and nationally account for 92% of prescription drug claims. The growing concentration of purchasing and negotiating power by these entities has, and may continue to, put pressure on our pricing due to their ability to extract price discounts on our products, fees for other services or rebates, negatively affecting our bargaining position, sales and/or profit margins. In addition, decisions by these entities to purchase or cover less or none of our products in favor of competing products could have a material adverse effect on our product sales, business and results of operations due to their purchasing volume. Further, if one of our significant wholesale distributors encounters financial or other difficulties and becomes unable or unwilling to pay us all amounts that such distributor owes us on a timely basis, or at all, it could negatively affect our business and results of operations. In addition, if one of our significant wholesale distributors becomes insolvent or otherwise unable to continue its commercial relationship with us in its present form, it could significantly disrupt our business and adversely affect our product sales, our business and results of operations unless suitable alternatives are timely found or lost sales are absorbed by another distributor.
RISKS RELATED TO RESEARCH AND DEVELOPMENT
We may not be able to develop commercial products despite significant investments in R&D.
Amgen invests heavily in R&D. Successful product development in the biotechnology industry is highly uncertain, and very few R&D projects yield approved and commercially viable products. Product candidates, including biosimilar product candidates, or new indications for existing products (collectively, product candidates) that appear promising in the early phases of development have failed to reach the market for a number of reasons, such as:
•the product candidate did not demonstrate acceptable clinical trial results even though it achieved its primary endpoints and/or demonstrated positive preclinical or early clinical trial results, for reasons that could include changes in the standard of care of medicine or expectations of health authorities;
•the product candidate was not effective or not more effective than currently available or potentially competitive therapies in treating a specified condition or illness;
•the product candidate was not cost effective in light of existing or potentially competitive therapeutics;
•the product candidate had harmful side effects in animals or humans;
•the necessary regulatory bodies, such as the FDA or EMA, did not approve the product candidate for an intended use;
•reimbursement for the product candidate is limited despite regulatory approval;
•the product candidate was not economical for us to manufacture and commercialize;
•the patient population size is smaller than anticipated;
•other parties had or may have had proprietary rights relating to our product candidate, such as patent rights, and did not let us sell it on reasonable terms, or at all;
•we and certain of our licensees, partners, contracted organizations or independent investigators failed to effectively conduct clinical development or clinical manufacturing activities;
•the pathway to regulatory approval or reimbursement for product candidates was uncertain or not well-defined;
•the biosimilar product candidate failed to demonstrate the requisite biosimilarity to the applicable reference product, or was otherwise determined by a regulatory authority to not meet applicable standards for approval; and
•a companion diagnostic device that is required with the use of a product candidate is not approved by the necessary regulatory authority.
We believe that genetics, together with the benefit of artificial intelligence and computational evidence, could meaningfully aid our search for new medicines and help guide our R&D decisions and investments, and have focused our R&D strategy on drug targets validated by genetic or other compelling human evidence. We have invested considerable time, energy and resources into developing our expertise in human genetics, acquiring access to libraries of genetic information, and are applying artificial intelligence to our R&D activities, including applying such technologies to advance our human data efforts and our generative biology platform that seek to discover and design new drugs. However, product candidates based on
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genetically validated targets or developed with the assistance of such technologies remain subject to the uncertainties of the drug development process and may not reach the market for a number of reasons, including the factors listed above.
We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications.
Before a product may be sold, we must conduct clinical trials to demonstrate that our product candidates are safe and effective for use in humans. The results of those clinical trials are used as the basis to obtain approval from regulatory authorities such as the FDA and EMA. See Our current products and products in development cannot be sold without regulatory approval. We are required to conduct clinical trials using an appropriate number of trial sites and patients to support the product label claims. The length of time, number of trial sites and number of patients required for clinical trials vary substantially, and we may spend several years and incur substantial expense in completing certain clinical trials. In addition, we may have difficulty finding a sufficient number of clinical trial sites and/or patients to participate in our clinical trials, particularly if competitors are conducting clinical trials in similar patient populations and/or in rare disease therapy clinical trials due to the inherently small patient population potentially served by such therapies. Patients may withdraw from clinical trials at any time (including trials in which patients believe that they may not be receiving a clinical benefit), and privacy laws and/or other restrictions in certain countries may restrict the ability of clinical trial investigators to conduct further follow-up on such patients, which may adversely affect the interpretation of study results. Delays and complications in planned clinical trials can result in increased development costs, associated delays in regulatory approvals and in product candidates reaching the market and revisions to existing product labels.
Further, to increase the number of patients available for enrollment in our clinical trials, we have opened, and will continue to open, clinical sites and enroll patients in a number of locations where our experience conducting clinical trials is more limited, including India, China, South Korea, the Philippines, Singapore and some Central and South American countries, either through utilization of third-party contract clinical trial providers entirely or in combination with local staff. Conducting clinical trials in locations where we have limited experience requires substantial time and resources to understand the unique regulatory environments of individual countries. For other examples of the risks of conducting clinical trials in China, see also Our sales and operations are subject to the risks of doing business internationally, including in emerging markets. Further, we must ensure the timely production, distribution and delivery of the clinical supply of our product candidates to numerous and varied clinical trial sites. Additionally, regional disruptions, including natural and man-made disasters, health emergencies (such as novel viruses or pandemics, including the COVID-19 pandemic), or geopolitical conflicts (such as the ongoing armed conflicts in Ukraine and the Middle East) have significantly disrupted the timing of clinical trials, and in the future could disrupt the timing, execution and outcome of clinical trials. If we fail to adequately manage the design, execution and diverse regulatory aspects of our clinical trials or to manage the production or distribution of our clinical supply, or such sites experience disruptions as a result of a natural/man-made disaster, health emergency or geopolitical conflict, corresponding regulatory approvals may be delayed or we may fail to gain approval for our product candidates or could lose our ability to market existing products in certain therapeutic areas or altogether. For example, our clinical trials were adversely affected by the COVID-19 pandemic. If we are unable to market and sell our products or product candidates or to obtain approvals in the timeframe needed to execute our product strategies, our business and results of operations could be materially and adversely affected.
We rely on independent third-party clinical investigators to recruit patients and conduct clinical trials on our behalf in accordance with applicable study protocols, laws and regulations. Further, we rely on unaffiliated third-party vendors to perform certain aspects of our clinical trial operations. In some circumstances, we enter into co-development arrangements with other pharmaceutical and medical devices companies that provide for the other company to conduct certain clinical trials for the product we are co-developing or to develop a diagnostic test used in screening or monitoring patients in our clinical trials. See Some of our pharmaceutical pipeline and our commercial product sales rely on collaborations with third parties, which may adversely affect the development and sales of our products. We also may acquire companies that have past or ongoing clinical trials or rights to products or product candidates for which clinical trials have been or are being conducted. These trials may not have been conducted to the same standards as ours; however, once an acquisition has been completed we assume responsibility for the conduct of these trials, including any potential risks and liabilities associated with the past and prospective conduct of those trials. If regulatory authorities determine that we or others, including our licensees or co-development partners, or the independent investigators or vendors selected by us, our co-development partners or by a company we have acquired or from which we have acquired rights to a product or product candidate, have not complied with regulations applicable to the clinical trials, those authorities may refuse or reject some or all of the clinical trial data or take other actions that could delay or otherwise negatively affect our ability to obtain or maintain marketing approval of the product or indication. In addition, delays or failures to develop diagnostic tests for our clinical trials can affect the timely enrollment of such trials and lead to delays or inability to obtain marketing approval. If we were unable to market and sell our products or product candidates, our business and results of operations could be materially and adversely affected.
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In addition, some of our clinical trials utilize drugs and combination products manufactured and marketed by other pharmaceutical companies or vendors. These drugs, devices and/or products may be administered or used in clinical trials in combination with one of our products or product candidates or in a head-to-head study comparing the products’ or product candidates’ relative efficacy and safety. In the event that any of these vendors or pharmaceutical companies have unforeseen issues that negatively affect the quality of their work product or create a shortage of supply, or if we are otherwise unable to obtain an adequate supply of these other drugs, our ability to complete our applicable clinical trials and/or evaluate clinical results may also be negatively affected. As a result, such quality or supply problems could adversely affect our ability to timely file for, gain or maintain regulatory approvals worldwide.
Clinical trials must generally be designed based on the current standard of medical care. However, in certain diseases, such as cancer, the standard of care is evolving rapidly. In some cases, we may design a clinical trial based on the standard of care we anticipate will exist at the time our study is completed. The duration of time needed to complete certain clinical trials may result in the design of such clinical trials being based on standards of medical care that are no longer or that have not become the current standards by the time such trials are completed, limiting the utility and application of such trials. Additionally, the views of regulatory agencies relating to the requirements for accelerated approval may change over time, and trial designs that were sufficient to support accelerated approvals for some oncology products may not be considered sufficient for later candidates. We may not obtain favorable clinical trial results and therefore may not be able to obtain regulatory approval for new product candidates or new indications for existing products and/or maintain our current product labels. Participants in clinical trials of our products and product candidates may also suffer adverse medical events or side effects that could, among other factors, delay or terminate clinical trial programs and/or require additional or longer trials to gain approval.
Even after a product is on the market, safety concerns may require additional or more extensive clinical trials as part of a risk management plan for our product or for approval of a new indication. Additional clinical trials we initiate, including those required by the FDA, could result in substantial additional expense, and the outcomes could result in further label restrictions or the loss of regulatory approval for an approved indication, each of which could have a material adverse effect on our product sales, business and results of operations. Additionally, any negative results from such trials could materially affect the extent of approvals, the use, reimbursement and sales of our products, our business and results of operations.
Our current products and products in development cannot be sold without regulatory approval.
Our business is subject to extensive regulation by numerous state and federal government authorities in the United States, including the FDA, and by foreign regulatory authorities, including the EMA. We are required in the United States and in the other regions and countries in which we, or our partners and affiliates, sell to obtain approval from regulatory authorities before we manufacture, market and sell our products. Once our products are approved, the FDA and other U.S. and ex-U.S. regulatory agencies have substantial authority to require additional testing and reporting, perform inspections, change product labeling or mandate withdrawals of our products. Failure to comply with applicable regulatory requirements may subject us to administrative and/or judicially imposed sanctions or monetary penalties as well as reputational and other harms. The sanctions could include the FDA’s or ex-U.S. regulatory authorities’ refusals to approve pending applications, delays in obtaining or withdrawals of approvals, delays or suspensions of clinical trials, warning letters, product recalls or seizures, total or partial suspensions of our operations, injunctions, fines, civil penalties and/or criminal prosecutions.
Obtaining and maintaining regulatory approvals have been, and will continue to be, increasingly difficult, time-consuming and costly. Legislative bodies or regulatory agencies could enact new laws or regulations, change existing laws or regulations or change their interpretations of laws or regulations at any time, which could affect our ability to obtain or maintain approval of our products or product candidates. The rate and degree of change in existing laws and regulations and regulatory expectations have accelerated in established markets, and regulatory expectations continue to evolve in emerging markets. We are unable to predict whether and when any further changes to laws or regulatory policies affecting our business could occur, such as changes to laws or regulations governing manufacturer communications concerning drug products and drug product candidates and whether such changes could have a material adverse effect on our product sales, business and results of operations. Further, we are reliant on regulators having the resources necessary to evaluate and approve our products. In the United States, a partial federal government shutdown halted the work of many federal agencies and their employees from late December 2018 through late January 2019. A subsequent extended shutdown could result in reductions or delays of FDA’s activities, including with respect to our ongoing clinical programs, our manufacturing of our products and product candidates and our product approvals.
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Regulatory authorities have questioned, and may in the future question, the sufficiency for approval of the endpoints we select for our clinical trials. A number of our products and product candidates have been evaluated in clinical trials using surrogate endpoints that measure an effect that is known to correlate with an ultimate clinical benefit. For example, a therapeutic oncology product candidate may be evaluated for its ability to reduce or eliminate minimal residual disease (MRD), or to extend the length of time during and after the treatment that a patient lives without the disease worsening, measured by progression-free survival (PFS). Demonstrating that the product candidate induces MRD-negative responses or produces a statistically significant improvement in PFS does not necessarily mean that the product candidate will show a statistically significant improvement in overall survival or the time that the patients remain alive. In the cardiovascular (CV) setting, a heart disease therapeutic candidate may be evaluated for its ability to reduce LDL-C levels, as an elevated LDL-C level has been a surrogate endpoint for CV events such as death, heart attack and stroke. The use of surrogate endpoints such as PFS and LDL-C reduction, in the absence of other measures of clinical benefit, may not be sufficient for broad usage or approval even when such results are statistically significant. Regulatory authorities could also add new requirements, such as the completion of enrollment in a confirmatory study or the completion of an outcomes study or a meaningful portion of an outcomes study, as conditions for obtaining approval or obtaining an indication. For example, despite demonstrating that Repatha reduced LDL-C levels in a broad patient population, only after our large phase 3 outcomes study evaluating the ability of Repatha to prevent CV events met certain of its primary composite endpoint and key secondary composite endpoint did the FDA grant a broader approval of Repatha to reduce the risk of certain CV events. There may also be situations in which demonstrating the efficacy and safety of a product candidate may not be sufficient to gain regulatory approval unless superiority to other existing treatment options can be shown. The imposition of additional requirements or our inability to meet them in a timely fashion, or at all, has delayed, and may in the future delay, our clinical development and regulatory filing efforts, delay or prevent us from obtaining regulatory approval for new product candidates or new indications for existing products, or prevent us from maintaining our current product labels.
Some of our products have been approved by U.S. and ex-U.S. regulatory authorities on an accelerated or conditional basis with full approval conditioned upon fulfilling the requirements of regulators. For example, the FDA has approved LUMAKRAS under accelerated approval for the treatment of adult patients with KRAS G12C-mutated local advanced or metastatic NSCLC. Following our submission of the LUMAKRAS/LUMYKRAS CodeBreaK 200 Phase 3 confirmatory data submission in March 2023 to the FDA and EMA, we received a Complete Response Letter from the FDA and a new post-marketing requirement for an additional confirmatory study to support full approval. Regulatory authorities are placing greater focus on whether the sponsors of products originally approved on an accelerated or conditional basis have met the conditions of the accelerated or conditional approvals. If we are unable to fulfill the regulators’ requirements that were conditions of a product’s accelerated or conditional approval and/or if regulators reevaluate the data or risk-benefit profile of our product, the conditional approval may not result in full approval or may be revoked or not renewed. Alternatively, we may be required to change the product’s labeled indications, conduct an additional confirmatory clinical trial, or even withdraw the product from the market.
Regulatory authorities can also impose post-marketing pediatric study requirements. Failure to fulfill such requirements may result in regulatory or enforcement action, including financial penalties or the invalidation of a product’s marketing authorization.
Safety problems or signals can arise as our products and product candidates are evaluated in clinical trials, including investigator sponsored studies, or as our marketed products are used in clinical practice. We are required continuously to collect and assess adverse events reported to us and to communicate to regulatory agencies these adverse events and safety signals regarding our products. Regulatory agencies periodically perform inspections of our pharmacovigilance processes, including our adverse event reporting. In the United States, for our products with approved Risk Evaluation and Mitigation Strategies (REMS, see Part I, Item 1. Business—Government Regulation—Postapproval Phase), we are required to submit periodic assessment reports to the FDA to demonstrate that the goals of the REMS are being met. REMS and other risk management programs are designed to help ensure that a drug’s benefits outweigh the risks and vary in the elements they contain. If the FDA is not satisfied with the results of the periodic assessment reports we submit for any of our REMS, the FDA may also modify our REMS or take other regulatory actions, such as implementing revised or restrictive labeling. The drug delivery devices approved for use in combination with our products are also subject to regulatory oversight and review for safety and malfunctions. See Some of our products are used with drug delivery or companion diagnostic devices that have their own regulatory, manufacturing and other risks. If regulatory agencies determine that we or other parties (including our clinical trial investigators, those operating our patient support programs or licensees of our products) have not complied with the applicable reporting, other pharmacovigilance or other safety or quality assessment requirements, we may become subject to additional inspections, warning letters or other enforcement actions, including fines, marketing authorization withdrawal and other penalties. Our product candidates and marketed products can also be affected by safety problems or signals occurring with respect to products that are similar to ours or that implicate an entire class of products. Further, as a result of clinical trials, including sub-analyses or meta-analyses of earlier clinical trials (a meta-analysis involves the use of various statistical methods to combine results from previous separate but related studies) performed by us or others, concerns may arise about the
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sufficiency of the data or studies underlying a product’s approved label. Such actual or perceived safety problems or concerns can lead to:
•revised or restrictive labeling for our products, or the potential for restrictive labeling that has resulted, and may in the future result, in our decision not to commercialize a product candidate;
•requirement of risk management or minimization activities or other regulatory agency compliance actions related to the promotion and sale of our products;
•post-marketing commitments, mandated post-marketing requirements or pharmacovigilance programs for our approved products;
•product recalls of our approved products;
•required changes to the processes used in the manufacture of our products, which could increase our manufacturing costs and affect the availability of contract manufacturers we may utilize to assist in such manufacturing;
•revocation of approval for our products from the market completely, or within particular therapeutic areas or patient types;
•increased timelines or delays in being approved by the FDA or other regulatory bodies; and/or
•treatments or product candidates not being approved by regulatory bodies.
For example, after an imbalance in positively adjudicated CV serious adverse events was observed in one of the phase 3 clinical trials for EVENITY but not in another, larger phase 3 study, in April 2019 the FDA approved EVENITY for the treatment of osteoporosis in postmenopausal women at high risk for fracture, along with a post-marketing requirement. The requirement includes a five-year observational feasibility study that could be followed by a comparative safety study or trial.
In addition to our innovative products, we are working to develop and commercialize biosimilar versions of a number of products currently manufactured, marketed and sold by other pharmaceutical companies. In some markets outside the United States and EU, there is not yet a legislative or regulatory pathway for the approval of biosimilars. In the United States, the BPCIA provided for such a pathway. Discussions within the FDA and other regulatory authorities, and between regulatory authorities and sponsors, continue as to the evidence needed to demonstrate biosimilarity or interchangeability for specific products. See We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future. Delays or uncertainties in the development or implementation of such pathways, or changes in existing regulatory pathways, including degradation of regulatory standards, could result in delays or difficulties in getting our biosimilar products approved by regulatory authorities, subject us to unanticipated development costs or otherwise reduce the value of the investments we have made in the biosimilars area. Further, we cannot predict the extent to which any potential legislative or policy initiatives would affect the biosimilar pathway or have a material adverse effect on our development of biosimilars, on our marketed biosimilars or on our pursuit of interchangeability designations for any biosimilar. In addition, if we are unable to bring our biosimilar products to market on a timely basis and secure “first-to-market” or other advantageous positions, our future biosimilar sales, business and results of operations could be materially and adversely affected.
Some of our products are used with drug delivery or companion diagnostic devices that have their own regulatory, manufacturing and other risks.
Many of our products and product candidates may be used in combination with a drug delivery device, such as an injector or other delivery system. For example, Neulasta is available as part of the Neulasta Onpro kit, our AutoTouch reusable autoinjector is used with ENBREL Mini single-dose prefilled cartridges, and Repatha can be administered with the Repatha SureClick autoinjector or Pushtronex automated mini doser. In addition, some of our products or product candidates, including many of our oncology product candidates and products, including LUMAKRAS/LUMYKRAS and bemarituzumab, may also require the use of a companion or other diagnostic device such as a device that determines whether the patient is eligible to use our drug or that helps ensure its safe and effective use. In some regions, including the United States, regulatory authorities may require contemporaneous approval of the companion diagnostic device and the therapeutic product; in others the regulatory authorities may require a separate study of the companion diagnostic device. Our product candidates or expanded indications of our products used with such devices may not be approved or may be substantially delayed in receiving regulatory approval if development or approval of such devices is delayed, such devices do not also gain or maintain regulatory approval or clearance, or if such devices do not remain commercially available. When approval of the product and device is sought under a single marketing drug application, the increased complexity of the review process may delay receipt of regulatory approval. In addition, some of these devices may be provided by single-source unaffiliated third-party companies. We are dependent on the sustained cooperation and effort of those third-party companies to supply and/or market the devices and, in some cases, to conduct the studies required for approval or clearance by the applicable regulatory agencies. We are also dependent on those
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third-party companies continuing to meet applicable regulatory or other requirements. Failure to successfully develop, modify, or supply the devices, delays in or failures of the Amgen or third-party studies, or failure of us or the third-party companies to obtain or maintain regulatory approval or clearance of the devices could result in increased development costs; delays in, or failure to obtain or maintain, regulatory approval; and/or associated delays in a product candidate reaching the market or in the addition of new indications for existing products. We are also required to collect and assess user complaints, adverse events and malfunctions regarding our devices, and actual or perceived safety problems or concerns with a device used with our product can lead to regulatory actions and adverse effects on our products. See Our current products and products in development cannot be sold without regulatory approval. Additionally, regulatory agencies conduct routine monitoring and inspections to identify and evaluate potential issues with our devices. For example, in 2017, the FDA reported on its adverse event reporting system that it was evaluating our Neulasta Onpro kit. Subsequently, we implemented device and labeling enhancements to address product complaints received on this device. We continuously monitor complaints and adverse events and implement additional enhancements as needed. Loss of regulatory approval or clearance of a device that is used with our product may also result in the removal of our product from the market. Further, failure to successfully develop, supply, or gain or maintain approval for these devices could adversely affect sales of the related approved products.
Some of our pharmaceutical pipeline and our commercial product sales rely on collaborations with third parties, which may adversely affect the development and sales of our products.
We depend on alliances with other companies, including pharmaceutical and biotechnology companies, vendors and service providers, for the development of a portion of the products in our pharmaceutical pipeline and for the commercialization and sales of certain of our commercial products. For example, we have collaborations with third parties under which we share development rights, obligations and costs and/or commercial rights and obligations. See Item 1. Business—Business Relationships.
Failures by these parties to meet their contractual, regulatory, or other obligations to us or any disruption in the relationships between us and these third parties, could have a material adverse effect on our pharmaceutical pipeline and business. In addition, our collaborative relationships for R&D and/or commercialization and sales often extend for many years and have given, and may in the future give, rise to disputes regarding the relative rights, obligations and revenues of us and our collaboration partners, including the ownership or prosecution of intellectual property and associated rights and obligations. This could result in the loss of intellectual property rights or protection, delay the development and sale of potential pharmaceutical products, affect the sale and delivery of our commercialized products and lead to lengthy and expensive litigation, administrative proceedings or arbitration.
RISKS RELATED TO OPERATIONS
We perform a substantial majority of our commercial manufacturing activities at our facility in the U.S. territory of Puerto Rico and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California; significant disruptions or production failures at these facilities could significantly impair our ability to supply our products or continue our clinical trials.
The global supply of our products and product candidates for commercial sales and for use in our clinical trials is significantly dependent on the uninterrupted and efficient operation of our manufacturing facilities, in particular those in the U.S. territory of Puerto Rico and Thousand Oaks, California. See Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
We currently perform a substantial majority of our clinical manufacturing that supports our product candidates at our facility in Thousand Oaks, California. A substantial disruption in our ability to operate our Thousand Oaks manufacturing facility could materially and adversely affect our ability to supply our product candidates for use in our clinical trials, leading to delays in development of our product candidates.
In addition, we currently perform a substantial majority of our commercial manufacturing activities at our facility in the U.S. territory of Puerto Rico. In recent years, Puerto Rico has been affected by a number of natural disasters, including Hurricanes Maria (2017) and Fiona (2022), as well as earthquakes (2020). These natural disasters have affected, and may continue to affect, public and private properties and Puerto Rico’s electric grid and communications networks. While the critical manufacturing areas of our commercial manufacturing facility were not significantly affected by these natural disasters, the restoration of electrical service on the island after Hurricane Maria was a slow process, and our facility relied on backup diesel powered generators for some time. We also operated on backup generators for a few weeks after the early 2020 earthquakes in Puerto Rico. In 2021, the baseload power generation units of the Puerto Rico Electric Power Authority malfunctioned due to the lack of adequate maintenance for over a decade, leading to selective outages across the island. In September 2022, Hurricane Fiona caused further damage to the island’s utility infrastructure which again resulted in widespread power outages and water supply issues. Although these events did not directly have a material effect on our
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business, they have resulted in disruptions to our third-party suppliers on the island. Further instability of the electric grid could require us to increase our use of our generators or to use them exclusively. In addition, future storms, earthquakes or other natural or man-made disasters or events (including political unrest or labor shortages) could have a more significant effect on our manufacturing operations. The COVID-19 pandemic also resulted in disruptions to activities on the island. In March 2020, the Governor of Puerto Rico issued Executive Orders requiring the lockdown of businesses and government facilities, imposing restrictions on business operations and a curfew on residents in response to COVID-19. Additionally, during the summer of 2021, a labor dispute arose between the maritime terminal operation company and its employees, represented by the International Longshoremen’s Association (ILA), which resulted in a strike that delayed cargo movement from the San Juan Port Zone for several days. Hurricanes Maria and Fiona, the 2020 earthquakes, the COVID-19 pandemic and the ILA strike have placed greater stress on the island’s already challenged economy. Beginning in 2016, the government of Puerto Rico defaulted on its roughly $72 billion of debt. In response, the U.S. Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act, which established a financial oversight board for Puerto Rico. After years of negotiations with bondholders and other creditors, this financial oversight board reached an agreement with the same, which was confirmed by the U.S. District Court for the District of Puerto Rico effective March 2022. Although our ability to manufacture and supply our products has not, to date, been significantly affected by natural disasters, unreliable electric utility services, strikes, pandemic lockdowns or the island’s economic challenges, these, or a combination of these challenges, or other issues that create a substantial disruption to our ability to operate our Puerto Rico manufacturing facility or get supplies and manufactured products transported to and from that location, could make it more expensive or difficult for us to operate in Puerto Rico, and could materially and adversely affect our ability to supply our products and affect our product sales. See Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
We rely on third-party suppliers for certain of our raw materials, medical devices and components.
We rely on unaffiliated third-party suppliers for certain raw materials, medical devices and components necessary for the manufacturing of our commercial and clinical products. Certain of those raw materials, medical devices and components are proprietary products of those unaffiliated third-party suppliers and are specifically cited in our drug applications with regulatory agencies so that they must be obtained from that specific sole source or sources and could not be obtained from another supplier unless and until the regulatory agency approved such supplier. For example, we rely on a single source for the SureClick autoinjectors used in the drug delivery of Repatha, ENBREL, Aimovig, AMJEVITA/AMGEVITA and Aranesp, and we also rely on a single source for the Pushtronex automated mini doser used in the drug delivery of Repatha. Also, certain of the raw materials required in the commercial and clinical manufacturing of our products are sourced from other countries and/or derived from biological sources, including mammalian tissues, bovine serum and human serum albumin.
Among the reasons we may be unable to obtain these raw materials, medical devices and components include:
•regulatory requirements or action by regulatory agencies or others;
•adverse financial or other strategic developments at or affecting the supplier, including bankruptcy;
•unexpected demand for or shortage of raw materials, medical devices or components;
•failure to comply with our quality standards which results in quality and product failures, complaints, product contamination and/or recall;
•a material shortage, contamination, recall and/or restrictions on the use of certain biologically derived substances or other raw materials;
•discovery of previously unknown or undetected imperfections in raw materials, medical devices or components;
•cyberattacks on supplier systems;
•natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;
•labor disputes (such as strikes) or shortages, including from the effects of health emergencies (such as novel viruses or pandemics) or natural disasters; and
•geopolitical conflicts (such as the ongoing conflicts in Ukraine and the Middle East).
For example, in prior years we have experienced shortages in certain components necessary for the formulation, fill and finish of certain of our products in our Puerto Rico facility, and we have also experienced shortages related to single use systems and packaging which has caused disruptions to our manufacturing plans. Further quality issues that result in unexpected additional demand for certain components have resulted in shortages and in the future may lead to shortages of required raw materials or components (such as we have experienced with EPOGEN glass vials). We may experience similar or
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other shortages in the future resulting in delayed shipments, supply constraints, clinical trial delays, contract disputes and/or stock-outs of our products. These or other similar events could negatively affect our ability to satisfy demand for our products or conduct clinical trials, which could have a material adverse effect on our product sales, business and results of operations.
Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
Manufacturing biologic and small molecule human therapeutic products is difficult, complex and highly regulated. We manufacture many of our commercial products and product candidates internally. In addition, we use third-party contract manufacturers to produce, or assist in the production of, a number of our products, and we currently use contract manufacturers to produce, or assist in the production of, a number of our late-stage product candidates and drug delivery devices. The number of third-party contract manufacturers that we use has increased with our recent acquisition of Horizon, as Horizon required such contract manufacturers for all of its products. See Item 1. Business—Manufacturing, Distribution and Raw Materials—Manufacturing; see also Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions. Our ability to adequately and timely manufacture and supply our products (and product candidates to support our clinical trials) is dependent on the uninterrupted and efficient operation of our facilities and those of our third-party contract manufacturers, which may be affected by:
•capacity of manufacturing facilities;
•contamination by microorganisms or viruses, or foreign particles from the manufacturing process;
•natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;
•labor disputes or shortages, including the effects of health emergencies (such as novel viruses or pandemics) or natural disasters;
•compliance with regulatory requirements;
•changes in forecasts of future demand;
•timing and actual number of production runs and production success rates and yields;
•updates of manufacturing specifications;
•contractual disputes with our suppliers and contract manufacturers;
•timing and outcome of product quality testing;
•power failures and/or other utility failures;
•cyberattacks on supplier systems;
•breakdown, failure, substandard performance or improper installation or operation of equipment (including our information technology systems and network-connected control systems or those of our contract manufacturers or third-party service providers);
•delays in the ability of the FDA or foreign regulatory agencies to provide us necessary reviews, inspections and approvals, including as a result of a subsequent extended U.S. federal or other government shutdowns; and/or
•geopolitical conflicts (such as the ongoing conflicts in Ukraine and the Middle East).
If any of these or other problems affect production in one or more of our facilities or those of our third-party contract manufacturers, or if we do not accurately forecast demand for our products or the amount of our product candidates required in clinical trials, we may be unable to start or increase production in our unaffected facilities to meet demand. If the efficient manufacture and supply of our products or product candidates is interrupted, we may experience delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends, contract disputes and/or recalls of our products. From time to time, we have initiated recalls of certain lots of our products. For example, in July 2014 we initiated a voluntary recall of an Aranesp lot distributed in the EU after particles were detected in a quality control sample following distribution of that lot, and in April 2018 we initiated a precautionary recall of two batches of Vectibix distributed in Switzerland after potential crimping defects were discovered in the metal seals on some product vials. If we are at any time unable to provide an uninterrupted supply of our products to patients, we may lose patients and physicians may elect to prescribe competing therapeutics instead of our products, which could have a material adverse effect on our product sales, business and results of operations.
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Our manufacturing processes, those of our third-party contract manufacturers and those of certain of our third-party service providers must undergo regulatory approval processes and are subject to continued review by the FDA and other regulatory authorities. It can take longer than five years to build, validate and license another manufacturing plant, and it can take longer than three years to qualify and license a new contract manufacturer or service provider. If we elect or are required to make changes to our manufacturing processes because of new regulatory requirements, new interpretations of existing requirements or other reasons, this could increase our manufacturing costs and result in delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends or contract negotiations or disputes. Such manufacturing challenges may also occur if our existing contract manufacturers are unable or unwilling to timely implement such changes, or at all.
In addition, regulatory agencies conduct routine monitoring and inspections of our manufacturing facilities and processes as well as those of our third-party contract manufacturers and service providers. If regulatory authorities determine that we or our third-party contract manufacturers or certain of our third-party service providers have violated regulations, they may mandate corrective actions and/or issue warning letters, or even restrict, suspend or revoke our prior approvals, prohibiting us from manufacturing our products or conducting clinical trials or selling our marketed products until we or the affected third-party contract manufacturers or third-party service providers comply, or indefinitely. See also Our current products and products in development cannot be sold without regulatory approval. Such issues may also delay the approval of product candidates we have submitted for regulatory review, even if such product candidates are not directly related to the products, devices or processes at issue with regulators. Because our third-party contract manufacturers and certain of our third-party service providers are subject to the FDA and foreign regulatory authorities, alternative qualified third-party contract manufacturers and third-party service providers may not be available on a timely basis, or at all. If we or our third-party contract manufacturers or third-party service providers cease or interrupt production or if our third-party contract manufacturers and third-party service providers fail to supply materials, products or services to us, we may experience delayed shipments, delays in our clinical trials, supply constraints, contract disputes, stock-outs and/or recalls of our products. Additionally, we distribute a substantial volume of our commercial products through our primary distribution centers in Louisville, Kentucky for the United States and in Breda, Netherlands for Europe and much of the rest of the world. We also conduct most of the labeling and packaging of our products distributed in Europe and much of the rest of the world in Breda. Our ability to timely supply products is dependent on the uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling and packaging facility in Breda. Further, we rely on commercial transportation, including air and sea freight, for the distribution of our products to our customers, which has been negatively affected by the COVID-19 pandemic, labor unrest, natural disasters and geopolitical security threats.
There have also been legislative and administrative proposals seeking to incentivize greater drug manufacturing in the United States with the stated goal of improving supply reliability in the United States. For example, on August 6, 2020, the previous Administration issued an Executive Order aimed at boosting domestic production of essential medicines, medical countermeasures, and critical inputs titled “Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs are Made in the United States.” Additionally, one legislative proposal would have prohibited the U.S. Department of Veterans Affairs from purchasing certain drugs that have active pharmaceutical ingredients manufactured outside the United States. While we perform a substantial majority of our commercial manufacturing activities in the United States, including in the U.S. territory of Puerto Rico, and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California, the passage of such legislation could result in foreign governments enacting retaliatory legislation or regulatory actions, which may have an adverse effect on our product sales, business and results of operations.
Our business and operations may be negatively affected by the failure, or perceived failure, of achieving our environmental, social and governance objectives.
We continue to work towards operating our business in an environmentally responsible and socially inclusive manner. Stakeholders, including our investors and our employees, have increasingly focused on, and are expected to continue to focus on, our ESG practices. Policymakers, regulators and investors globally have increased their focus on ESG matters, resulting in rapidly evolving and diverging expectations and standards. For example, California recently enacted the Climate Corporate Data Accountability Act that requires, among other things, disclosure of greenhouse gas emissions. In contrast, in other states, there are a growing number of anti-ESG initiatives that may conflict with certain of our stakeholders’ expectations. For example, 11 states have enacted laws prohibiting the consideration of ESG factors in connection with state pension asset investment decisions. If our ESG practices fail to meet our stakeholders’ expectations and standards, or if we fail to comply with ESG-related regulations across our global business, there could be a material adverse effect on our reputation, business and, ultimately, our stock price.
Our ESG report is made available on our website and describes our current ESG goals and the progress we have made on the ESG issues that we believe our external and internal stakeholders consider to be important, based on surveys, interviews and certain frameworks for corporate responsibility. Achieving our ESG goals requires long-term investments and broad,
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coordinated activity, and we may be required to incur additional costs or allocate additional resources towards monitoring, reporting and implementing our ESG programs. Further, we may fail to accurately assess our stakeholders’ ESG priorities and concerns, as such priorities and concerns have been rapidly changing. While we have achieved most of our goals set in prior years, whether we can achieve our current and future ESG goals continues to be uncertain and remains subject to numerous risks, including evolving regulatory requirements and social expectations affecting ESG practices, our ability to recruit, develop and retain a diverse workforce, the availability of suppliers and collaboration partners that can meet our environmental goals, the effects of the organic growth of our business and potential acquisitions of other businesses on our ESG performance, and the availability and cost of technologies or resources, such as carbon credits, that support our goals. Any failure or perceived failure to meet our ESG program priorities could result in a material adverse effect on our reputation, business and stock price.
The effects of global climate change and related natural disasters could negatively affect our business and operations.
Many of our operations and facilities, including those essential to our manufacturing, R&D and distribution activities, are in locations that are subject to natural disasters, including droughts, fires, extreme temperatures, hurricanes, tropical storms and/or floods. For example, in 2017 Hurricane Maria caused catastrophic damage, compounded in 2022 by Hurricane Fiona, to the U.S. territory of Puerto Rico, where we perform a substantial majority of our commercial manufacturing activities. Although our site was well-protected and suffered minimal damage, there can be no assurances that we would have similar results in the face of future natural disasters. The severity and frequency of weather-related natural disasters has been amplified, and is expected to continue to be amplified by, global climate change. Such natural disasters have caused, and in the future may cause, damage to and/or disrupt our operations, which may result in a material adverse effect on our product sales, business and results of operations. Our suppliers, vendors and business partners also face similar risks, and any disruption to their operations could have an adverse effect on our supply and manufacturing chain. Further, many of our key facilities are located on islands, including Puerto Rico, Singapore and Ireland, which rely on essential port facilities that may be vulnerable to climate change-related or other natural disasters. Although we have detailed business continuity plans in place and periodic assessments of our natural disaster risk, any natural disaster may also result in prolonged interruption to our critical operational and business activities, and we may be required to incur significant costs to remedy the effects of such natural disasters and fully resume operations, which may result in a material adverse effect on our product sales, business and results of operations. See We perform a substantial majority of our commercial manufacturing activities at our facility in the U.S. territory of Puerto Rico and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California; significant disruptions or production failures at these facilities could significantly impair our ability to supply our products or continue our clinical trials and Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.
GENERAL RISK FACTORS
Global economic conditions may negatively affect us and may magnify certain risks that affect our business.
Our operations and performance have been, and may continue to be, affected by global economic conditions. The economic downturn resulting from the COVID-19 pandemic precipitated a global recession, which was followed by high rates of inflation and actions taken by financial regulators to raise interest rates. Instability in the financial system, tighter lending standards and higher interest rates have added stress that may create additional vulnerabilities in the global economy, the effects of which may be of an extended duration. Additionally, with higher interest rates, deficits, and other fiscal pressures, governments may be unable to sustain their previously high levels of fiscal spending. Further, in the United States, although Congress has approved stopgap measures to fund the government through early March, the federal government continues to be at risk of a shutdown if legislation providing funding for the fiscal year is not passed as a result of political divisions in Congress and an impasse on budgetary and spending matters. Consequently, these and other financial pressures have caused, and may continue to cause, government or other third-party payers to more aggressively seek cost containment measures in healthcare and other settings. See Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. As a result of global economic conditions, some third-party payers may delay or be unable to satisfy their reimbursement obligations. Job losses or other economic hardships (including inflation) may also affect patients’ ability to afford healthcare as a result of increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare insurance coverage or for other reasons. We believe such conditions have led and could continue to lead to reduced demand for our products, which could have a material adverse effect on our product sales, business and results of operations. The current inflationary environment related to increased aggregate demand, supply chain constraints and the effects from the armed conflict in Ukraine (including the effects of the sanctions that were implemented in response to the conflict and the resulting impacts on the commodity market and supply chains) and the Middle East have also increased our operating expenses and may continue to affect our operating expenses. Our operational costs, including the cost of energy, materials, labor, distribution and our other operational and facilities costs are subject to market conditions and are being adversely affected by inflationary pressures. Economic conditions may also adversely affect the ability of our distributors, customers and suppliers to
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obtain the liquidity required to buy inventory or raw materials and to perform their obligations under agreements with us, which could disrupt our operations. Although we monitor our distributors’, customers’ and suppliers’ financial condition and their liquidity to mitigate our business risks, some of our distributors, customers and suppliers may become insolvent, which could have a material adverse effect on our product sales, business and results of operations. A significant worsening of global economic conditions could precipitate or materially amplify the other risks described herein.
We maintain a significant portfolio of investments disclosed as cash equivalents and marketable securities on our consolidated balance sheets. In recent years, the global COVID-19 pandemic and interest rate increases have led to disruption and volatility in the global capital markets. We have certain assets, including equity investments, that are exposed to market fluctuations that could, in a sustained or recurrent series of market disruptions, result in impairments. The value of our investments may also be adversely affected by interest rate fluctuations, inflation, downgrades in credit ratings, illiquidity in the capital markets, geopolitical events and other factors that may result in other-than-temporary declines in the value of our investments. Any of those events could cause us to record impairment charges with respect to our investment portfolio or to realize losses on sales of investments. We also maintain a majority of our cash and cash equivalents in accounts with major multi-national financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can adversely affect the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Inability to access, or a delay in accessing these funds, could adversely affect our business and financial position.
Our stock price is volatile.
Our stock price, like that of our peers in the biotechnology and pharmaceutical industries, is volatile. Our revenues and operating results may fluctuate from period to period for a number of reasons. Events such as a delay in product development, changes to our expectations or strategy or even a relatively small revenue shortfall may cause financial results for a period to be below our expectations or projections. As a result, our revenues and operating results and, in turn, our stock price may be subject to significant fluctuations. Announcements or discussions, including via social media channels, of possible restrictive actions by government or private payers that would negatively affect our business or industry if ultimately enacted or adopted may also cause our stock price to fluctuate, whether or not such restrictive actions ever actually occur. Similarly, actual or perceived safety issues with our products or similar products or unexpected clinical trial results can have an immediate and rapid effect on our stock price, whether or not our operating results are materially affected.
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| Item 1B. | UNRESOLVED STAFF COMMENTS | ||||
None.
| Item 1C. | CYBERSECURITY | ||||
Risk Management and Strategy
Amgen has a multi-layered and iterative approach towards assessing, identifying, managing and mitigating risks from cybersecurity threats. The Company’s Digital, Technology & Innovation (DTI) function is designed to support our productivity, innovation and outreach globally through the quality delivery of information systems, solutions and services for our business and operations. The DTI function has a Cybersecurity & Digital Trust (CDT) team that assesses and reduces cybersecurity exposure, including by providing employees with training and resources to identify potential cybersecurity threats and implementing information technology security practices. The CDT team also monitors for cybersecurity threat activity and seeks to mitigate the impact from cybersecurity incidents by deploying information security engineers, system architects, analysts and cybersecurity specialists to provide monitoring, reporting and management of cybersecurity incidents.
To evaluate the progress of its activities, our DTI function uses various industry and regulatory frameworks as guides to assess the state of the Company’s cybersecurity program maturity and controls, including our organizational, people, physical and technological controls. The CDT team also conducts reviews and evaluations of our cybersecurity resilience program with Amgen’s Cybersecurity & Digital Trust Governance Council (which includes leaders from information security, compliance, regulatory affairs, manufacturing, audit, law and business development functions).
Our cybersecurity risk management program is considered by and integrated into our Company-wide Enterprise Risk Management program, and shares common methodologies, reporting channels and governance processes that apply across the Enterprise Risk Management program to that of other enterprise level risks (such as product development, safety and surveillance, financial and intellectual property risks). Regular evaluations are conducted of the greatest risks to our business and their underlying risk drivers as well as the associated mitigation activities, maturity and controls. This program is overseen by our Executive Vice President and Chief Financial Officer and guided by the Enterprise Risk Council, a cross-functional group of the Company’s business leaders representing key business functions that is chaired by our Chief Audit Executive. The results of the enterprise risk evaluations and the status and operation of the Enterprise Risk Management program are presented to our Board of Directors, which oversees the Company’s enterprise-level risks.
Further, our corporate audit function is responsible for assessing risk and testing whether, and the extent to which, our information security policies and practices are being implemented effectively within our business and by third party providers. Findings from such reports and related corrective action plans are shared with our CDT team, Company leadership, and the Audit Committee and Corporate Responsibility and Compliance Committee (CRCC) of our Board of Directors.
In addition to leveraging the Company’s own information technology resources, our Incident Response and Cyber Threat Intelligence teams engage, as needed, third-party cybersecurity risk assessors and consultants to assist in recognizing threats, identifying security vulnerabilities, and evaluating the impact of cybersecurity attacks and incidents when they occur. On a biennial basis, our DTI organization also engages external third-party experts to assess the Company’s cybersecurity control maturity across the organization and develops plans to address such experts’ recommendations.
Our CDT function has processes to oversee and identify the risks of cybersecurity threats associated with third-party service providers and monitors and works to mitigate the impact of cybersecurity incidents encountered by our third-party service providers. Upon becoming aware of cybersecurity incidents encountered by our third-party service providers, the CDT function’s Incident Response and Cyber Threat Intelligence teams are deployed to evaluate and mitigate the impact of such incidents on our business.
Despite our layered controls and cybersecurity efforts, the Company and its third-party vendors have experienced cyberattacks and information security vulnerabilities, and while such incidents have not had a material adverse effect on the Company, there can be no assurance that future cybersecurity attacks or incidents would not result in a material adverse effect on our business strategy, results of operations or financial condition. For examples of such matters and a discussion of the risks that we face, see Item 1A. Risk Factors—A breakdown of our information technology systems, cyberattack or information security breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation. However, we have not identified risk from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition.
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Governance
Our Board of Directors oversees an enterprise-wide approach to risk management, including risks related to information systems and cybersecurity, and each Board committee has primary risk oversight responsibilities aligned with its areas of focus. At each regular meeting of the Board, the Board receives and considers reports from each of its committees, and such reports provide additional detail on significant risk management issues as appropriate, including cybersecurity. The CRCC is the committee that has primary oversight responsibility for the Company’s information systems and management of cybersecurity and receives reports from our Senior Vice President and Chief Information Officer (CIO) and Chief Information Security Officer (CISO) that includes reviews of our information systems strategy, technology investments, cybersecurity risks and incidents, and third-party risk management, as well as an annual evaluation of the Company’s cybersecurity status. The Board’s Audit Committee has oversight responsibility of our internal controls, assurances and financial risks. The Audit Committee is provided with copies of materials presented to our CRCC by our CIO and CISO and receives reports from our CIO regarding topics including integration or implementation of new financial systems and key controls and governance designed to address cybersecurity risks associated with the use of such new financial systems.
Our management team, including our CIO and CISO, supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal information security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information systems environment.
Our CISO, who heads our CDT team and is accountable for the Company’s cybersecurity risk management program, joined the Company’s information systems organization in 2016, is a Certified Information Systems Security Professional and is certified in risk and information systems control. Previously, our CISO served in both leadership and operational positions as a cybersecurity professional in the U.S. government and was a cybersecurity consultant, providing a wide range of cybersecurity services to various U.S. government agencies and departments. Our DTI organization is led by, and our CISO is overseen by, our CIO, who has held roles of increasing responsibility within our information systems organization since 2001 and has developed his knowledge and skills in the cybersecurity area over the course of his career in information systems. Our inaugural Executive Vice President and Chief Technology Officer (CTO), effective as of the end of 2023, oversees our CIO. Prior to the establishment of the CTO role, our CIO was overseen by our Executive Vice President and Chief Financial Officer.
As leaders of the DTI organization and CDT function, respectively, the Company’s CIO and CISO are informed about and monitor significant cybersecurity threats and incidents through the Company’s internal cybersecurity reporting structure. Our CDT team is responsible for monitoring and detecting cybersecurity threats and incidents. Our CDT team, overseen by our CISO, is also responsible for the mitigation and remediation of cybersecurity incidents. When members of the CDT team detect a cybersecurity threat or incident or are made aware of a cybersecurity incident encountered by a third-party service provider, the discovery is communicated to the Incident Response team, which includes our CISO and other senior members of the CDT function. The Incident Response team evaluates the severity of the cybersecurity threat or incident and shares its findings with our CISO.
Our CISO and/or his senior team leaders, in addition to our CIO and CTO, also provide regular reports to executives leading our finance, compliance, law and human resources functions on potentially significant cybersecurity incidents and the progress made towards mitigation and remediation of those incidents. These leaders oversee reporting to our CRCC and Audit Committee, and reporting of such cybersecurity incidents are included in the course of regular meetings of such committees. Additionally, in appropriate circumstances, reporting of potentially significant cybersecurity incidents are made directly to the leaders of our CRCC and Audit Committee or directly to the Board of Directors outside of their regular meeting schedule. Further, in support of our internal controls, our CISO also reviews cybersecurity matters and trends with our accounting and law functions on a quarterly basis.
Information Systems Acquired from Horizon Therapeutics plc
On October 6, 2023, we completed our acquisition of Horizon. Horizon’s legacy information systems are currently maintained separately from Amgen’s preexisting information system infrastructure. After we are able to fully evaluate Horizon’s legacy information systems, protocols and practices, we plan to operationally integrate the legacy Horizon systems into our own, and these integrated systems will then be subject to Amgen’s cybersecurity risk management structure and strategy. While we integrate these systems, our CISO and CDT function are engaging in cybersecurity risk management activities, and any cybersecurity incidents detected on the legacy Horizon information systems are assessed, mitigated and remediated by our CDT function’s Incident Response and Cyber Threat Intelligence teams and reported in accordance with the governance processes detailed above. See Item 1A. Risk Factors—Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions and Item 1A. Risk Factors—A breakdown of our information technology systems, cyberattack or information
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security breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation of our business and/or affect our reputation.
| Item 2. | PROPERTIES | ||||
As of December 31, 2023, we owned or leased approximately 160 properties, including properties acquired from Horizon in Deerfield, Illinois and Ireland. The locations and primary functions of significant properties are summarized in the following tables:
| U.S. Location: | Manufacturing | Administrative | R&D | Sales & marketing | Warehouse | Distribution center | ||||||||||||||
| Thousand Oaks, CA* | P | P | P | P | P | P | ||||||||||||||
| San Francisco, CA | P | |||||||||||||||||||
Deerfield, IL | P | P | P | |||||||||||||||||
| Louisville, KY | P | P | ||||||||||||||||||
| Cambridge, MA | P | |||||||||||||||||||
| Juncos, Puerto Rico | P | P | P | P | ||||||||||||||||
| West Greenwich, RI | P | P | P | |||||||||||||||||
| Tampa, FL | P | P | ||||||||||||||||||
| Other U.S. cities | P | P | ||||||||||||||||||
____________
* Corporate headquarters
| ROW Location: | Manufacturing | Administrative | R&D | Sales & marketing | Warehouse | Distribution center | ||||||||||||||
| Brazil | P | P | P | |||||||||||||||||
| Canada | P | P | P | |||||||||||||||||
| China | P | P | ||||||||||||||||||
| Denmark | P | P | P | |||||||||||||||||
France | P | P | ||||||||||||||||||
| Germany | P | P | P | |||||||||||||||||
| Iceland | P | P | ||||||||||||||||||
| Ireland | P | P | P | P | P | |||||||||||||||
| Japan | P | P | ||||||||||||||||||
| Netherlands | P | P | P | P | P | |||||||||||||||
| Singapore | P | P | P | P | ||||||||||||||||
| Switzerland | P | P | ||||||||||||||||||
| United Kingdom | P | P | P | |||||||||||||||||
| Other countries | P | P | P | P | ||||||||||||||||
Excluded from the information above are (i) undeveloped land and leased properties that have been abandoned and (ii) certain buildings we still own but that are no longer used in our business. Additionally, in January 2024 our U.S. manufacturing facility in New Albany, Ohio received licensure from the FDA for commercial production, and our facility in Holly Springs, North Carolina is currently under construction. There are no material encumbrances on our owned properties.
We believe our facilities are suitable for their intended uses and, in conjunction with our third-party contract manufacturing agreements, provide adequate capacity and are sufficient to meet our expected needs. See Item 1A. Risk Factors for a discussion of the factors that could adversely impact our manufacturing operations and the global supply of our products.
See Item 1. Business—Manufacturing, Distribution and Raw Materials.
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| Item 3. | LEGAL PROCEEDINGS | ||||
Certain of the legal proceedings in which we are involved are discussed in Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements and are hereby incorporated by reference.
| Item 4. | MINE SAFETY DISCLOSURES | ||||
Not applicable.
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PART II
| Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | ||||
Common stock
Our common stock trades on the NASDAQ Global Select Market under the symbol AMGN. As of February 9, 2024, there were approximately 4,614 holders of record of our common stock.
Performance graph
The following graph shows the value of an investment of $100 on December 31, 2018, in each of Amgen common stock, the Amex Biotech Index, the Amex Pharmaceutical Index and Standard & Poor’s 500 Index. All values assume reinvestment of the pretax value of dividends and are calculated as of December 31 of each year. The historical stock price performance of the Company’s common stock shown in the performance graph is not necessarily indicative of future stock price performance.
| 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | ||||||||||||||||||||||||||||||
| Amgen (AMGN) | $100.00 | $127.62 | $125.07 | $126.16 | $152.01 | $172.55 | |||||||||||||||||||||||||||||
| Amex Biotech (BTK) | $100.00 | $120.43 | $136.78 | $131.96 | $126.68 | $130.31 | |||||||||||||||||||||||||||||
| Amex Pharmaceutical (DRG) | $100.00 | $118.39 | $128.73 | $158.82 | $171.14 | $184.35 | |||||||||||||||||||||||||||||
| Standard & Poor’s 500 (SPX) | $100.00 | $131.48 | $155.65 | $200.29 | $163.90 | $207.07 | |||||||||||||||||||||||||||||
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The material in the above performance graph is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made on, before or after the date of this filing and irrespective of any general incorporation language in such filing.
Stock repurchase program
During the year ended December 31, 2023, we had one outstanding stock repurchase program, under which we had no repurchase activity.
| Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced program | Maximum dollar value that may yet be purchased under the program | |||||||||||||||||||||||
| October 1 - October 31 | — | — | $ | 6,979,263,848 | ||||||||||||||||||||||
| November 1 - November 30 | — | — | $ | 6,979,263,848 | ||||||||||||||||||||||
| December 1 - December 31 | — | — | $ | 6,979,263,848 | ||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| January 1 - December 31 | — | — | ||||||||||||||||||||||||
Dividends
For the years ended December 31, 2023 and 2022, we paid quarterly dividends. We expect to continue to pay quarterly dividends, although the amount and timing of any future dividends are subject to approval by our Board of Directors. Additional information required by this item is incorporated herein by reference to Part IV—Note 17, Stockholders’ equity, to the Consolidated Financial Statements.
Securities Authorized for Issuance Under Existing Equity Compensation Plans
Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Part III, Item 12—Securities Authorized for Issuance Under Existing Equity Compensation Plans.
| Item 6. | RESERVED | ||||
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| Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
The following MD&A is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and accompanying notes. Our results of operations discussed in MD&A are presented in conformity with GAAP. Amgen operates in one business segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.
Forward-looking statements
This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases, written statements or our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. We describe our respective risks, uncertainties and assumptions that could affect the outcome or results of operations in Part I, Item 1A. Risk Factors. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, collaborations and effects of pandemics. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.
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Overview
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) discovers, develops, manufactures and delivers innovative medicines to fight some of the world’s toughest diseases. Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that dramatically improve people’s lives, while also reducing the social and economic burden of disease. We helped launch the biotechnology industry more than 40 years ago and have grown to be one of the world’s leading independent biotechnology companies. Our robust pipeline includes potential first-in-class medicines at all stages of development.
Our principal products are Prolia, ENBREL, Otezla, XGEVA, Repatha, Nplate, KYPROLIS, Aranesp, EVENITY, Vectibix, BLINCYTO, TEPEZZA and KRYSTEXXA. We also market a number of other products, including but not limited to Neulasta, MVASI, AMJEVITA/AMGEVITA, TEZSPIRE, Parsabiv, Aimovig, LUMAKRAS/LUMYKRAS, EPOGEN, KANJINTI, TAVNEOS, RAVICTI, UPLIZNA and PROCYSBI. For additional information about our products, see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products.
Our strategy includes integrated activities intended to strengthen our competitive position in the industry. In 2023, we completed our acquisition of Horizon, advanced our innovative pipeline and generated strong volume growth across our product portfolio and regions. We accomplished these objectives while maintaining a strategic and disciplined approach to capital allocation.
Our newly established rare disease therapeutic area is designed to maximize the potential of medicines acquired in connection with our Horizon acquisition, including TEPEZZA for thyroid eye disease, KRYSTEXXA for chronic refractory gout and UPLIZNA for neuromyelitis optica spectrum disorder, as well as TAVNEOS, acquired from the ChemoCentryx acquisition in 2022, for severe active ANCA-associated vasculitis.
We are advancing our pipeline of innovative medicines, including initiating and completing enrollment of our Phase 2 study of maridebart cafraglutide for the treatment of obesity; announcing results from our Phase 2 study of tarlatamab in patients with SCLC; and rapidly enrolling patients in Phase 2 and Phase 3 studies for several of our later-stage clinical programs across our therapeutic areas. For more information on our pipeline, including programs acquired from our Horizon acquisition, see Part I, Item 1. Business—Research and Development and Selected Product Candidates.
Total product sales increased in 2023, primarily driven by volume growth for certain brands, including Repatha, TEZSPIRE, EVENITY, Prolia and BLINCYTO, and the contribution of $954 million in product sales from the Horizon acquisition during the period from the acquisition date of October 6, 2023 through December 31, 2023, partially offset by declines in net selling prices of certain products, including Neulasta, MVASI and ENBREL.
Cash flows from operating activities totaled $8.5 billion, which supported investment in our business, including our Horizon acquisition, while returning capital to shareholders through the payment of cash dividends. For 2023, we increased our quarterly cash dividend by 10% to $2.13 per share of common stock. In December 2023, we declared a cash dividend of $2.25 per share of common stock for the first quarter of 2024, an increase of 6% for this period, to be paid in March 2024.
Amgen’s approach to and investment in human capital resource management is directed at attracting, motivating, developing and retaining talent to tackle the challenges of running an enterprise focused on the discovery, development and commercialization of innovative medicines. Our compensation, benefits and development programs are designed to encourage performance, promote accountability and adherence to Company values, and align with the interests of the Company’s shareholders. Further, we believe that a diverse and inclusive culture fosters innovation, which supports our ability to serve patients. In our effort to attract and retain the best talent, we seek out and support talent across the globe, including in underrepresented populations, consistent with our commitment to equal opportunity. For further information on these and other efforts, see Part I, Item 1. Business—Human Capital Resources.
We have a long-standing ambition to be environmentally responsible, and we regularly set targets to challenge ourselves to deliver further improvements. We achieved our targets for the 2013–2020 period while growing revenues, increasing production capacity and expanding to approximately 100 countries over the same period. To continue on our path to greater environmental sustainability, in January 2021 we announced a new set of long-term environmental targets to achieve by 2027, including achieving carbon neutrality, reducing water consumption by 40% and reducing waste disposed by 75%.(2)(3) Additionally, in 2022 we issued our first green bonds, which were used to finance eligible projects that met specified criteria to reduce our impact on the environment.
(2) Represents reductions against established baselines, taking into account only verified reduction projects and does not take into account changes associated with contraction or expansion of the Company.
(3) Carbon neutrality goal refers to Scope 1 and 2.
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Our long-term success depends, to a great extent, on our ability to continue to discover, develop and commercialize innovative products and acquire or collaborate on therapies currently in development by other companies. We must grow sales from existing and new products to achieve revenue growth and to offset revenue losses from when products lose their exclusivity or when competing products are launched. Certain of our products face increasing pressure from competition, including biosimilars and generics. For additional information, including information on the expirations of patents for various products, see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents, and Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition. We devote considerable resources to R&D activities, but successful product development in the biotechnology industry is highly uncertain. We also face increasing regulatory scrutiny of safety and efficacy both before and after products launch.
Macroeconomic and other challenges
Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, as well as rising healthcare costs continue to pose challenges to our business. Further, ongoing geopolitical conflicts continue to create additional uncertainty in global macroeconomic conditions. Additionally, with public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, including net price declines. Moreover, legislation enacted to reduce healthcare expenditures, including provisions of the IRA, have affected, and are likely to continue to affect, our business. Finally, wholesale and end-user buying patterns can affect our product sales. These buying patterns can cause fluctuations in quarterly product sales but have generally not been significant to date when comparing full-year product performance to the prior year. See Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products, and Part I, Item 1A. Risk Factors for further discussion of certain factors that could impact our future product sales.
Our product sales were affected by reduced demand as a result of the COVID-19 pandemic, and the cumulative decrease in diagnoses over the course of the pandemic suppressed the volume of new patients starting treatment, which continues to impact the business. Given the unpredictable nature of future virus surges, there could be similar intermittent disruptions in the future in physician–patient interactions.
With regard to our clinical trial activities, we are continuously monitoring the possible impacts from health-related events, including changes from new COVID-19 variants; we are working to mitigate effects on future study enrollment in our clinical trials; and we are evaluating the impact in all relevant countries. We remain focused on supporting our active clinical sites in their providing care for patients and in our providing investigational drug supply.
Selected Financial Information
The following is an overview of our results of operations (in millions, except percentages and per-share data):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | |||||||||||||||
| Product sales: | |||||||||||||||||
| U.S. | $ | 19,272 | 9 | % | $ | 17,743 | |||||||||||
| ROW | 7,638 | 8 | % | 7,058 | |||||||||||||
| Total product sales | 26,910 | 9 | % | 24,801 | |||||||||||||
| Other revenues | 1,280 | (16) | % | 1,522 | |||||||||||||
| Total revenues | $ | 28,190 | 7 | % | $ | 26,323 | |||||||||||
| Operating expenses | $ | 20,293 | 21 | % | $ | 16,757 | |||||||||||
| Operating income | $ | 7,897 | (17) | % | $ | 9,566 | |||||||||||
| Net income | $ | 6,717 | 3 | % | $ | 6,552 | |||||||||||
| Diluted EPS | $ | 12.49 | 3 | % | $ | 12.11 | |||||||||||
| Diluted shares | 538 | (1) | % | 541 | |||||||||||||
In the following discussion of changes in product sales, any reference to volume growth or decline refers to changes in the purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies. In addition, any reference to increases or decreases in inventory refers to changes in inventory held by wholesaler customers and end users (such as pharmacies).
Total product sales increased in 2023, primarily driven by volume growth for certain brands, including Repatha, TEZSPIRE, EVENITY, Prolia and BLINCYTO, and the contribution of $954 million in product sales from the Horizon
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acquisition during the period from the acquisition date of October 6, 2023 through December 31, 2023, partially offset by declines in net selling prices of certain products, including Neulasta, MVASI and ENBREL. For 2024, we expect that net selling prices will continue to decline at a portfolio level driven by increased competition. Further, the first quarter of a year historically represents the lowest product sales quarter for the year, in part due to plan changes, insurance reverifications and higher co-pay expenses as U.S. patients work through deductibles, particularly for products acquired through pharmacy benefit programs.
The impact of changes to foreign currency exchange rates will be partially offset by corresponding changes in our international operating expenses. While not designed to completely address foreign currency changes, our hedging activities also seek to offset, in part, such effects on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros.
Uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts have the potential to introduce variability into product sales. For example, actions by governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product sales. Furthermore, our product sales were affected by reduced demand as a result of the COVID-19 pandemic, and the cumulative decrease in diagnoses over the course of the pandemic suppressed the volume of new patients starting treatment, which continues to impact the business. Given the unpredictable nature of future virus surges, there could be future intermittent disruptions in physician–patient interactions. See Risk Factors in Part I, Item 1A. of this Form 10-K.
Other revenues decreased for 2023, primarily due to lower revenue from our COVID-19 manufacturing collaboration.
Operating expenses increased for 2023, due to higher amortization and acquisition-related expenses incurred as a result of the Horizon acquisition, a net impairment charge resulting from the termination of AMG 340, higher profit share and royalty expense, changes in our product mix and higher spend in later-stage clinical programs and marketed products support, partially offset by a loss on the divestiture of Gensenta in 2022. See Part IV—Note 3, Acquisitions and divestitures; Note 13, Goodwill and other intangible assets; and Note 18, Fair value measurement, to the Consolidated Financial Statements.
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Results of Operations
Product sales
Worldwide product sales were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Prolia | $ | 4,048 | 12 | % | $ | 3,628 | 12 | % | $ | 3,248 | |||||||||||||||||||
| ENBREL | 3,697 | (10) | % | 4,117 | (8) | % | 4,465 | ||||||||||||||||||||||
| Otezla | 2,188 | (4) | % | 2,288 | 2 | % | 2,249 | ||||||||||||||||||||||
| XGEVA | 2,112 | 5 | % | 2,014 | — | % | 2,018 | ||||||||||||||||||||||
| Repatha | 1,635 | 26 | % | 1,296 | 16 | % | 1,117 | ||||||||||||||||||||||
| Nplate | 1,477 | 13 | % | 1,307 | 27 | % | 1,027 | ||||||||||||||||||||||
| KYPROLIS | 1,403 | 13 | % | 1,247 | 13 | % | 1,108 | ||||||||||||||||||||||
| Aranesp | 1,362 | (4) | % | 1,421 | (4) | % | 1,480 | ||||||||||||||||||||||
| EVENITY | 1,160 | 47 | % | 787 | 48 | % | 530 | ||||||||||||||||||||||
| Vectibix | 984 | 10 | % | 893 | 2 | % | 873 | ||||||||||||||||||||||
| BLINCYTO | 861 | 48 | % | 583 | 24 | % | 472 | ||||||||||||||||||||||
TEPEZZA(1) | 448 | NM | — | NM | — | ||||||||||||||||||||||||
KRYSTEXXA(1) | 272 | NM | — | NM | — | ||||||||||||||||||||||||
Other products(2) | 5,263 | 1 | % | 5,220 | (9) | % | 5,710 | ||||||||||||||||||||||
| Total product sales | $ | 26,910 | 9 | % | $ | 24,801 | 2 | % | $ | 24,297 | |||||||||||||||||||
| Total U.S. | $ | 19,272 | 9 | % | $ | 17,743 | 3 | % | $ | 17,286 | |||||||||||||||||||
| Total ROW | 7,638 | 8 | % | 7,058 | 1 | % | 7,011 | ||||||||||||||||||||||
| Total product sales | $ | 26,910 | 9 | % | $ | 24,801 | 2 | % | $ | 24,297 | |||||||||||||||||||
NM = not meaningful
____________
(1) TEPEZZA and KRYSTEXXA were acquired from our Horizon acquisition on October 6, 2023, and include product sales from the acquisition date through December 31, 2023.
(2) Consists of product sales of our non-principal products, as well as sales prior to the divestiture of our Bergamo and Gensenta subsidiaries in the second quarter of 2023 and fourth quarter of 2022, respectively.
Future sales of our products will depend in part on the factors discussed in the Overview, Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition, in Part I, Item 1A. Risk Factors, and any additional factors discussed in the individual product sections below. In addition, for a list of our products’ significant competitors, see Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Competition.
Prolia
Total Prolia sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Prolia — U.S. | $ | 2,733 | 11 | % | $ | 2,465 | 15 | % | $ | 2,150 | |||||||||||||||||||
| Prolia — ROW | 1,315 | 13 | % | 1,163 | 6 | % | 1,098 | ||||||||||||||||||||||
| Total Prolia | $ | 4,048 | 12 | % | $ | 3,628 | 12 | % | $ | 3,248 | |||||||||||||||||||
The increase in global Prolia sales for 2023 was primarily driven by volume growth and higher net selling price.
The increase in global Prolia sales for 2022 was driven by volume growth and higher net selling price, partially offset by unfavorable changes to foreign currency exchange rates.
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For a discussion of ongoing litigation related to Prolia, see Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements.
ENBREL
Total ENBREL sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| ENBREL — U.S. | $ | 3,650 | (10) | % | $ | 4,044 | (7) | % | $ | 4,352 | |||||||||||||||||||
| ENBREL — Canada | 47 | (36) | % | 73 | (35) | % | 113 | ||||||||||||||||||||||
| Total ENBREL | $ | 3,697 | (10) | % | $ | 4,117 | (8) | % | $ | 4,465 | |||||||||||||||||||
The decrease in ENBREL sales for 2023 was driven by lower net selling price, lower inventory and unfavorable changes to estimated sales deductions. For 2024, we expect ENBREL to follow the historical pattern of lower sales in the first quarter relative to subsequent quarters due to the impact of benefit plan changes, insurance reverification and increased co-pay expenses as U.S. patients work through deductibles. In addition, for 2024, we expect further declines in net selling price.
The decrease in ENBREL sales for 2022 was primarily driven by unfavorable changes to estimated sales deductions, lower volume and lower net selling price.
Otezla
Total Otezla sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
Otezla — U.S. | $ | 1,777 | (6) | % | $ | 1,886 | 5 | % | $ | 1,804 | |||||||||||||||||||
Otezla — ROW | 411 | 2 | % | 402 | (10) | % | 445 | ||||||||||||||||||||||
| Total Otezla | $ | 2,188 | (4) | % | $ | 2,288 | 2 | % | $ | 2,249 | |||||||||||||||||||
The decrease in global Otezla sales for 2023 was driven by lower net selling price and inventory, partially offset by volume growth. For 2024, we expect Otezla to follow the historical pattern of lower sales in the first quarter relative to subsequent quarters due to the impact of benefit plan changes, insurance reverification and increased co-pay expenses as U.S. patients work through deductibles.
The increase in global Otezla sales for 2022 was primarily driven by volume growth, partially offset by lower net selling price. ROW Otezla sales for 2022 were impacted by unfavorable changes to foreign currency exchange rates.
XGEVA
Total XGEVA sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| XGEVA — U.S. | $ | 1,527 | 3 | % | $ | 1,480 | 3 | % | $ | 1,434 | |||||||||||||||||||
| XGEVA — ROW | 585 | 10 | % | 534 | (9) | % | 584 | ||||||||||||||||||||||
| Total XGEVA | $ | 2,112 | 5 | % | $ | 2,014 | — | % | $ | 2,018 | |||||||||||||||||||
The increase in global XGEVA sales for 2023 was primarily driven by higher net selling price.
Global XGEVA sales were relatively unchanged for 2022 as higher net selling price was offset by lower volume as a result of increased competition and unfavorable changes to foreign currency exchange rates.
For a discussion of ongoing litigation related to XGEVA, see Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements.
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Repatha
Total Repatha sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
Repatha — U.S. | $ | 793 | 30 | % | $ | 608 | 9 | % | $ | 557 | |||||||||||||||||||
Repatha — ROW | 842 | 22 | % | 688 | 23 | % | 560 | ||||||||||||||||||||||
| Total Repatha | $ | 1,635 | 26 | % | $ | 1,296 | 16 | % | $ | 1,117 | |||||||||||||||||||
The increase in global Repatha sales for 2023 was driven by volume growth, partially offset by lower net selling price.
The increase in global Repatha sales for 2022 was driven by volume growth, partially offset by lower net selling price and unfavorable changes to foreign currency exchange rates. Volume benefited from contracting changes to support and improve Medicare Part D and commercial patient access and the inclusion of Repatha on China’s National Reimbursement Drug List as of January 1, 2022, both of which resulted in decreases to the net selling price in 2022.
For a discussion of ongoing litigation related to Repatha, see Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements.
Nplate
Total Nplate sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Nplate — U.S. | $ | 996 | 17 | % | $ | 848 | 50 | % | $ | 566 | |||||||||||||||||||
| Nplate — ROW | 481 | 5 | % | 459 | — | % | 461 | ||||||||||||||||||||||
| Total Nplate | $ | 1,477 | 13 | % | $ | 1,307 | 27 | % | $ | 1,027 | |||||||||||||||||||
The increase in global Nplate sales for 2023 was primarily driven by volume growth, including U.S. government orders totaling $286 million.
The increase in global Nplate sales for 2022 was driven by volume growth, including a U.S. government order of $207 million.
KYPROLIS
Total KYPROLIS sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| KYPROLIS — U.S. | $ | 921 | 8 | % | $ | 850 | 15 | % | $ | 736 | |||||||||||||||||||
| KYPROLIS — ROW | 482 | 21 | % | 397 | 7 | % | 372 | ||||||||||||||||||||||
| Total KYPROLIS | $ | 1,403 | 13 | % | $ | 1,247 | 13 | % | $ | 1,108 | |||||||||||||||||||
The increases in global KYPROLIS sales for 2023 and 2022 were driven by volume growth.
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Aranesp
Total Aranesp sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Aranesp — U.S. | $ | 452 | (13) | % | $ | 521 | (3) | % | $ | 537 | |||||||||||||||||||
| Aranesp — ROW | 910 | 1 | % | 900 | (5) | % | 943 | ||||||||||||||||||||||
| Total Aranesp | $ | 1,362 | (4) | % | $ | 1,421 | (4) | % | $ | 1,480 | |||||||||||||||||||
The decrease in global Aranesp sales for 2023 was driven by unfavorable changes to foreign currency exchange rates and lower net selling price. U.S. Aranesp sales for 2023 decreased due to lower unit demand as a result of independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.
The decrease in global Aranesp sales for 2022 was driven by lower net selling price and unfavorable changes to foreign currency exchange rates, partially offset by favorable changes to estimated sales deductions and volume growth.
We expect Aranesp to continue to face competition from EPOGEN and its biosimilars, which will impact volume and net selling price in the future.
EVENITY
Total EVENITY sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| EVENITY — U.S. | $ | 809 | 52 | % | $ | 533 | 61 | % | $ | 331 | |||||||||||||||||||
| EVENITY — ROW | 351 | 38 | % | 254 | 28 | % | 199 | ||||||||||||||||||||||
| Total EVENITY | $ | 1,160 | 47 | % | $ | 787 | 48 | % | $ | 530 | |||||||||||||||||||
The increases in global EVENITY sales for 2023 and 2022 were driven by volume growth.
Vectibix
Total Vectibix sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Vectibix — U.S. | $ | 461 | 16 | % | $ | 396 | 14 | % | $ | 347 | |||||||||||||||||||
| Vectibix — ROW | 523 | 5 | % | 497 | (6) | % | 526 | ||||||||||||||||||||||
| Total Vectibix | $ | 984 | 10 | % | $ | 893 | 2 | % | $ | 873 | |||||||||||||||||||
The increase in global Vectibix sales for 2023 was driven by volume growth.
The increase in global Vectibix sales for 2022 was driven by higher net selling price and volume growth, partially offset by unfavorable changes to foreign currency exchange rates.
BLINCYTO
Total BLINCYTO sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| BLINCYTO — U.S. | $ | 566 | 68 | % | $ | 336 | 21 | % | $ | 278 | |||||||||||||||||||
| BLINCYTO — ROW | 295 | 19 | % | 247 | 27 | % | 194 | ||||||||||||||||||||||
| Total BLINCYTO | $ | 861 | 48 | % | $ | 583 | 24 | % | $ | 472 | |||||||||||||||||||
The increase in global BLINCYTO sales for 2023 was driven by volume growth.
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The increase in global BLINCYTO sales for 2022 was driven by volume growth and higher net selling price.
Other products
Other product sales by geographic region were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Neulasta — U.S. | $ | 710 | (26) | % | $ | 959 | (37) | % | $ | 1,514 | |||||||||||||||||||
| Neulasta — ROW | 138 | (17) | % | 167 | (24) | % | 220 | ||||||||||||||||||||||
| MVASI — U.S. | 511 | (15) | % | 602 | (27) | % | 826 | ||||||||||||||||||||||
| MVASI — ROW | 289 | (3) | % | 299 | (12) | % | 340 | ||||||||||||||||||||||
| AMJEVITA — U.S. | 126 | NM | — | NM | — | ||||||||||||||||||||||||
AMGEVITA — ROW | 500 | 9 | % | 460 | 5 | % | 439 | ||||||||||||||||||||||
| TEZSPIRE — U.S. | 567 | * | 170 | NM | — | ||||||||||||||||||||||||
| Parsabiv — U.S. | 228 | (10) | % | 253 | 69 | % | 150 | ||||||||||||||||||||||
| Parsabiv— ROW | 134 | 4 | % | 129 | (1) | % | 130 | ||||||||||||||||||||||
| Aimovig — U.S. | 303 | (24) | % | 398 | 27 | % | 313 | ||||||||||||||||||||||
| Aimovig — ROW | 20 | 25 | % | 16 | * | 4 | |||||||||||||||||||||||
LUMAKRAS — U.S. | 197 | (11) | % | 222 | * | 82 | |||||||||||||||||||||||
LUMYKRAS — ROW | 83 | 32 | % | 63 | * | 8 | |||||||||||||||||||||||
| EPOGEN — U.S. | 226 | (55) | % | 506 | (3) | % | 521 | ||||||||||||||||||||||
| KANJINTI — U.S. | 109 | (58) | % | 257 | (46) | % | 479 | ||||||||||||||||||||||
| KANJINTI — ROW | 50 | (15) | % | 59 | (37) | % | 93 | ||||||||||||||||||||||
TAVNEOS — U.S.(1) | 126 | * | 16 | NM | — | ||||||||||||||||||||||||
TAVNEOS — ROW(1) | 8 | 60 | % | 5 | NM | — | |||||||||||||||||||||||
RAVICTI — U.S.(2) | 86 | NM | — | NM | — | ||||||||||||||||||||||||
RAVICTI — ROW(2) | 1 | NM | — | NM | — | ||||||||||||||||||||||||
UPLIZNA — U.S.(2) | 60 | NM | — | NM | — | ||||||||||||||||||||||||
UPLIZNA — ROW(2) | 5 | NM | — | NM | — | ||||||||||||||||||||||||
PROCYSBI — U.S.(2) | 49 | NM | — | NM | — | ||||||||||||||||||||||||
PROCYSBI — ROW(2) | 1 | NM | — | NM | — | ||||||||||||||||||||||||
Other — U.S.(3) | 576 | 47 | % | 393 | 27 | % | 309 | ||||||||||||||||||||||
Other — ROW(3) | 160 | (35) | % | 246 | (13) | % | 282 | ||||||||||||||||||||||
| Total other product sales | $ | 5,263 | 1 | % | $ | 5,220 | (9) | % | $ | 5,710 | |||||||||||||||||||
| Total U.S. — other products | $ | 3,874 | 3 | % | $ | 3,776 | (10) | % | $ | 4,194 | |||||||||||||||||||
| Total ROW — other products | 1,389 | (4) | % | 1,444 | (5) | % | 1,516 | ||||||||||||||||||||||
| Total other product sales | $ | 5,263 | 1 | % | $ | 5,220 | (9) | % | $ | 5,710 | |||||||||||||||||||
NM = not meaningful
* Change in excess of 100%
____________
(1) TAVNEOS was acquired from our ChemoCentryx acquisition on October 20, 2022.
(2) RAVICTI, UPLIZNA and PROCYSBI were acquired from our Horizon acquisition on October 6, 2023, and include product sales from the acquisition date through December 31, 2023.
(3) Consists of product sales from (i) AVSOLA, RIABNI, Corlanor, NEUPOGEN, IMLYGIC, Sensipar/Mimpara and BEKEMV; (ii) ACTIMMUNE, RAYOS, BUPHENYL, PENNSAID, QUINSAIR and DUEXIS from our Horizon acquisition on October 6, 2023 through December 31, 2023; and (iii) sales prior to the divestiture of our Bergamo and Gensenta subsidiaries in the second quarter of 2023 and fourth quarter of 2022, respectively.
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Operating expenses
Operating expenses were as follows (dollar amounts in millions):
| Year ended December 31, 2023 | Change | Year ended December 31, 2022 | Change | Year ended December 31, 2021 | |||||||||||||||||||||||||
| Cost of sales | $ | 8,451 | 32 | % | $ | 6,406 | (1) | % | $ | 6,454 | |||||||||||||||||||
| % of product sales | 31.4 | % | 25.8 | % | 26.6 | % | |||||||||||||||||||||||
| % of total revenues | 30.0 | % | 24.3 | % | 24.8 | % | |||||||||||||||||||||||
| Research and development | $ | 4,784 | 8 | % | $ | 4,434 | (8) | % | $ | 4,819 | |||||||||||||||||||
| % of product sales | 17.8 | % | 17.9 | % | 19.8 | % | |||||||||||||||||||||||
| % of total revenues | 17.0 | % | 16.8 | % | 18.5 | % | |||||||||||||||||||||||
| Acquired in-process research and development | $ | — | NM | $ | — | (100) | % | $ | 1,505 | ||||||||||||||||||||
| % of product sales | — | % | — | % | 6.2 | % | |||||||||||||||||||||||
| % of total revenues | — | % | — | % | 5.8 | % | |||||||||||||||||||||||
| Selling, general and administrative | $ | 6,179 | 14 | % | $ | 5,414 | 1 | % | $ | 5,368 | |||||||||||||||||||
| % of product sales | 23.0 | % | 21.8 | % | 22.1 | % | |||||||||||||||||||||||
| % of total revenues | 21.9 | % | 20.6 | % | 20.7 | % | |||||||||||||||||||||||
| Other | $ | 879 | 75 | % | $ | 503 | * | $ | 194 | ||||||||||||||||||||
| Total operating expenses | $ | 20,293 | 21 | % | $ | 16,757 | (9) | % | $ | 18,340 | |||||||||||||||||||
NM = not meaningful
* Change in excess of 100%
Cost of sales
Cost of sales increased to 30.0% of total revenues for 2023, driven by higher amortization expense from acquisition-related assets primarily associated with the Horizon acquisition, higher profit share and royalty expense and changes in our product mix, partially offset by the impact of the Puerto Rico tax law change. The 2022 Puerto Rico tax law change replaced an excise tax with an income tax beginning in 2023. See Part IV—Note 3, Acquisitions and divestitures, and Note 7, Income taxes, to the Consolidated Financial Statements.
Cost of sales decreased to 24.3% of total revenues for 2022, driven by lower COVID-19 antibody shipments and manufacturing costs, partially offset by changes in our product mix.
Research and development
The Company groups all of its R&D activities and related expenditures into three categories: (i) research and early pipeline, (ii) later-stage clinical programs and (iii) marketed products. These categories are described below:
| Category | Description | |||||||
| Research and early pipeline | R&D expenses incurred in activities substantially in support of early research through the completion of phase 1 clinical trials, including drug discovery, toxicology, pharmacokinetics and drug metabolism and process development | |||||||
| Later-stage clinical programs | R&D expenses incurred in or related to phase 2 and phase 3 clinical programs intended to result in registration of a new product or a new indication for an existing product primarily in the United States or the EU | |||||||
| Marketed products | R&D expenses incurred in support of the Company’s marketed products that are authorized to be sold primarily in the United States or the EU. Includes clinical trials designed to gather information on product safety (certain of which may be required by regulatory authorities) and their product characteristics after regulatory approval has been obtained, as well as the costs of obtaining regulatory approval of a product in a new market after approval in either the United States or the EU has been obtained | |||||||
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R&D expense by category was as follows (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Research and early pipeline | $ | 1,584 | $ | 1,611 | $ | 1,670 | |||||||||||
| Later-stage clinical programs | 1,898 | 1,627 | 1,726 | ||||||||||||||
| Marketed products | 1,302 | 1,196 | 1,423 | ||||||||||||||
| Total R&D expense | $ | 4,784 | $ | 4,434 | $ | 4,819 | |||||||||||
The increase in R&D expense for 2023 was driven by higher spend in later-stage clinical programs and marketed products support, including spend from programs acquired from the Horizon acquisition.
The decrease in R&D expense for 2022 was driven by higher business development activity in 2021 included in later-stage clinical programs and research and early pipeline and lower marketed products support, partially offset by higher later-stage clinical programs support and research and early pipeline spend.
Acquired in-process research and development
The Acquired IPR&D expense in 2021 was related to the bemarituzumab program, which was acquired as part of the Five Prime acquisition in 2021. See Part IV—Note 3, Acquisitions and divestitures, to the Consolidated Financial Statements.
Selling, general and administrative
The increase in SG&A expense for 2023 was primarily driven by acquisition-related expenses, in addition to commercial and general and administrative expenses related to the Horizon acquisition, partially offset by a decline in spend for other marketed products. See Part IV—Note 3, Acquisitions and divestitures, to the Consolidated Financial Statements.
The increase in SG&A expense for 2022 was primarily driven by higher acquisition-related expenses.
Other
Other operating expenses for 2023 primarily consisted of a net impairment charge for AMG 340 and expenses related to our restructuring plan initiated in the first quarter of 2023. See Part IV—Note 2, Restructuring; Note 13, Goodwill and other intangible assets; and Note 18, Fair value measurement, to the Consolidated Financial Statements.
Other operating expenses for 2022 primarily consisted of a loss on the divestiture of Gensenta. See Part IV—Note 3, Acquisitions and divestitures, to the Consolidated Financial Statements.
Other operating expenses for 2021 primarily consisted of expenses related to cost-savings initiatives and a legal judgment.
Nonoperating expenses/income and income taxes
Nonoperating expenses/income and income taxes were as follows (dollar amounts in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Interest expense, net | $ | (2,875) | $ | (1,406) | $ | (1,197) | |||||||||||
| Other income (expense), net | $ | 2,833 | $ | (814) | $ | 259 | |||||||||||
| Provision for income taxes | $ | 1,138 | $ | 794 | $ | 808 | |||||||||||
| Effective tax rate | 14.5 | % | 10.8 | % | 12.1 | % | |||||||||||
Interest expense, net
The increases in Interest expense, net, in 2023 and 2022 over the respective prior years was primarily due to higher overall debt outstanding and higher interest rates on debt. See Part IV—Note 16, Financing arrangements, to the Consolidated Financial Statements.
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Other income (expense), net
During the first quarter of 2023, we changed the method of accounting for our investment in BeiGene from the equity method to recording the investment at fair value, with changes in fair value recognized in earnings. See Part IV—Note 10, Investments, to the Consolidated Financial Statements.
The change in Other income (expense), net, for 2023 was primarily due to gains recognized in connection with recording our BeiGene investment at fair value and an increase in interest income due to higher average cash balances and higher interest rates.
The change in Other income (expense), net, for 2022 was primarily due to higher losses recognized in connection with our BeiGene investment compared with 2021 and losses recognized on our investments in limited partnerships, publicly traded equity securities and other strategic investments.
Income taxes
The increase in our effective tax rate for 2023 compared with 2022 was primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023.
The decrease in our effective tax rate for 2022 compared with 2021 was primarily due to the nondeductible IPR&D expense arising from the acquisition of Five Prime in the prior year, partially offset by a nondeductible loss on the divestiture of Gensenta in 2022 and net unfavorable items as compared to the prior year.
As previously reported, the OECD reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Effective January 1, 2024, selected individual countries, including the United Kingdom and EU member countries, have enacted the global minimum tax agreement. Our legal entities that are doing business in the countries that have enacted the agreement are now subject to a 15% minimum tax rate on adjusted financial statement income. Other countries, including the United States and the U.S. territory of Puerto Rico, have not yet enacted the OECD agreement and implementation remains highly uncertain. The continued enactment of the agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.
The U.S. Treasury released final foreign tax credit regulations in December 2021 that eliminated U.S. creditability of the Puerto Rico excise tax beginning in 2023. In response, on June 30, 2022, the U.S. territory of Puerto Rico enacted Act 52-2022, which provides for an alternative income tax rate on industrial development income that the U.S. Treasury confirmed will be creditable under federal law. As part of this new law, eligible businesses will be subject to incremental income and withholding taxes in lieu of payment of the Puerto Rico excise tax. In order to qualify for the alternative income tax, our current tax grant with the Puerto Rico government was amended in December 2022. We qualified for this alternative income tax beginning on January 1, 2023, and our tax expense increased.
In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.
In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.
We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The two cases were consolidated in the U.S.
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Tax Court on December 19, 2022. On February 10, 2023, the U.S. Tax Court entered an order setting a trial date of November 4, 2024.
We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we are under examination by a number of state and foreign tax jurisdictions.
Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our consolidated financial statements.
See Part I, Item 1A. Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations; Part II, Item 7. Management’s Discussion and Analysis or Financial Condition and Results of Operations—Critical Accounting Policies and Estimates, Income taxes; and Part IV—Note 7, Income taxes, to the Consolidated Financial Statements for further discussion.
Financial Condition, Liquidity and Capital Resources
Selected financial data was as follows (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash, cash equivalents and marketable securities | $ | 10,944 | $ | 9,305 | |||||||
| Total assets | $ | 97,154 | $ | 65,121 | |||||||
| Current portion of long-term debt | $ | 1,443 | $ | 1,591 | |||||||
| Long-term debt | $ | 63,170 | $ | 37,354 | |||||||
| Stockholders’ equity | $ | 6,232 | $ | 3,661 | |||||||
Cash, cash equivalents and marketable securities
Our balance of cash, cash equivalents and marketable securities was $10.9 billion on December 31, 2023. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.
Capital allocation
Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including investments in innovation both internally and externally (including investments that expand our portfolio of products in areas of therapeutic interest), capital expenditures, repayment of debt, payment of dividends and stock repurchases.
We intend to continue investing in our business while reducing our debt and returning capital to stockholders through the payment of cash dividends and stock repurchases. This reflects our desire to optimize our cost of capital and our confidence in the future cash flows of our business. The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, debt levels and debt service requirements, our credit rating, availability of financing on acceptable terms, changes to applicable tax laws or corporate laws, changes to our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements. In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock. The manner of stock repurchases may include block purchases, tender offers, ASRs and market transactions.
The Board of Directors declared quarterly cash dividends of $2.13, $1.94 and $1.76 per share of common stock paid in 2023, 2022 and 2021, respectively, an increase of 10% over the prior year in both 2023 and 2022. In December 2023, the Board
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of Directors declared a cash dividend of $2.25 per share of common stock for the first quarter of 2024, an increase of 6% for this period, to be paid in March 2024.
During 2023, we did not repurchase any of our common stock. During 2022, we repurchased $6.3 billion of common stock, including $6.0 billion under ASR agreements and had cash settlements for stock repurchases of $6.4 billion. In 2021, we repurchased and had cash settlements of $5.0 billion of common stock. As of December 31, 2023, $7.0 billion remained available under the stock repurchase program.
As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of December 31, 2023 and 2022. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our expected continued profitability and strong financial position.
We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements as well as our plans to reduce debt, pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities. We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of marketable securities, borrowings through commercial paper and/or syndicated credit facilities, and access to other domestic and foreign debt markets and equity markets. See Part I, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business.
Financing arrangements
To help meet our liquidity requirements, we have entered into various financing arrangements. The noncurrent portions of our long-term borrowings as of December 31, 2023 and 2022, were $63.2 billion and $37.4 billion, respectively. The carrying values of our long-term borrowings are net of fair value adjustments for interest rate swaps and unamortized discounts, premiums and offering costs. As of December 31, 2023, S&P, Moody’s and Fitch assigned credit ratings to our outstanding senior notes of BBB+, Baa1 and BBB, respectively, which are considered investment grade. Unfavorable changes to these ratings may have an adverse impact on future financings.
In December 2022, in connection with the acquisition of Horizon, we entered into a bridge credit agreement and a term loan credit agreement, which provided for borrowings in the aggregate of $28.5 billion. In March 2023, we issued $24.0 billion of debt composed of eight series of notes and terminated the bridge credit agreement. In October 2023, in connection with the completion of the acquisition of Horizon, we borrowed $4.0 billion under the term loan credit agreement.
During 2022 and 2021, we issued debt with aggregate principal amounts of $7.0 billion and $5.0 billion, respectively.
During 2023, we repurchased portions of our debt at an aggregate cost of $0.6 billion. During 2022, we repurchased portions of our debt at a cost of $0.3 billion. During 2021, we repaid/redeemed debt of $4.2 billion.
To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that effectively converted a fixed-rate interest coupon for certain of our debt issuances to a floating, SOFR-based coupon over the lives of the respective notes. These interest rate swap contracts qualify and are designated as fair value hedges. As of both December 31, 2023 and 2022, we had interest rate swap contracts with aggregate notional amount of $6.7 billion.
To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated in foreign currencies, we entered into cross-currency swap contracts, which effectively convert the interest payments and principal repayment of the respective notes from euros, pounds sterling and Swiss francs to U.S. dollars. These cross-currency swap contracts qualify and are designated as cash flow hedges. As of both December 31, 2023 and 2022, we had cross-currency swap contracts with aggregate notional amount of $2.7 billion and $3.4 billion, respectively.
As of December 31, 2023, we had a commercial paper program that allows us to issue up to $2.5 billion of unsecured commercial paper to fund our working-capital needs. During 2023, 2022 and 2021, we did not issue any commercial paper. No commercial paper was outstanding as of both December 31, 2023 and 2022.
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In 2023, we amended and restated our syndicated, unsecured, revolving credit agreement, under which we may borrow up to $4.0 billion (increased from $2.5 billion prior to the amendment) for general corporate purposes, including as a liquidity backstop for our commercial paper program. The commitments under the revolving credit agreement may be increased by up to $1.25 billion with the agreement of the banks (increased from $750 million prior to the amendment). Each bank that is a party to the agreement has an initial commitment term of five years. This term may be extended for up to two additional one-year periods with the agreement of the banks. Annual commitment fees for this agreement are 0.09% of the unused portion of the facility based on our current credit rating. Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.01% or (ii) the highest of (A) the administrative agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50% or (C) one-month SOFR plus 1.1%. As of December 31, 2023 and 2022, no amounts were outstanding under this facility.
In February 2023, we filed a shelf registration statement with the SEC that allows us to issue unspecified amounts of debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depositary shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depositary shares. Under this shelf registration statement, all of the securities available for issuance may be offered from time to time, with terms to be determined at the time of issuance. This shelf registration statement expires in February 2026.
Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement and term loan credit agreement include a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements. We were in compliance with all applicable covenants under these arrangements as of December 31, 2023.
These financing arrangements are more fully discussed in Part IV—Note 16, Financing arrangements, and Note 19, Derivative instruments, to the Consolidated Financial Statements.
Cash flows
Our summarized cash flow activity was as follows (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Net cash provided by operating activities | $ | 8,471 | $ | 9,721 | $ | 9,261 | |||||||||||
| Net cash (used in) provided by investing activities | $ | (26,204) | $ | (6,044) | $ | 733 | |||||||||||
| Net cash provided by (used in) financing activities | $ | 21,048 | $ | (4,037) | $ | (8,271) | |||||||||||
Operating
Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds. Cash provided by operating activities decreased in 2023 due to lower net income adjusted for non-cash items, primarily transaction and integration payments made in connection with the Horizon acquisition, as well as higher tax payments, partially offset by changes in working capital items. Cash provided by operating activities increased in 2022 primarily due to the timing of payments for sales incentives and discounts, vendor purchases, liabilities to tax authorities and receipts from corporate partners, partially offset by higher manufacturing activities in the current year.
Investing
Cash used in investing activities during 2023 was primarily due to $27.0 billion of net cash used for the purchase of Horizon, partially offset by net cash inflows related to marketable securities of $1.7 billion. Cash used in investing activities during 2022 was primarily due to our $3.8 billion purchase of ChemoCentryx and net cash outflows related to marketable securities of $1.4 billion. Cash provided by investing activities during 2021 was primarily due to net cash inflows related to marketable securities of $4.3 billion, partially offset by cash used in the acquisitions of Teneobio and Five Prime of $2.5 billion. Capital expenditures were $1.1 billion, $936 million and $880 million in 2023, 2022 and 2021, respectively. We currently estimate 2024 spending on capital projects to be approximately $1.1 billion. A majority of the increase in expenditures relates to expansion of manufacturing capacity to enable supply of products and product candidates.
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Financing
Cash provided by financing activities during 2023 was primarily due to net proceeds from long-term debt of $27.8 billion primarily in connection with the acquisition of Horizon, partially offset by the payment of dividends of $4.6 billion and repayment/extinguishment of debt of $2.1 billion. Cash used in financing activities during 2022 was primarily due to payments to repurchase our common stock of $6.4 billion and dividends paid of $4.2 billion, partially offset by proceeds from the issuance of debt of $6.9 billion. Cash used in financing activities during 2021 was primarily due to payments to repurchase our common stock of $5.0 billion and the payment of dividends of $4.0 billion, partially offset by proceeds from the issuance of debt, net of repayments of $0.8 billion.
See Part IV—Note 10, Investments; Note 16, Financing arrangements; and Note 17, Stockholders’ equity, to the Consolidated Financial Statements.
Capital requirements
We have material cash requirements to pay third parties under various contractual obligations discussed below.
We are obligated to pay interest and repay principal under our various financing arrangements, including amounts under interest rate swap and cross-currency swap contracts related to certain of our long-term debt obligations. For information on scheduled debt maturities and payments under derivative contracts associated with our long-term debt obligations, see Part IV—Note 16, Financing arrangements, and Note 19, Derivative instruments, to the Consolidated Financial Statements.
We are obligated to make payments for operating leases, including rental commitments on abandoned leases and leases that have not yet commenced. For information on these obligations, see Part IV—Note 14, Leases, to the Consolidated Financial Statements.
Under the 2017 Tax Act, we elected to pay in eight annual installments the repatriation tax related primarily to prior indefinitely invested earnings of our foreign operations. For information on the remaining scheduled repatriation tax installments, see Part IV—Note 20, Contingencies and commitments—Commitments—U.S. repatriation tax, to the Consolidated Financial Statements.
We have purchase obligations of $4.3 billion primarily related to (i) R&D commitments (including those related to clinical trials) for new and existing products, (ii) capital expenditures and (iii) open purchase orders for the acquisition of goods and services in the ordinary course of business. Most of these obligations are expected to be paid within one year, and payment of certain of these amounts may be reduced based on certain future events.
In addition to the purchase obligations noted above, we are contractually obligated to pay additional amounts that in the aggregate are significant, upon the achievement of various development, regulatory and commercial milestones for agreements we have entered into with third parties, including contingent consideration incurred in the acquisitions of Teneobio and Kirin-Amgen, Inc. These payments are contingent upon the occurrence of various future events, substantially all of which have a high degree of uncertainty of occurring, and any resulting cash requirements are managed through our operational budgeting processes. Except with respect to the fair value of the contingent consideration of approximately $96 million, these obligations are not recorded on our Consolidated Balance Sheets. As of December 31, 2023, the maximum amount that may be payable in the future for agreements we have entered into with third parties is $8.3 billion.
We have recorded liabilities for UTBs that, because of their nature, have a high degree of uncertainty regarding the timing of future cash payment and other events that extinguish these liabilities. See Part IV—Note 7, Income taxes, to the Consolidated Financial Statements.
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Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. Our significant accounting policies are included in Part IV—Note 1, Summary of significant accounting policies, to the Consolidated Financial Statements. The following are considered critical to our consolidated financial statements because they require the most difficult, subjective or complex judgments, often because of the need to make estimates about matters that are inherently uncertain.
Product sales and sales deductions
Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon delivery, based on an amount that reflects the consideration to which we expect to be entitled, net of accruals for estimated rebates, wholesaler chargebacks, discounts and other deductions (collectively, sales deductions) and returns established at the time of sale.
We analyze the adequacy of our accruals for sales deductions quarterly. Amounts accrued for sales deductions are adjusted when trends or significant events indicate that adjustment is appropriate. Accruals are also adjusted to reflect actual results. Amounts recorded in Accrued liabilities in the Consolidated Balance Sheets for sales deductions were as follows (in millions):
| Rebates | Chargebacks | Other deductions | Total | ||||||||||||||||||||
| Balance as of December 31, 2020 | $ | 3,979 | $ | 591 | $ | 239 | $ | 4,809 | |||||||||||||||
| Amounts charged against product sales | 10,195 | 9,619 | 2,065 | 21,879 | |||||||||||||||||||
| Payments | (10,027) | (9,413) | (2,074) | (21,514) | |||||||||||||||||||
| Balance as of December 31, 2021 | 4,147 | 797 | 230 | 5,174 | |||||||||||||||||||
| Amounts charged against product sales | 12,500 | 10,630 | 2,288 | 25,418 | |||||||||||||||||||
| Payments | (11,768) | (10,578) | (2,260) | (24,606) | |||||||||||||||||||
| Balance as of December 31, 2022 | 4,879 | 849 | 258 | 5,986 | |||||||||||||||||||
Additions (1) | 263 | 24 | 39 | 326 | |||||||||||||||||||
| Amounts charged against product sales | 14,328 | 13,349 | 2,533 | 30,210 | |||||||||||||||||||
| Payments | (13,634) | (13,125) | (2,492) | (29,251) | |||||||||||||||||||
| Balance as of December 31, 2023 | $ | 5,836 | $ | 1,097 | $ | 338 | $ | 7,271 | |||||||||||||||
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(1) Represents sales deductions assumed from the Horizon acquisition.
For the years ended December 31, 2023, 2022 and 2021, total sales deductions were 53%, 51% and 47% of gross product sales, respectively. The increase in the total sales deductions balance as of December 31, 2023, compared with December 31, 2022, was primarily driven by the impact of higher U.S. chargeback and commercial rebate discount rates, an increase in gross sales and Horizon integrated beginning balances, partially offset by timing of payments. Included in the amounts are immaterial net adjustments related to prior-year sales due to changes in estimates.
In the United States, we use wholesalers as the principal means of distributing our products to healthcare providers such as physicians or their clinics, dialysis centers, hospitals and pharmacies. Products we sell in Europe are distributed principally to hospitals and/or wholesalers depending on the distribution practice in each country where the products are sold. We monitor the inventory levels of our products at our wholesalers by using data from our wholesalers and other third parties, and we believe wholesaler inventories have been maintained at appropriate levels (generally two to three weeks) given end-user demand. Accordingly, historical fluctuations in wholesaler inventory levels have not significantly affected our method of estimating sales deductions and returns.
Accruals for sales deductions are based primarily on estimates of the amounts earned or to be claimed on the related sales. These estimates take into consideration current contractual and statutory requirements, specific known market events and trends, internal and external historical data and forecasted customer buying patterns. Sales deductions are substantially product specific and therefore, for any given year, can be affected by the mix of products sold.
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Rebates include primarily amounts paid to payers and providers in the United States, including those paid to state Medicaid programs, and are based on contractual arrangements or statutory requirements that vary by product, by payer and by individual payer plans. As we sell products, we estimate the amount of rebate we will pay based on the product sold, contractual terms, estimated patient population, historical experience and wholesaler inventory levels; and we accrue these rebates in the period the related sales are recorded. We then adjust the rebate accruals as more information becomes available and to reflect actual claims experience. Estimating such rebates is complicated, in part because of the time delay between the date of sale and the actual settlement of the liability. We believe the methodology we use to accrue for rebates is reasonable and appropriate given current facts and circumstances, but actual results may differ.
Wholesaler chargebacks relate to our contractual agreements to sell products to healthcare providers in the United States at fixed prices that are lower than the prices we charge wholesalers. When healthcare providers purchase our products through wholesalers at these reduced prices, wholesalers charge us for the difference between their purchase prices and the contractual prices between Amgen and the healthcare providers. The provision for chargebacks is based on expected sales by our wholesaler customers to healthcare providers. Accruals for wholesaler chargebacks are less difficult to estimate than rebates are, and they closely approximate actual results because chargeback amounts are fixed at the date of purchase by the healthcare providers and because we generally settle the liability for these deductions within a few weeks.
Product returns
Returns are estimated by comparison of historical return data to their related sales on a production lot basis. Historical rates of return are determined for each product and are adjusted for known or expected changes in the marketplace specific to each product, when appropriate. In each of the past three years, sales return provisions have amounted to less than 1% of gross product sales. Changes in estimates for prior-year sales return provisions have historically been immaterial.
Income taxes
We provide for income taxes based on pretax income and applicable tax rates in the various jurisdictions in which we operate.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by tax authorities based on the technical merits of the position. The tax benefit recognized in the consolidated financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of UTBs is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by tax authorities, new information obtained during a tax examination or resolution of an examination. We believe our estimates for uncertain tax positions are appropriate and sufficient for any assessments that may result from examinations of our tax returns. We recognize both accrued interest and penalties, when appropriate, related to UTBs in income tax expense. See Part IV—Note 7, Income taxes, to the Consolidated Financial Statements.
Certain items are included in our tax return at different times than they are reflected in the financial statements, and they cause temporary differences between the tax bases of assets and liabilities and their reported amounts. Such temporary differences create deferred tax assets and liabilities. Deferred tax assets are generally items that can be used as tax deductions or credits in tax returns in future years but for which we have already recorded the tax benefit in the consolidated financial statements. We establish valuation allowances against our deferred tax assets when the amount of expected future taxable income is not likely to support the use of the deduction or credit. Deferred tax liabilities are either (i) tax expenses recognized in the consolidated financial statements for which payment has been deferred, (ii) expenses for which we have already taken a deduction on the tax return but have not yet recognized in the consolidated financial statements or (iii) liabilities for the difference between the book basis and the tax basis of the intangible assets acquired in many business combinations, because future expenses associated with these assets most often will not be tax deductible.
We are a vertically integrated enterprise with operations in the United States and various foreign jurisdictions. In the jurisdictions where we conduct operations, we are subject to income tax based on the tax laws and principles of such jurisdictions and on the functions, risks and activities performed therein. Our pretax income is therefore attributed to domestic or foreign sources based on the operations performed and risks assumed in each location and the tax laws and principles of the respective taxing jurisdictions. For example, we conduct significant operations in Puerto Rico, a territory of the United States that is treated as a foreign jurisdiction for U.S. tax purposes, pertaining to manufacturing, distribution and other related functions to meet our worldwide product demand. Income from our operations in Puerto Rico is subject to tax incentive grants through 2050.
In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS
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appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.
In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.
We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The two cases were consolidated in the U.S. Tax Court on December 19, 2022. On February 10, 2023, the U.S. Tax Court entered an order setting a trial date of November 4, 2024.
We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we have examinations by a number of state and foreign tax jurisdictions.
Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our consolidated financial statements. See Part I, Item 1A. Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations; Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income taxes; and Part IV—Note 7, Income taxes, to the Consolidated Financial Statements for further discussion.
Our operations are subject to the tax laws, regulations and administrative practices of the United States, the U.S. territory of Puerto Rico, U.S. state jurisdictions and other countries in which we do business. Significant changes in these rules could have a material adverse effect on our results of operations. See Part I, Item 1A. Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such tax liabilities could adversely affect our profitability and results of operations.
Contingencies
In the ordinary course of business, we are involved in various legal proceedings, government investigations and other matters such as intellectual property disputes, contractual disputes and class action suits that are complex in nature and have outcomes that are difficult to predict. We describe our legal proceedings and other matters that are significant or that we believe could become significant in Part IV—Note 20, Contingencies and commitments, to the Consolidated Financial Statements. We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously.
While it is not possible to accurately predict or determine the eventual outcomes of these items, an adverse determination in one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.
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Valuation of assets and liabilities in connection with acquisitions
We have acquired and continue to acquire intangible assets in connection with business combinations and asset acquisitions. These intangible assets consist primarily of technology associated with currently marketed human therapeutic products and IPR&D product candidates. Discounted cash flow models are typically used to determine the fair values of these intangible assets for purposes of allocating consideration paid to the net assets acquired in an acquisition. See Part IV—Note 3, Acquisitions and divestitures, to the Consolidated Financial Statements. These models require the use of significant estimates and assumptions, including but not limited to:
•determining the timing and expected costs to complete in-process projects, taking into account the stage of completion at the acquisition date;
•projecting the probability and timing of obtaining marketing approval from the FDA and other regulatory agencies for product candidates;
•estimating the timing of and future net cash flows from product sales resulting from completed products and in-process projects; and
•developing appropriate discount rates to calculate the present values of the cash flows.
Significant estimates and assumptions are also required to determine the business combination date fair values of any contingent consideration obligations incurred in connection with business combinations. In addition, we must revalue these obligations each subsequent reporting period until the related contingencies are resolved and record changes in their fair values in earnings. The acquisition date fair values of contingent consideration obligations incurred or assumed in the acquisitions were determined using a combination of valuation techniques. Significant estimates and assumptions required for these valuations included but were not limited to the timing and probability of achieving regulatory milestones, product sales projections under various scenarios and discount rates used to calculate the present value of the required payments. These estimates and assumptions are required to be updated in order to revalue these contingent consideration obligations each reporting period. Accordingly, subsequent changes in underlying facts and circumstances could result in changes in these estimates and assumptions, which could have a material impact on the estimated future fair values of these obligations.
We believe the fair values used to record intangible assets acquired and contingent consideration obligations incurred in connection with business combinations and asset acquisitions are based on reasonable estimates and assumptions given the facts and circumstances as of the related valuation dates.
Impairment of long-lived assets
We review the carrying value of our property, plant and equipment and our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such circumstances exist, an estimate of undiscounted future cash flows to be generated by the long-lived asset is compared with the carrying value to determine whether an impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value.
Indefinite-lived intangible assets, composed of IPR&D projects acquired in a business combination that have not reached technological feasibility or that lack regulatory approval at the time of acquisition, are reviewed for impairment annually, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable and upon establishment of technological feasibility or regulatory approval. We determine impairment by comparing the fair value of the asset to its carrying value. If the asset’s carrying value exceeds its fair value, an impairment charge is recorded for the difference, and its carrying value is reduced accordingly.
Estimating future cash flows of an IPR&D product candidate for purposes of an impairment analysis requires us to make significant estimates and assumptions regarding the amount and timing of costs to complete the project and the amount, timing and probability of achieving revenues from the completed product similar to how the acquisition date fair value of the project was determined, as described above. There are often major risks and uncertainties associated with IPR&D projects as we are required to obtain regulatory approvals in order to be able to market these products. Such approvals require completing clinical trials that demonstrate a product candidate is safe and effective. Consequently, the eventual realized value of the acquired IPR&D project may vary from its fair value at the date of acquisition, and IPR&D impairment charges may occur in future periods which could have a material adverse effect on our results of operations.
We believe our estimations of future cash flows used for assessing impairment of long-lived assets are based on reasonable assumptions given the facts and circumstances as of the related dates of the assessments.
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Recently Issued Accounting Standards
See Part IV—Note 1, Summary of significant accounting policies, to the Consolidated Financial Statements for a discussion of recently issued accounting pronouncements not yet adopted as of December 31, 2023.
| Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ||||
We are exposed to market risks that may result from changes in interest rates, foreign currency exchange rates and prices of equity instruments as well as changes in general economic conditions in the countries where we conduct business. To reduce certain of these risks, we enter into various types of foreign currency and interest rate derivative hedging transactions as part of our risk management program. We do not use derivatives for speculative trading purposes.
In the discussion that follows, we assumed a hypothetical change in interest rates of 100 basis points from those as of December 31, 2023 and 2022. Except as noted below, we also assumed a hypothetical 20% change in foreign currency exchange rates against the U.S. dollar based on its position relative to other currencies as of December 31, 2023 and 2022.
Interest-rate-sensitive financial instruments
Our portfolio of available-for-sale investments as of December 31, 2023 and 2022, was composed almost entirely of U.S. Treasury securities and money market mutual funds. The fair values of our available-for-sale investments were $10.4 billion and $4.3 billion as of December 31, 2023 and 2022, respectively. Duration is a sensitivity measure that can be used to approximate the change in the value of a security that will result from a 100 basis point change in interest rates. Applying a duration model, a hypothetical 100 basis point increase in interest rates as of December 31, 2023 and 2022, would not have resulted in a material reduction in the fair values of these securities. In addition, a hypothetical 100 basis point decrease in interest rates as of December 31, 2023 and 2022, would not result in a material effect on income in the respective ensuing year.
As of December 31, 2023, we had outstanding debt with a carrying value of $64.6 billion and a fair value of $59.2 billion. As of December 31, 2022, we had outstanding debt with a carrying value of $38.9 billion and a fair value of $35.0 billion. Our outstanding debt was composed of debt with fixed interest rates. Changes in interest rates do not affect interest expense on fixed-rate debt. Changes in interest rates would, however, affect the fair values of fixed-rate debt. A hypothetical 100 basis point decrease in interest rates relative to interest rates as of December 31, 2023 and 2022, would have resulted in an increase of $5.4 billion and $3.5 billion, respectively, in the aggregate fair value of our outstanding debt on these dates. Analysis of the debt does not consider the impact that hypothetical changes in interest rates would have on related interest rate swap contracts and cross-currency swap contracts, discussed below.
To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that qualified and were designated for accounting purposes as fair value hedges for certain of our fixed-rate debt. These interest rate swap contracts effectively converted a fixed-rate interest coupon to a floating-rate SOFR-based coupon over the life of the respective notes. Interest rate swap contracts with aggregate notional amounts of $6.7 billion were outstanding as of both December 31, 2023 and 2022. A hypothetical 100 basis point increase in interest rates relative to interest rates as of December 31, 2023 and 2022, would have resulted in reductions in fair values of approximately $180 million and $210 million, respectively, on our interest rate swap contracts on these dates. Analysis of the interest rate swap contracts does not consider the impact that hypothetical changes in interest rates would have on the related fair values of debt that these interest-rate-sensitive instruments were designed to offset.
As of December 31, 2023 and 2022, we had outstanding cross-currency swap contracts with aggregate notional amounts of $2.7 billion and $3.4 billion, respectively, that hedge our foreign-currency-denominated debt and related interest payments. These contracts effectively convert interest payments and principal repayment of this debt to U.S. dollars from euros, pounds sterling and Swiss francs and are designated for accounting purposes as cash flow hedges. A hypothetical 100 basis point adverse movement in interest rates relative to interest rates as of December 31, 2023 and 2022, would have resulted in reductions in the fair values of our cross-currency swap contracts of approximately $100 million and $90 million, respectively.
Foreign-currency-sensitive financial instruments
Our international operations are affected by fluctuations in the value of the U.S. dollar compared with foreign currencies, predominantly the euro. Increases and decreases in our international product sales from movements in foreign currency exchange rates are partially offset by corresponding increases or decreases in our international operating expenses. Increases and decreases in our foreign-currency-denominated assets from movements in foreign currency exchange rates are partially offset by corresponding increases or decreases in our foreign-currency-denominated liabilities. To further reduce our net exposure to foreign currency exchange rate fluctuations on our results of operations, we enter into foreign currency forward and cross-currency swap contracts.
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As of December 31, 2023, we had outstanding euro- and pound-sterling- denominated debt with a principal carrying value and a fair value of $2.3 billion and $2.3 billion, respectively. As of December 31, 2022, we had outstanding euro-, pound-sterling- and Swiss-franc-denominated debt with a principal carrying value and a fair value of $3.0 billion and $2.9 billion, respectively. A hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2023, would have resulted in an increase in fair value of this debt of approximately $470 million on this date and a reduction in income in the ensuing year of approximately $460 million. A hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2022, would have resulted in an increase in fair value of this debt of $580 million on this date and a reduction in income in the ensuing year of $600 million. The impact on income from these hypothetical changes in foreign currency exchange rates would be substantially offset by the impact such changes would have on related cross-currency swap contracts, which are in place for the related foreign-currency-denominated debt.
We have cross-currency swap contracts that are designated as cash flow hedges of our debt denominated in euros and pounds sterling (and Swiss francs with respect to the prior year), with aggregate notional amount of $2.7 billion and $3.4 billion as of December 31, 2023 and 2022, respectively. A hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates on these dates would have resulted in reductions in the fair values of these contracts of approximately $480 million and $540 million on these dates, respectively. The impact of this hypothetical adverse movement in foreign currency exchange rates on ensuing years’ income from these contracts would be fully offset by corresponding hypothetical changes in the carrying amounts of the related hedged debt.
We enter into foreign currency forward contracts that are designated for accounting purposes as cash flow hedges of certain anticipated foreign currency transactions. As of December 31, 2023, the fair values of these contracts were a $145 million asset and a $116 million liability. As of December 31, 2022, the fair values of these contracts were a $288 million asset and a $76 million liability. As of December 31, 2023, we had primarily euro-based open foreign currency forward contracts with notional amounts of $6.6 billion. As of December 31, 2022, we had primarily euro-based open foreign currency forward contracts with notional amounts of $6.0 billion. With regard to foreign currency forward contracts that were open as of December 31, 2023, a hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2023, would have resulted in a reduction in fair value of these contracts of approximately $1.2 billion on this date and in the ensuing year, a reduction in income of approximately $690 million. With regard to contracts that were open as of December 31, 2022, a hypothetical 20% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2022, would have resulted in a reduction in fair value of these contracts of approximately $1.1 billion on this date and in the ensuing year, a reduction in income of $590 million. The analysis does not consider the impact that hypothetical changes in foreign currency exchange rates would have on anticipated transactions that these foreign-currency-sensitive instruments were designed to offset.
As of December 31, 2023 and 2022, we had open, short-duration, foreign currency forward contracts that mature in one month or less, that had notional amounts of $0.5 billion and $0.5 billion, respectively, and that hedged fluctuations of certain assets and liabilities denominated in foreign currencies but were not designated as hedges for accounting purposes. These contracts had no material net unrealized gains or losses as of December 31, 2023 and 2022. With regard to these foreign currency forward contracts that were open as of December 31, 2023 and 2022, a hypothetical 5% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates on these dates would not have a material effect on the fair values of these contracts or related income in the respective ensuing years. The analysis does not consider the impact that hypothetical changes in foreign currency exchange rates would have on assets and liabilities that these foreign-currency-sensitive instruments were designed to offset.
Market-price-sensitive financial instruments
As of December 31, 2023 and 2022, we were exposed to price risk on equity securities included in our portfolio of investments, which were acquired primarily for the promotion of business and strategic objectives. These investments include our investments in BeiGene and Neumora, as well as other publicly and privately held small-capitalization stocks, limited partnerships that invest in early-stage biotechnology companies. A 20% decrease in the aggregate value of our equity investment portfolio as of December 31, 2023 and 2022, would result in losses in fair value of approximately $1.0 billion and $1.1 billion, respectively.
Counterparty credit risks
Our financial instruments, including derivatives, are subject to counterparty credit risk, which we consider as part of the overall fair value measurement. Our financial risk management policy limits derivative transactions by requiring that transactions be made only with institutions with minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch; and it places exposure limits on the amount with any individual counterparty. In addition, we have an investment policy that limits
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investments to certain types of debt and money market instruments issued by institutions with investment-grade credit ratings and places restriction on maturities and concentrations by asset class and issuer.
| Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | ||||
The information required by this item is incorporated herein by reference to the financial statements and schedule listed in Item 15(a)1 and (a)2 of Part IV and included in this Annual Report on Form 10-K.
| Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | ||||
None.
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| Item 9A. | CONTROLS AND PROCEDURES | ||||
We maintain “disclosure controls and procedures,” as such term is defined under the Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in Amgen’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to Amgen’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, Amgen’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, Amgen’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation under the supervision and with the participation of our management, including Amgen’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Amgen’s disclosure controls and procedures. Based upon their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2023.
Management determined that as of December 31, 2023, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States. However, all internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and reporting.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the COSO in Internal Control—Integrated Framework (2013 framework). Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
Management has excluded Horizon, which was acquired by us on October 6, 2023, from its assessment of internal control over financial reporting as of December 31, 2023. Total assets and revenues of Horizon excluded from our assessment of internal control over financial reporting were approximately 7% of total assets and 3% of total revenues as of and for the year ended December 31, 2023, respectively.
The effectiveness of the Company’s internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report appearing below, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Amgen Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Amgen Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Amgen Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Horizon Therapeutics plc, which is included in the 2023 consolidated financial statements of the Company and constituted 7% of total assets as of December 31, 2023 and 3% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Horizon Therapeutics plc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 and our report dated February 14, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
February 14, 2024
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| Item 9B. | OTHER INFORMATION | ||||
Rule 10b5-1 trading arrangements
During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”
Item 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | ||||
Not applicable.
PART III
| Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | ||||
Information about our Directors is incorporated by reference from the section entitled ITEM 1—ELECTION OF DIRECTORS in our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2023 (the Proxy Statement). Information about the procedures by which stockholders may recommend nominees for the Board of Directors is incorporated by reference from APPENDIX A—AMGEN INC. BOARD OF DIRECTORS GUIDELINES FOR DIRECTOR QUALIFICATIONS AND EVALUATIONS and OTHER MATTERS—Stockholder Proposals for the 2025 Annual Meeting in our Proxy Statement. Information about our Audit Committee, members of the committee and our Audit Committee financial experts is incorporated by reference from the section entitled CORPORATE GOVERNANCE—Audit Committee in our Proxy Statement. Information about our executive officers is contained in the discussion entitled Part I, Item 1. Business—Information about our Executive Officers.
Code of Ethics
We maintain a Code of Ethics for the Chief Executive Officer and Senior Financial Officers applicable to our principal executive officer, principal financial officer, principal accounting officer or controller and other persons performing similar functions. To view this code of ethics free of charge, please visit our website at www.amgen.com. (The website address is not intended to function as a hyperlink, and the information contained in our website is not intended to be a part of this filing.) We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to or a waiver from a provision of this code of ethics, if any, by posting such information on our website as set forth above.
| Item 11. | EXECUTIVE COMPENSATION | ||||
Information about director and executive compensation is incorporated by reference from the sections entitled COMPENSATION DISCUSSION AND ANALYSIS, EXECUTIVE COMPENSATION TABLES, DIRECTOR COMPENSATION and CORPORATE GOVERNANCE—Pay Ratio in our Proxy Statement. Information about compensation committee matters is incorporated by reference from the sections entitled CORPORATE GOVERNANCE—Compensation and Management Development Committee and CORPORATE GOVERNANCE—Compensation Committee Report in our Proxy Statement.
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| Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | ||||
Securities Authorized for Issuance Under Existing Equity Compensation Plans
Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from the section entitled SECURITIES AUTHORIZED FOR ISSUANCE UNDER EXISTING EQUITY COMPENSATION PLANS in our Proxy Statement.
Security Ownership of Directors and Executive Officers and Certain Beneficial Owners
Information about security ownership of certain beneficial owners and management is incorporated by reference from the sections entitled SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS and SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS in our Proxy Statement.
| Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE | ||||
Information about certain relationships and related transactions and director independence is incorporated by reference from the sections entitled CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS and CORPORATE GOVERNANCE—Director Independence in our Proxy Statement.
| Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | ||||
Information about the fees for professional services rendered by our independent registered public accountants is incorporated by reference from the section entitled AUDIT MATTERS—Independent Registered Public Accountants in our Proxy Statement.
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PART IV
| Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | ||||
(a)1.Index to Financial Statements
The following Consolidated Financial Statements are included herein:
| Page number | |||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: | |||||
Consolidated Statements of Income for each of the three years in the period ended December 31, 2023 | |||||
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2023 | |||||
Consolidated Balance Sheets as of December 31, 2023 and 2022 | |||||
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2023 | |||||
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2023 | |||||
| Notes to Consolidated Financial Statements | |||||
(a)2.Index to Financial Statement Schedules
The following Schedule is filed as part of this Annual Report on Form 10-K:
| Page number | |||||
| Schedule II. Valuation and Qualifying Accounts | |||||
All other schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statements or notes thereto.
(a)3.Exhibits
| Exhibit No. | Description | |||||||
| 2.1 | Asset Purchase Agreement, dated August 25, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 8-K on August 26, 2019 and incorporated herein by reference.) | |||||||
| 2.1.1 | Amendment No. 1 to the Asset Purchase Agreement, dated October 17, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 8-K on October 17, 2019 and incorporated herein by reference.) | |||||||
| 2.1.2 | Amendment No. 2 to the Asset Purchase Agreement, dated October 17, 2019, by and between Amgen Inc. and Celgene Corporation. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 2.2 | Letter Agreement, dated November 21, 2019, by and between Amgen Inc. and the parties named therein re: Treatment of Certain Product Inventory in connection with Amgen’s acquisition of Otezla. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 2.3 | Irrevocable Guarantee, dated August 25, 2019, by and between Amgen Inc. and Bristol-Myers Squibb Company. (Filed as an exhibit to Form 8-K on August 26, 2019 and incorporated herein by reference.) | |||||||
| 2.4 | Agreement and Plan of Merger, dated July 27, 2021, by and among Amgen Inc., Teneobio, Inc., Tuxedo Merger Sub, Inc., and Fortis Advisors LLC. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential)(Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2021 on November 3, 2021 and incorporated herein by reference.) | |||||||
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| Exhibit No. | Description | |||||||
| 2.5 | Agreement and Plan of Merger, dated as of August 3, 2022, among ChemoCentryx, Inc., Amgen Inc. and Carnation Merger Sub, Inc. (Filed as an exhibit to Form 8-K on August 4, 2022 and incorporated herein by reference.) | |||||||
| 2.6 | Transaction Agreement, dated as of December 11, 2022, by and among Amgen Inc., Pillartree Limited and Horizon Therapeutics plc. (Filed as an exhibit to Form 8-K on December 12, 2022 and incorporated herein by reference.) | |||||||
| 2.7 | Appendix 3 to the Rule 2.7 Announcement, dated as of December 12, 2022 (Conditions Appendix). (Filed as an exhibit to Form 8-K on December 12, 2022 and incorporated herein by reference.) | |||||||
| 3.1 | Restated Certificate of Incorporation of Amgen Inc. (As Restated March 6, 2013.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2013 on May 3, 2013 and incorporated herein by reference.) | |||||||
| 3.2 | Amended and Restated Bylaws of Amgen Inc. (As Amended and Restated February 15, 2016.) (Filed as an exhibit to Form 8-K on February 17, 2016 and incorporated herein by reference.) | |||||||
| 4.1 | Form of stock certificate for the common stock, par value $.0001 of the Company. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 1997 on May 14, 1997 and incorporated herein by reference.) | |||||||
| 4.2 | Form of Indenture, dated January 1, 1992. (Filed as an exhibit to Form S-3 Registration Statement filed on December 19, 1991 and incorporated herein by reference.) | |||||||
| 4.3 | Agreement of Resignation, Appointment and Acceptance dated February 15, 2008. (Filed as an exhibit to Form 10-K for the year ended December 31, 2007 on February 28, 2008 and incorporated herein by reference.) | |||||||
| 4.4 | First Supplemental Indenture, dated February 26, 1997. (Filed as an exhibit to Form 8-K on March 14, 1997 and incorporated herein by reference.) | |||||||
| 4.5 | 8-1/8% Debentures due April 1, 2097. (Filed as an exhibit to Form 8-K on April 8, 1997 and incorporated herein by reference.) | |||||||
| 4.6 | Officer’s Certificate of Amgen Inc., dated April 8, 1997, establishing a series of securities entitled “8 1/8% Debentures due April 1, 2097.” (Filed as an exhibit to Form 8-K on April 8, 1997 and incorporated herein by reference.) | |||||||
| 4.7 | Indenture, dated August 4, 2003. (Filed as an exhibit to Form S-3 Registration Statement on August 4, 2003 and incorporated herein by reference.) | |||||||
| 4.8 | Corporate Commercial Paper - Master Note between and among Amgen Inc., as Issuer, Cede & Co., as Nominee of The Depository Trust Company, and Citibank, N.A., as Paying Agent. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 1998 on May 13, 1998 and incorporated herein by reference.) | |||||||
| 4.9 | Officers’ Certificate of Amgen Inc., dated May 30, 2007, including form of the Company’s 6.375% Senior Notes due 2037. (Filed as an exhibit to Form 8-K on May 30, 2007 and incorporated herein by reference.) | |||||||
| 4.10 | Officers’ Certificate of Amgen Inc., dated May 23, 2008, including form of the Company’s 6.90% Senior Notes due 2038. (Filed as exhibit to Form 8-K on May 23, 2008 and incorporated herein by reference.) | |||||||
| 4.11 | Officers’ Certificate of Amgen Inc., dated January 16, 2009, including form of the Company’s 6.40% Senior Notes due 2039. (Filed as exhibit to Form 8-K on January 16, 2009 and incorporated herein by reference.) | |||||||
| 4.12 | Officers’ Certificate of Amgen Inc., dated March 12, 2010, including form of the Company’s 5.75% Senior Notes due 2040. (Filed as exhibit to Form 8-K on March 12, 2010 and incorporated herein by reference.) | |||||||
| 4.13 | Officers’ Certificate of Amgen Inc., dated September 16, 2010, including form of the Company’s 4.95% Senior Notes due 2041. (Filed as an exhibit to Form 8-K on September 17, 2010 and incorporated herein by reference.) | |||||||
| 4.14 | Officers’ Certificate of Amgen Inc., dated June 30, 2011, including form of the Company’s 5.65% Senior Notes due 2042. (Filed as an exhibit to Form 8-K on June 30, 2011 and incorporated herein by reference.) | |||||||
| 4.15 | Officers’ Certificate of Amgen Inc., dated November 10, 2011, including form of the Company’s 5.15% Senior Notes due 2041. (Filed as an exhibit to Form 8-K on November 10, 2011 and incorporated herein by reference.) | |||||||
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| Exhibit No. | Description | |||||||
4.33* | ||||||||
| 10.1+ | Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (Filed as Appendix C to the Definitive Proxy Statement on Schedule 14A on April 8, 2013 and incorporated herein by reference.) | |||||||
| 10.1.1+ | First Amendment to Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, effective March 4, 2015. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2015 on April 27, 2015 and incorporated herein by reference.) | |||||||
| 10.1.2+ | Second Amendment to Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, effective March 2, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2016 on May 2, 2016 and incorporated herein by reference.) | |||||||
| 10.2+* | Form of Grant of Stock Option Agreement for the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (As Amended and Restated on December 11, 2023.) | |||||||
| 10.3+* | Form of Restricted Stock Unit Agreement for the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan. (As Amended and Restated on December 11, 2023.) | |||||||
| 10.4+ | Amgen Inc. 2009 Performance Award Program. (As Amended on December 12, 2017.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2017 on February 13, 2018 and incorporated herein by reference.) | |||||||
| 10.5+* | Form of Performance Unit Agreement for the Amgen Inc. 2009 Performance Award Program. (As Amended and Reinstated on December 11, 2023.) | |||||||
| 10.6+* | ||||||||
| 10.7+ | Form of Restricted Stock Unit Agreement for the Amgen Inc. 2009 Director Equity Incentive Program. (As Amended on December 11, 2019.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.8+ | Form of Cash-Settled Restricted Stock Unit Agreement for the Amgen 2009 Director Equity Incentive Program. (As Amended on December 11, 2019.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.9+ | Amgen Inc. Supplemental Retirement Plan. (As Amended and Restated effective October 16, 2013.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2013 on February 24, 2014 and incorporated herein by reference.) | |||||||
| 10.9.1+ | First Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 14, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2016 on October 28, 2016 and incorporated herein by reference.) | |||||||
| 10.9.2+ | Second Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 23, 2019. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.9.3+ | Third Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 20, 2021. (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.) | |||||||
| 10.9.4+ | Fourth Amendment to the Amgen Inc. Supplemental Retirement Plan, effective October 20, 2022. (Filed as an exhibit to Form 10-K for the year ended December 31, 2022 on February 9, 2023 and incorporated herein by reference.) | |||||||
| 10.9.5+* | ||||||||
| 10.10+ | Amended and Restated Amgen Change of Control Severance Plan. (As Amended and Restated effective December 9, 2010 and subsequently amended effective March 2, 2011.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 on May 10, 2011 and incorporated herein by reference.) | |||||||
| 10.11+ | Amgen Inc. Executive Incentive Plan. (As Amended and Restated effective January 1, 2022.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2022 on April 28, 2022 and incorporated herein by reference.) | |||||||
90
| Exhibit No. | Description | |||||||
| 10.12+ | Amgen Nonqualified Deferred Compensation Plan. (As Amended and Restated effective October 16, 2013.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2013 on February 24, 2014 and incorporated herein by reference.) | |||||||
| 10.12.1+ | First Amendment to the Amgen Nonqualified Deferred Compensation Plan, effective October 14, 2016. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2016 on October 28, 2016 and incorporated herein by reference.) | |||||||
| 10.12.2+ | Second Amendment to the Amgen Nonqualified Deferred Compensation Plan, effective January 1, 2020. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.12.3+ | Third Amendment to the Amgen Nonqualified Deferred Compensation Plan, effective January 1, 2022. (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.) | |||||||
| 10.12.4+* | ||||||||
| 10.13+ | Aircraft Time Sharing Agreement, dated December 3, 2021, by and between Amgen Inc. and Robert A. Bradway. (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.) | |||||||
| 10.14+* | ||||||||
| 10.15 | Term Loan Credit Agreement, dated as of December 22, 2022, by and among Amgen Inc., Citibank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, Citibank, N.A., Bank of America, N.A., Goldman Sachs Bank USA and Mizuho Bank, Ltd., as lead arrangers and book runners, Goldman Sachs Bank USA and Mizuho Bank, Ltd. as documentation agents, and the other banks party thereto. (Filed as an exhibit to Form 8-K on December 22, 2022 and incorporated herein by reference.) | |||||||
| 10.16 | Third Amended and Restated Credit Agreement, dated as of March 9, 2023, among Amgen Inc., the Banks therein named, Citibank, N.A., as Administrative Agent, and JPMorgan Chase Bank, N.A., as Syndication Agent. (Filed as an exhibit to Form 8-K on March 9, 2023 and incorporated herein by reference.) | |||||||
10.17* | Collaboration and License Agreement between Amgen Inc. and Celltech R&D Limited dated May 10, 2002 (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) and Amendment No. 1, effective June 9, 2003, to Collaboration and License Agreement between Amgen Inc. and Celltech R&D Limited (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) | |||||||
10.17.1* | Amendment No. 2 to Collaboration and License Agreement, effective November 14, 2016, between Amgen Inc. and Celltech R&D Limited. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) | |||||||
| 10.18 | Letter Agreement, dated June 25, 2019, by and between Amgen Inc. and UCB Celltech (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2019 on July 31, 2019 and incorporated herein by reference.) | |||||||
| 10.19 | Collaboration Agreement, dated October 31, 2019, by and between Amgen Inc. and BeiGene Switzerland GmbH, a wholly-owned subsidiary of BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.19.1 | First Amendment to Collaboration Agreement, dated April 20, 2022, by and between Amgen Inc. and BeiGene Switzerland GmbH, and BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2022 on August 5, 2022 and incorporated herein by reference.) | |||||||
91
| Exhibit No. | Description | |||||||
| 10.19.2 | Second Amendment to Collaboration Agreement, entered into as of February 26, 2023, by and between Amgen Inc. and BeiGene Switzerland GmbH, and BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) (Filed as an exhibit to Form 10-Q for the quarter ended March 31, 2023 on April 28, 2023 and incorporated herein by reference.) | |||||||
| 10.20 | Guarantee, dated as of October 31, 2019, made by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Form 10-K for the year ended December 31, 2019 on February 12, 2020 and incorporated herein by reference.) | |||||||
| 10.21 | Share Purchase Agreement, dated October 31, 2019, by and between Amgen Inc. and BeiGene, Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed). (Filed as an exhibit to Schedule 13D on January 8, 2020 and incorporated herein by reference.) | |||||||
| 10.21.1 | Amendment No. 1 to Share Purchase Agreement, dated December 6, 2019, by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Schedule 13D on January 8, 2020 and incorporated herein by reference.) | |||||||
| 10.21.2 | Restated Amendment No. 2 to Share Purchase Agreement, dated September 24, 2020, by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Form 10-Q for the quarter ended September 30, 2020 on October 29, 2020 and incorporated herein by reference.) | |||||||
| 10.21.3 | Amendment No. 3 to Share Purchase Agreement, dated January 30, 2023, by and among BeiGene, Ltd. and Amgen Inc. (Filed as an exhibit to Form 8-K on January 31, 2023 and incorporated herein by reference.) | |||||||
| 10.22 | Collaboration Agreement dated March 30, 2012 by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC, a wholly owned subsidiary of AstraZeneca Pharmaceuticals LP (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2022 on August 5, 2022 and incorporated herein by reference.) | |||||||
| 10.22.1 | Amendment No. 1 to the Collaboration Agreement, dated October 1, 2014, by and among Amgen Inc., AstraZeneca Collaboration Ventures, LLC and AstraZeneca Pharmaceuticals LP (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2022 on August 5, 2022 and incorporated herein by reference.) | |||||||
| 10.22.2 | Amendment Nos. 2 through 6 to the March 30, 2012 Collaboration Agreement between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC, dated May 2 and 27 and October 2, 2016, January 31, 2018, and May 15, 2020, respectively (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2020 on July 29, 2020 and incorporated herein by reference.) | |||||||
| 10.22.3 | Amendment No. 7 to the Collaboration Agreement, dated December 17, 2020, by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2020 on February 9, 2021 and incorporated herein by reference.) | |||||||
| 10.22.4 | Amendment No. 8 to the Collaboration Agreement, dated November 19, 2021, by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) (Filed as an exhibit to Form 10-K for the year ended December 31, 2021 on February 16, 2022 and incorporated herein by reference.) | |||||||
| 10.22.5* | Letter Agreement Regarding the Collaboration Agreement, dated as of December 1, 2023, by and between Amgen Inc. and AstraZeneca Collaboration Ventures, LLC (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential.) | |||||||
| 10.23 | License and Collaboration Agreement, dated June 1, 2021, by and between Amgen Inc. and Kyowa Kirin Co., Ltd. (portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or confidential). (Filed as an exhibit to Form 10-Q for the quarter ended June 30, 2021 on August 4, 2021 and incorporated herein by reference.) | |||||||
| 21* | ||||||||
92
| Exhibit No. | Description | |||||||
| 23 | Consent of the Independent Registered Public Accounting Firm. The consent is set forth on page 95 of this Annual Report on the 10-K. | |||||||
| 24 | Power of Attorney. The Power of Attorney is set forth on page 96 of this Annual Report on Form 10-K. | |||||||
| 31* | ||||||||
| 32** | ||||||||
| 97* | ||||||||
| 101.INS | Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
____________________________
(* = filed herewith)
(** = furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended)
(+ = management contract or compensatory plan or arrangement)
| Item 16. | FORM 10-K SUMMARY | ||||
Not applicable.
93
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMGEN INC. | ||||||||||||||
| (Registrant) | ||||||||||||||
| Date: | February 14, 2024 | By: | /s/ PETER H. GRIFFITH | |||||||||||
| Peter H. Griffith | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
| (Principal Financial Officer) | ||||||||||||||
94
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
•Registration Statement (Form S-3 No. 333-269670) of Amgen Inc.,
•Registration Statement (Form S-8 No. 333-159377) pertaining to the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan,
•Registration Statement (Form S-8 No. 33-39183) pertaining to the Amgen Inc. Amended and Restated Employee Stock Purchase Plan,
•Registration Statements (Form S-8 Nos. 33-39104, 333-144581 and 333-216719) pertaining to the Amgen Retirement and Savings Plan,
•Registration Statements (Form S-8 Nos. 33-47605, 333-144580 and 333-216715) pertaining to The Retirement and Savings Plan for Amgen Manufacturing, Limited (formerly known as the Retirement and Savings Plan for Amgen Manufacturing, Inc.),
•Registration Statements (Form S-8 Nos. 333-81284, 333-177868, 333-216723 and 333-260723) pertaining to the Amgen Nonqualified Deferred Compensation Plan,
•Registration Statements (Form S-8 Nos. 333-176240 and 333-260724) pertaining to the Amgen Profit Sharing Plan for Employees in Ireland, and
•Registration Statement (Form S-8 No. 333-274900) pertaining to the Horizon Therapeutics Public Limited Company Amended and Restated 2014 Equity Incentive Plan, Horizon Therapeutics Public Limited Company Amended and Restated 2018 Equity Incentive Plan and 2018 Restricted Stock Unit Award Sub-Plan, and Horizon Therapeutics Public Limited Company Amended and Restated 2020 Equity Incentive Plan and 2020 Restricted Stock Unit Award Sub-Plan;
of our reports dated February 14, 2024, with respect to the consolidated financial statements of Amgen Inc. and the effectiveness of internal control over financial reporting of Amgen Inc. included in this Annual Report (Form 10-K) of Amgen Inc. for the year ended December 31, 2023.
/s/ Ernst & Young LLP
Los Angeles, California
February 14, 2024
95
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert A. Bradway, Peter H. Griffith and Jonathan P. Graham, or any of them, his or her attorney-in-fact, each with the power of substitution and re-substitution, for him or her in any and all capacities, to sign any amendments to this Report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Signature | Title | Date | ||||||||||||
| /S/ ROBERT A. BRADWAY | Chairman of the Board, Chief Executive Officer and President, and Director (Principal Executive Officer) | 2/14/2024 | ||||||||||||
| Robert A. Bradway | ||||||||||||||
| /S/ PETER H. GRIFFITH | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | 2/14/2024 | ||||||||||||
| Peter H. Griffith | ||||||||||||||
| /S/ MATTHEW C. BUSCH | Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer) | 2/14/2024 | ||||||||||||
| Matthew C. Busch | ||||||||||||||
| /S/ WANDA M. AUSTIN | Director | 2/14/2024 | ||||||||||||
| Wanda M. Austin | ||||||||||||||
| /S/ MICHAEL V. DRAKE | Director | 2/14/2024 | ||||||||||||
| Michael V. Drake | ||||||||||||||
| /S/ BRIAN J. DRUKER | Director | 2/14/2024 | ||||||||||||
| Brian J. Druker | ||||||||||||||
| /S/ ROBERT A. ECKERT | Director | 2/14/2024 | ||||||||||||
| Robert A. Eckert | ||||||||||||||
| /S/ GREG C. GARLAND | Director | 2/14/2024 | ||||||||||||
| Greg C. Garland | ||||||||||||||
| /S/ CHARLES M. HOLLEY, JR. | Director | 2/14/2024 | ||||||||||||
| Charles M. Holley, Jr. | ||||||||||||||
| /S/ S. OMAR ISHRAK | Director | 2/14/2024 | ||||||||||||
| S. Omar Ishrak | ||||||||||||||
| /S/ TYLER JACKS | Director | 2/14/2024 | ||||||||||||
| Tyler Jacks | ||||||||||||||
| /S/ ELLEN J. KULLMAN | Director | 2/14/2024 | ||||||||||||
| Ellen J. Kullman | ||||||||||||||
| /S/ AMY E. MILES | Director | 2/14/2024 | ||||||||||||
| Amy E. Miles | ||||||||||||||
| /S/ RONALD D. SUGAR | Director | 2/14/2024 | ||||||||||||
| Ronald D. Sugar | ||||||||||||||
| /S/ R. SANDERS WILLIAMS | Director | 2/14/2024 | ||||||||||||
| R. Sanders Williams | ||||||||||||||
96
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Amgen Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Amgen Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 14, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-1
| Sales deductions | ||||||||
Description of the Matter | As of December 31, 2023, the Company recorded accrued sales deductions of $7.3 billion. As described in Note 1 to the financial statements under the caption “Product sales and sales deductions,” revenues from product sales are recognized net of accruals for estimated rebates, wholesaler chargebacks, discounts and other deductions (collectively sales deductions), which are established at the time of sale. Auditing the estimation of sales deductions, specifically estimated chargebacks, commercial rebates, and Medicaid rebates related to U.S. product sales, which are netted against product sales, is complex, requires significant judgment, and the amounts involved are material to the financial statements taken as a whole. Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon delivery, and is based on an amount that reflects the consideration to which the Company expects to be entitled, which represents an amount that is net of accruals for estimated sales deductions. The estimated sales deductions are based on current contractual and statutory requirements, market events and trends, internal and external historical data, and forecasted customer buying patterns. | |||||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the sales deduction processes. This included testing controls over management’s review of significant assumptions and inputs used in the estimate of sales deductions, including actual sales, contractual terms, historical experience, wholesaler inventory levels, demand data and estimated patient population. We also tested management’s controls over the accuracy of forecasting demand activity as well as the completeness and accuracy of the significant components included in the final sales deduction estimates. To test management’s estimated sales deductions, we obtained management’s calculations for the respective estimates and performed the following procedures, among others. We tested management’s estimation process over the determination of sales discount accruals by developing an independent expectation of the estimated accrual balances, including comparing accrual balances recorded by management to those implied by historical payment trends, evaluating trends in actual sales and discount accrual balances, confirming terms and conditions for a sample of contracts, testing a sample of credits issued and payments made throughout the year, and agreeing rates to underlying contract terms. | |||||||
F-2
| Unrecognized tax benefits | ||||||||
| Description of the Matter | As discussed in Notes 1 and 7 to the consolidated financial statements, the Company operates in various jurisdictions in which differing interpretations of complex tax laws and regulations create uncertainty and necessitate the use of significant judgment in the determination of the Company’s unrecognized tax benefits, particularly in the U.S. federal tax jurisdiction where the Company has significant assets and operations. In this regard, the Company uses significant judgment in (1) determining whether a tax position’s technical merits are more-likely-than-not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition. As of December 31, 2023, the Company accrued $4.0 billion of gross unrecognized tax benefits. Auditing the assessment of the technical merits and measurement of the Company’s unrecognized tax benefits is challenging due to the high degree of estimation and management judgement, given the ultimate resolution is dependent on uncontrollable factors such as the resolution of audit disputes with the IRS. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s process to assess the technical merits of its tax positions, as well as management’s process to measure the unrecognized tax benefits of those tax positions, particularly in regard to matters in dispute with the IRS. This included testing controls over management’s review of the inputs, calculations, assumptions and methods selected to measure the amount of tax benefits that qualify for recognition. We involved tax controversy and transfer pricing specialists to assist in assessing the technical merits and measurement of certain of the Company’s unrecognized tax benefits. Depending on the nature of the specific tax position and, as applicable, developments with the relevant tax authorities, our procedures included obtaining and reviewing the Company’s correspondence with such tax authorities and evaluating certain third-party advice to support the Company’s evaluations and recorded positions. We evaluated developments in the applicable regulatory environments to assess potential effects on the Company’s recorded positions. We assessed management’s consideration of current tax controversy, litigation and tax litigation trends. We analyzed the assumptions and data used by the Company when it determined the amount of tax benefits to recognize, including applicable interest and penalties, and we tested the accuracy of those underlying calculations. We have also evaluated the Company’s income tax disclosures included in Note 7 in relation to these matters. | |||||||
F-3
| Valuation of intangible assets acquired in a business combination | ||||||||
| Description of the Matter | As described in Note 3 to the financial statements, on October 6, 2023, the Company completed its acquisition of Horizon Therapeutics plc (“Horizon”) (“Horizon acquisition”). The transaction was accounted for as a business combination using the acquisition method of accounting. The acquisition date fair values of acquired intangible assets, primarily consisted of finite-lived developed-product-technology rights, inclusive of the TEPEZZA intangible asset. The finite-lived intangible assets were valued using a multi-period excess earnings income approach that discounts expected future cash flows to present value. Auditing the acquisition date fair values of the TEPEZZA finite-lived developed-product-technology rights intangible asset acquired from Horizon was complex due to the significant judgment required in estimating the fair value. In particular, the fair value estimate required the use of a valuation methodology that was sensitive to changes in significant assumptions (e.g., revenue projections and discount rate), which were affected by expected future market or economic conditions. | |||||||
| How We Addressed the Matter in Our Audit | We evaluated and tested the design and operating effectiveness of the Company’s internal controls over the determination of the estimated fair value of the intangible assets. For example, we tested controls over management's review of the valuation methodologies and the significant assumptions used to develop the fair value estimate of the TEPEZZA intangible asset. We also tested management's controls to validate that the data used in the fair value estimate was complete and accurate. To test the Company’s estimated fair value of the TEPEZZA intangible asset, our audit procedures included, among others, evaluating the Company’s selection of the valuation methodology and the significant assumptions, with the assistance of a valuation specialist. We also tested the completeness and accuracy of the underlying data utilized in the valuation. For example, we compared the TEPEZZA revenue projections to analyst reports, current industry and market trends, historical results of the acquired business and to other relevant factors. We also performed sensitivity analyses over significant assumptions to evaluate the impact that changes in significant assumptions would have on the fair value of the TEPEZZA acquired intangible asset. In addition, we tested the estimated discount rate applied to the TEPEZZA intangible asset value. | |||||||
/s/ | ||||||||
We have served as the Company’s auditor since 1980.
February 14, 2024
F-4
AMGEN INC.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2023, 2022 and 2021
(In millions, except per-share data)
| 2023 | 2022 | 2021 | |||||||||||||||
| Revenues: | |||||||||||||||||
| Product sales | $ | $ | $ | ||||||||||||||
| Other revenues | |||||||||||||||||
| Total revenues | |||||||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of sales | |||||||||||||||||
| Research and development | |||||||||||||||||
| Acquired in-process research and development | |||||||||||||||||
| Selling, general and administrative | |||||||||||||||||
| Other | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating income | |||||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense, net | ( | ( | ( | ||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Provision for income taxes | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | $ | $ | ||||||||||||||
| Diluted | $ | $ | $ | ||||||||||||||
| Shares used in the calculation of earnings per share: | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
See accompanying notes.
F-5
AMGEN INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31, 2023, 2022 and 2021
(In millions)
| 2023 | 2022 | 2021 | |||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Other comprehensive (loss) income, net of reclassification adjustments and taxes: | |||||||||||||||||
| Gains (losses) on foreign currency translation | ( | ||||||||||||||||
| (Losses) gains on cash flow hedges | ( | ||||||||||||||||
| Losses on available-for-sale securities | ( | ||||||||||||||||
| Other | |||||||||||||||||
| Other comprehensive (loss) income, net of taxes | ( | ||||||||||||||||
| Comprehensive income | $ | $ | $ | ||||||||||||||
See accompanying notes.
F-6
AMGEN INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2023 and 2022
(In millions, except per-share data)
| 2023 | 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable securities | |||||||||||
| Trade receivables, net | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term deferred tax liabilities | |||||||||||
| Long-term tax liabilities | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Contingencies and commitments | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock and additional paid-in capital; $ | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes.
F-7
AMGEN INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31, 2023, 2022 and 2021
(In millions, except per-share data)
| Number of shares of common stock | Common stock and additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive income, net of taxes | — | — | — | ||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
Issuance of common stock in connection with the Company’s equity award programs | — | — | |||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Tax impact related to employee stock-based compensation expense | — | ( | — | — | ( | ||||||||||||||||||||||||
| Repurchases of common stock | ( | — | ( | — | ( | ||||||||||||||||||||||||
| Balance as of December 31, 2021 | ( | ( | |||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive income, net of taxes | — | — | — | ||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
Issuance of common stock in connection with the Company’s equity award programs | — | — | |||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Tax impact related to employee stock-based compensation expense | — | ( | — | — | ( | ||||||||||||||||||||||||
| Repurchases of common stock | ( | — | ( | — | ( | ||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ( | |||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | — | — | — | ( | ( | ||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
| Issuance of common stock in connection with the Company’s equity award programs | — | — | |||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Equity awards issued for Horizon acquisition, net | — | — | — | ||||||||||||||||||||||||||
Tax impact related to employee stock-based compensation expense | — | ( | — | — | ( | ||||||||||||||||||||||||
| Repurchases of common stock | — | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
See accompanying notes.
F-8
AMGEN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2023, 2022 and 2021
(In millions)
| 2023 | 2022 | 2021 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Depreciation, amortization and other | |||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||
| Deferred income taxes | ( | ( | ( | ||||||||||||||
| Acquired in-process research and development | |||||||||||||||||
| Adjustments for equity method investments | |||||||||||||||||
| Loss on divestiture | |||||||||||||||||
| (Gains) losses on equity securities | ( | ||||||||||||||||
| Other items, net | ( | ( | |||||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||
| Trade receivables, net | ( | ( | ( | ||||||||||||||
| Inventories | ( | ( | |||||||||||||||
| Other assets | ( | ( | |||||||||||||||
| Accounts payable | ( | ( | |||||||||||||||
| Accrued income taxes, net | ( | ( | ( | ||||||||||||||
| Long-term tax liabilities | |||||||||||||||||
| Accrued sales incentives and allowance | |||||||||||||||||
| Other liabilities | ( | ( | |||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | ( | ( | ( | ||||||||||||||
| Purchases of marketable securities | ( | ( | ( | ||||||||||||||
| Proceeds from sales of marketable securities | |||||||||||||||||
| Proceeds from maturities of marketable securities | |||||||||||||||||
| Purchases of property, plant and equipment | ( | ( | ( | ||||||||||||||
| Other | ( | ||||||||||||||||
| Net cash (used in) provided by investing activities | ( | ( | |||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Net proceeds from issuance of debt | |||||||||||||||||
| Extinguishment of debt | ( | ( | |||||||||||||||
| Repayment of debt | ( | ( | |||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||
| Dividends paid | ( | ( | ( | ||||||||||||||
| Other | ( | ( | ( | ||||||||||||||
| Net cash provided by (used in) financing activities | ( | ( | |||||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ||||||||||||||||
| Cash and cash equivalents at beginning of year | |||||||||||||||||
| Cash and cash equivalents at end of year | $ | $ | $ | ||||||||||||||
See accompanying notes.
F-9
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
1. Summary of significant accounting policies
Business
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics. We operate in one business segment: human therapeutics.
Principles of consolidation
The consolidated financial statements include the accounts of Amgen as well as its majority-owned subsidiaries. In determining whether we are the primary beneficiary of a variable interest entity, we consider whether we have both the power to direct activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. We do not have any significant interests in any variable interest entities of which we are the primary beneficiary. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior periods in the consolidated financial statements and accompanying notes to conform with the current presentation.
On October 6, 2023, Amgen completed its acquisition of Horizon, and its operations became included in our consolidated financial statements commencing on the acquisition date. See Note 3, Acquisitions and divestitures, for additional information regarding this acquisition.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Revenues
Product sales and sales deductions
Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon delivery, based on an amount that reflects the consideration to which we expect to be entitled, net of accruals for estimated rebates, wholesaler chargebacks, discounts and other deductions (collectively, sales deductions) and returns established at the time of sale.
We analyze the adequacy of our accruals for sales deductions quarterly. Amounts accrued for sales deductions are adjusted when trends or significant events indicate that an adjustment is appropriate. Accruals are also adjusted to reflect actual results. Accruals for sales deductions are based primarily on estimates of the amounts earned or to be claimed on the related sales. These estimates take into consideration current contractual and statutory requirements, specific known market events and trends, internal and external historical data and forecasted customer buying patterns. Sales deductions are substantially product specific and therefore, for any given period, can be affected by the mix of products sold. Included in sales deductions are immaterial net adjustments related to prior-period sales due to changes in estimates.
Returns are estimated through comparison of historical return data with their related sales on a production lot basis. Historical rates of return are determined for each product and are adjusted for known or expected changes in the marketplace specific to each product, when appropriate. Historically, sales return provisions have amounted to less than 1 % of gross product sales. Changes in estimates for prior-period sales return provisions have historically been immaterial.
Our payment terms vary by types and locations of customers and by products or services offered. Payment terms differ by jurisdiction and customer, but payment is generally required in a term ranging from 30 to 120 days from date of shipment or satisfaction of the performance obligation. For certain products or services and certain customer types, we may require payment before products are delivered or services are rendered to customers.
Indirect taxes collected from customers and remitted to government authorities that are related to sales of the Company’s products, primarily in Europe, are excluded from revenues.
As a practical expedient, sales commissions are expensed when incurred because the amortization period would have been
F-10
one year or less. These costs are recorded in SG&A expense in the Consolidated Statements of Income.
Other revenues
Other revenues consist primarily of royalty income and corporate partner revenues. Royalties from licensees are based on third-party sales of licensed products and are recorded when the related third-party product sale occurs. Royalty income is estimated based on historical and forecasted sales trends. Corporate partner revenues are composed mainly of license fees and milestones earned and our share of commercial profits generated from collaborations. See Arrangements with multiple-performance obligations, discussed below.
Arrangements with multiple-performance obligations
From time to time, we enter into arrangements for the R&D, manufacture and/or commercialization of products and product candidates. Such arrangements may require us to deliver various rights, services and/or goods, including intellectual property rights/licenses, R&D services, manufacturing services and/or commercialization services. The underlying terms of these arrangements generally provide for consideration to Amgen in the form of nonrefundable, upfront license fees; development and commercial-performance milestone payments; royalty payments; and/or profit sharing.
In arrangements involving more than one performance obligation, each required performance obligation is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis or by using an adjusted market assessment approach if selling price on a stand-alone basis is not available.
The consideration allocated to each distinct performance obligation is recognized as revenue when control of the related goods or services is transferred. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. We utilize the sales- and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenues generated from royalties or profit sharing as the underlying sales occur.
Research and development costs
R&D costs are expensed as incurred and primarily include salaries, benefits and other staff-related costs; facilities and overhead costs; clinical trial and related clinical manufacturing costs; contract services and other outside costs; information systems’ costs; and amortization of acquired technology used in R&D with alternative future uses. R&D expenses also include costs and cost recoveries associated with third-party R&D arrangements, including upfront fees and milestones paid to third parties in connection with technologies that had not reached technological feasibility and did not have an alternative future use. Net payment or reimbursement of R&D costs is recognized when the obligations are incurred or as we become entitled to the cost recovery. See Note 9, Collaborations.
Selling, general and administrative costs
SG&A costs are primarily composed of salaries, benefits and other staff-related costs associated with sales and marketing, finance, legal and other administrative personnel; facilities and overhead costs; outside marketing, advertising and legal expenses; the U.S. healthcare reform federal excise fee on Branded Prescription Pharmaceutical Manufacturers and Importers; and other general and administrative costs. Advertising costs are expensed as incurred and were $647 million, $841 million and $843 million during the years ended December 31, 2023, 2022 and 2021, respectively. SG&A expenses also include costs and cost recoveries associated with marketing and promotion efforts under certain collaborative arrangements. Net payment or reimbursement of SG&A costs is recognized when the obligations are incurred or we become entitled to the cost recovery. See Note 9, Collaborations.
Leases
At inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we determine the classification as either operating or financing. Operating leases are included in Other noncurrent assets, Accrued liabilities and Other noncurrent liabilities in our Consolidated Balance Sheets.
F-11
ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments under the lease. Lease recognition occurs at the commencement date, and lease liability amounts are based on the present value of lease payments made during the lease term. Our lease terms may include options to extend or terminate a lease when it is reasonably certain that we will exercise that option. Because most of our leases do not provide information to determine an implicit interest rate, we use our incremental borrowing rate in determining the present value of lease payments. ROU assets also include any lease payments made prior to the commencement date less lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term.
We have lease agreements with both lease and nonlease components, which are generally accounted for together as a single lease component. In addition, for certain vehicle and equipment leases, we apply a portfolio approach to determine the lease term and discount rate.
Stock-based compensation
We have stock-based compensation plans under which various types of equity-based awards are granted, including RSUs, performance units and stock options. The fair values of RSUs and stock option awards, which are subject only to service conditions with graded vesting, are recognized as compensation expense, generally on a straight-line basis over the service period, net of estimated forfeitures. The fair values of performance unit awards are recognized as compensation expense, generally on a straight-line basis from the grant date to the end of the performance period. See Note 5, Stock-based compensation.
Income taxes
We provide for income taxes based on pretax income and applicable tax rates in the various jurisdictions in which we operate. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the bases of assets and liabilities, as well as for loss and tax credit carryforwards for financial reporting purposes and amounts recognized for income tax purposes. We record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.
Acquisitions
We first determine whether a set of assets acquired constitute a business and should be accounted for as a business combination. If the assets acquired do not constitute a business, we account for the transaction as an asset acquisition. Business combinations are accounted for by means of the acquisition method of accounting. Under the acquisition method, assets acquired, including IPR&D projects, and liabilities assumed are recorded at their respective fair values as of the acquisition date in our consolidated financial statements. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. Contingent consideration obligations incurred in connection with a business combination (including the assumption of an acquiree’s liability arising from an acquisition it consummated prior to our acquisition) are recorded at their fair values on the acquisition date and remeasured at their fair values each subsequent reporting period until the related contingencies have been resolved. The resulting changes in fair values are recorded in earnings. In contrast, asset acquisitions are accounted for by using a cost accumulation and allocation model. Under this model, the cost of the acquisition is allocated to the assets acquired and liabilities assumed. IPR&D projects with no alternative future use are recorded in R&D expense upon acquisition, and contingent consideration obligations incurred in connection with an asset acquisition are recorded when it is probable that they will occur and they can be reasonably estimated. See Note 3, Acquisitions and divestitures, and Note 18, Fair value measurement.
Cash equivalents
We consider cash equivalents to be only those investments that are highly liquid, that are readily convertible to cash and that mature within three months from the date of purchase.
F-12
Interest-bearing securities
We consider our interest-bearing securities investment portfolio as available-for-sale, and accordingly, these investments are recorded at fair value, with unrealized gains and losses recorded in AOCI. Investments with maturities beyond one year may be classified as short-term marketable securities in the Consolidated Balance Sheets due to their highly liquid nature and because they represent the Company’s investments that are available for current operations. See Note 10, Investments, and Note 18, Fair value measurement.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost, which includes amounts related to materials, labor and overhead, is determined in a manner that approximates the first-in, first-out method. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. See Note 11, Inventories.
Derivatives
We recognize all of our derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been formally designated and qualifies as part of a hedging relationship under the applicable accounting standards and, further, on the type of hedging relationship. For derivatives formally designated as hedges, we assess both at inception and quarterly thereafter whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. Our derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings. See Note 18, Fair value measurement, and Note 19, Derivative instruments.
Property, plant and equipment, net
Property, plant and equipment is recorded at historical cost, net of accumulated depreciation, amortization and, if applicable, impairment charges. We review our property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Depreciation is recorded over the assets’ useful lives on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or lease terms. See Note 12, Property, plant and equipment.
Goodwill and other intangible assets
Finite-lived intangible assets are recorded at cost, net of accumulated amortization, and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recorded over the assets’ estimated useful lives on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable. We review our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. See Note 13, Goodwill and other intangible assets.
The fair values of IPR&D projects acquired in a business combination that are not complete are capitalized and accounted for as indefinite-lived intangible assets until completion or abandonment of the related R&D efforts. Upon successful completion of the project, the capitalized amount is amortized over its estimated useful life. If a project is abandoned, all remaining capitalized amounts are written off immediately. Major risks and uncertainties are often associated with IPR&D projects because we are required to obtain regulatory approvals before marketing the resulting products. Such approvals require completing clinical trials that demonstrate a product candidate is safe and effective. Consequently, the eventual realized value of the acquired IPR&D project may vary from its fair value at the date of acquisition, and IPR&D impairment charges may occur in future periods.
Capitalized IPR&D projects are tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We consider various factors for potential impairment, including the current legal and regulatory environment and the competitive landscape. Adverse clinical trial results, significant delays in obtaining marketing approval, the inability to bring a product to market and the introduction or advancement of competitors’ products could result in partial or full impairment of the related intangible assets.
We perform an impairment test of goodwill annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To date, an impairment of goodwill has not been recorded. See Note 13, Goodwill and other intangible assets.
F-13
Contingencies
In the ordinary course of business, we are involved in various legal proceedings, government investigations and other matters that are complex in nature and have outcomes that are difficult to predict. Certain of these proceedings are discussed in Note 20, Contingencies and commitments. We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously.
Foreign currency translation
The net assets of international subsidiaries whose functional currencies are not in U.S. dollars are translated into U.S. dollars using current exchange rates. The U.S. dollar effects that arise from translation of the net assets of these subsidiaries at changing rates are recognized in AOCI. The subsidiaries’ earnings are translated into U.S. dollars by using average exchange rates.
Equity investments
Marketable and nonmarketable equity securities
Investments in publicly traded equity securities with readily determinable fair values are recorded at quoted market prices for identical securities, with changes in fair value recorded in Other income (expense), net, in the Consolidated Statements of Income. Investments in equity securities without readily determinable fair values are recorded at cost minus impairment, if any, adjusted for changes resulting from observable price changes in orderly transactions for identical or similar securities. Such adjustments are recorded in Other income (expense), net, in the Consolidated Statements of Income.
Equity method investments
Equity investments that give us the ability to exert significant influence, but not control, over an investee for which we have not elected the fair value option are accounted for under the equity method of accounting. In concluding whether we have the ability to exercise significant influence over an investee, we consider factors such as our ownership percentage, voting and other shareholder rights, board of directors representation and the existence of other collaborative or business relationships. The equity method of accounting requires us to allocate the difference between the fair value of securities acquired and our proportionate share of the carrying value of the underlying assets (the basis difference) to various items and amortize such differences over their useful lives. Our share of investees’ earnings or losses and amortization of basis differences, if any, are recorded one quarter in arrears in Other income (expense), net, in the Consolidated Statements of Income. We record impairment losses on our equity method investments if we deem the impairment to be other-than-temporary. We deem an impairment to be other-than-temporary based on various factors, including but not limited to, the length of time the fair value is below the carrying value, volatility of the security price and our intent and ability to retain the investment to allow for a recovery in fair value.
For equity method investments for which we have elected the fair value option, changes in fair value are recorded in Other income (expense), net, in the Consolidated Statements of Income.
Additionally, we hold investments in limited partnerships, which primarily invest in early-stage biotechnology companies. As a practical expedient, such limited partnership investments are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships, with such changes included in Other income (expense), net, in the Consolidated Statements of Income.
Recent accounting pronouncements
In November 2023, the FASB issued a new accounting standard which improves reportable segment disclosure requirements. The new standard will require enhanced disclosures about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal period, including for companies with a single reportable segment. The standard is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued a new accounting standard which improves income tax disclosure requirements. The new standard will require more detailed information on several income tax disclosures, such as income taxes paid and the income tax rate reconciliation table. The standard is effective for public business entities such as Amgen with annual periods beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures.
F-14
2. Restructuring
In the first quarter of 2023, we initiated a restructuring plan to enhance continued innovation, including investments in first-in-class medicines, while improving our cost structure. As part of the plan, we are reallocating resources to the areas of the business that will enable long-term growth. We completed substantially all the activities associated with this restructuring plan in 2023.
The following table summarizes recorded charges related to the restructuring plan by type of activity and the locations recognized within the Consolidated Statements of Income (in millions):
| Year ended December 31, 2023 | |||||||||||||||||
| Separation costs | Asset impairments and other charges | Total | |||||||||||||||
| Cost of sales | $ | $ | $ | ||||||||||||||
| Research and development | |||||||||||||||||
| Selling, general and administrative | |||||||||||||||||
| Other | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
As of December 31, 2023, total restructuring liability decreased to $45 million primarily due to payments related to separation costs. The total restructuring liability was included in Accrued liabilities in the Consolidated Balance Sheets.
3. Acquisitions and divestitures
Acquisition of Horizon Therapeutics plc
On October 6, 2023, Amgen completed its acquisition of Horizon for $116.50 per share in cash, representing a total consideration of approximately $27.8 billion. The acquisition was funded primarily through our March 2023 debt issuance and borrowings from our term loan credit agreement. See Note 16, Financing arrangements. Horizon is a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs of patients impacted by rare, autoimmune and severe inflammatory diseases. The acquisition, which was accounted for as a business combination, aligns with Amgen’s core strategy of delivering innovative medicines that make a significant difference for patients suffering from serious diseases and strengthens Amgen’s leading rare disease portfolio by adding first-in-class, early-in-lifecycle medicines, including TEPEZZA for thyroid eye disease, KRYSTEXXA for chronic refractory gout and UPLIZNA for neuromyelitis optica spectrum disorder. Upon its acquisition, Horizon became a wholly owned subsidiary of Amgen, and its operations have been included in our consolidated financial statements commencing on the acquisition date.
During the three months ended December 31, 2023, the Company incurred approximately $487 million of acquisition costs related to the closing of our Horizon acquisition, consisting of $167 million for share-based payments to settle non-vested equity awards attributable to post-combination services, severance and other employee-related expenses, and $320 million of transaction costs. These costs were included primarily in SG&A expense in the Consolidated Statements of Income.
F-15
The following table summarizes the total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed (in millions):
| Amounts | ||||||||
| Cash and cash equivalents | $ | |||||||
| Inventories | ||||||||
| Property, plant and equipment, net | ||||||||
| Finite-lived intangible assets – developed-product-technology rights | ||||||||
| IPR&D | ||||||||
| Goodwill | ||||||||
| Deferred tax asset | ||||||||
| Deferred tax liability | ( | |||||||
| Other assets and liabilities, net | ( | |||||||
| Total assets acquired, net | $ | |||||||
The $27.8 billion total consideration for this transaction consisted of (i) cash consideration transferred to common shareholders of $26.7 billion; (ii) cash consideration transferred to vested and outstanding options, outstanding RSU awards, and outstanding PSU awards of $523 million; (iii) fair value of Amgen replacement awards (based on conversion of outstanding employee RSU awards) of $180 million representing non-cash consideration; and (iv) a portion of Horizon’s debt, settled by Amgen on the closing date, of $382 million. Amgen issued 1.7 million replacement equity awards with the original vesting conditions, and fair value was determined based on acquisition date fair value based on the conversion calculation. See Note 5, Stock-based compensation.
The estimated fair values of $20.7 billion for the developed-product-technology rights and IPR&D intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The projected cash flows were based on certain assumptions attributable to the respective intangible asset, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies. The developed-product-technology rights are being amortized on a straight-line basis over a weighted-average period of approximately 10 years using the straight-line methodology.
The estimated fair value of the acquired inventory of $5.0 billion was determined using the comparative sales method, which uses actual or expected selling prices of inventory as the base amount to which adjustments for selling effort and a profit on the buyer’s effort are applied. The inventory fair value adjustment is being amortized using a weighted-average inventory turnover, which we estimate to approximate 27 months.
A deferred tax liability of $2.5 billion was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired, as well as associated deferred tax asset for anticipatory foreign tax credits of $834 million.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $3.1 billion was recorded as goodwill, which is not deductible for tax purposes. The goodwill value represents expected synergies from the marketed products acquired and other benefits.
Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis to determine the acquisition date fair values of certain assets acquired, liabilities assumed and tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.
Following the acquisition date of October 6, 2023, the operating results of Horizon have been included in our consolidated financial statements. For the period from the acquisition date through December 31, 2023, total revenues and net losses attributable to Horizon were $955 million and $1.2 billion, respectively, inclusive of $633 million of inventory fair value step-up amortization and $479 million of intangible asset amortization recorded in Cost of sales in the Consolidated Statements of Income.
F-16
Supplemental Pro Forma Financial Information
The following table presents the unaudited supplemental pro forma results of a hypothetical combined Amgen and Horizon for the years ended December 31, 2023 and 2022, as if the acquisition of Horizon had occurred on January 1, 2022 (in millions):
| Years ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Total revenue | $ | $ | |||||||||
| Net income | $ | $ | |||||||||
The unaudited supplemental pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of Amgen and Horizon. In order to reflect the occurrence of the acquisition on January 1, 2022, the unaudited supplemental pro forma financial information includes adjustments to reflect the following: (i) incremental amortization expense based on the current preliminary fair values of the identifiable intangible assets and inventory step-up; (ii) the additional interest expense associated with the issuance of debt to finance the acquisition; (iii) the reclassification of transaction and other acquisition-related costs incurred during the three months ended December 31, 2023, to the year ended December 31, 2022; and (iv) the income tax impact using an estimated effective tax rate applied to the combined entity. The unaudited supplemental pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2022. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company, nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.
Acquisition of ChemoCentryx, Inc.
On October 20, 2022, we acquired all of the outstanding stock of ChemoCentryx, a publicly traded biotechnology company focused on orally administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer, for $52.00 per share in cash, representing a total consideration of $3.9 billion. The acquisition, which was accounted for as a business combination, includes TAVNEOS, an orally administered selective complement 5a receptor inhibitor that was approved by the FDA in October 2021 as an adjunctive therapy for adults with severe active antineutrophil cytoplasmic autoantibody-associated vasculitis (ANCA-associated vasculitis). TAVNEOS is commercialized by us in the United States; for markets outside the United States, TAVNEOS is commercialized by a collaboration partner, and Amgen is entitled to royalties and milestones based on future sales of the product. Upon its acquisition, ChemoCentryx became a wholly owned subsidiary of Amgen, and its operations became included in our consolidated financial statements commencing on the acquisition date.
Measurement period adjustments during the year ended December 31, 2023, included changes in the purchase price allocation and total consideration, resulting in a net decrease of approximately $18 million to goodwill. The measurement period adjustments resulted primarily from valuation inputs pertaining to the TAVNEOS intangible assets, adjustments to vendor payables and deferred tax attributes based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date. The adjustments did not have a significant impact on Amgen’s results of operations during the year ended December 31, 2023, and would not have had a significant impact on prior-period results if the adjustments had been made as of the acquisition date.
F-17
The following table summarizes the final total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):
| Amounts | ||||||||
| Cash and cash equivalents | $ | |||||||
| Marketable securities | ||||||||
| Inventories | ||||||||
| Finite-lived intangible assets – developed-product-technology rights | ||||||||
| Goodwill | ||||||||
| Other liabilities, net | ( | |||||||
| Deferred tax liability, net | ( | |||||||
| Total assets acquired, net | $ | |||||||
The $3.9 billion total consideration consisted of (i) a $3.7 billion cash payment to outstanding common stockholders of ChemoCentryx and (ii) a $181 million cash payment to equity award holders of ChemoCentryx for services rendered prior to the acquisition date of October 20, 2022, under the ChemoCentryx equity award plans.
The developed-product-technology rights acquired relates to TAVNEOS, which is approved in the United States and the EU for ANCA-associated vasculitis. The estimated fair values of $3.5 billion were determined by using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The developed-product-technology rights are being amortized on a straight-line basis over a weighted-average period of approximately 11 years using the straight-line method.
The estimated fair value of the acquired inventory of $41 million was determined using the comparative sales method, which uses actual or expected selling prices of inventory as the base amount to which adjustments for selling effort and a profit on the buyer’s effort are applied. The inventory fair value adjustment was amortized as inventory turned over, which we estimated to be approximately 13 months.
A net deferred tax liability of $502 million was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $649 million was recorded as goodwill, which is not deductible for tax purposes. The goodwill value is primarily attributable to the expected synergies from the TAVNEOS asset.
Acquisition of Teneobio, Inc.
On October 19, 2021, we acquired all of the outstanding stock of Teneobio, a privately held, clinical-stage biotechnology company developing a new class of biologics called human heavy-chain antibodies, which are single-chain antibodies composed of the human heavy-chain domain. The transaction, which was accounted for as a business combination, includes Teneobio’s proprietary bispecific and multispecific antibody technologies, which complement Amgen’s existing antibody capabilities and bispecific T-cell engager BiTE® platform and will enable significant acceleration and efficiency in the discovery and development of new molecules to treat diseases across Amgen’s core therapeutic areas. Upon its acquisition, Teneobio became a wholly owned subsidiary of Amgen, and its operations have been included in our consolidated financial statements commencing on the acquisition date.
F-18
Measurement period adjustments for the year ended December 31, 2022, included changes to the purchase price allocation and total consideration, resulting in a net increase of $22 million to goodwill. The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date. These adjustments did not have a significant impact on Amgen’s results of operations during the year ended December 31, 2022, and would not have had a significant impact on prior-period results if these adjustments had been made as of the acquisition date.
The following table summarizes the final total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):
| Amounts | ||||||||
| Cash purchase price | $ | |||||||
| Contingent consideration | ||||||||
| Total consideration | $ | |||||||
| Cash and cash equivalents | $ | |||||||
| IPR&D | ||||||||
| Finite-lived intangible asset – R&D technology rights | ||||||||
| Finite-lived intangible assets – licensing rights | ||||||||
| Goodwill | ||||||||
| Other assets, net | ||||||||
| Deferred tax liability | ( | |||||||
| Total assets acquired, net | $ | |||||||
Consideration for this transaction comprised of (i) an upfront cash payment of $993 million, which included a working-capital adjustment, and (ii) future contingent milestone payments to Teneobio’s former equity holders of up to $1.6 billion in cash, based on the achievement of various development and regulatory milestones with regard to the leading asset (AMG 340, formerly TNB-585) and to various development milestones for other drug candidates. The estimated fair values of the contingent consideration obligations aggregated $299 million as of the acquisition date and were determined using a probability-weighted expected return methodology. The assumptions in this method include the probability of achieving the milestones and the expected payment dates, with such amounts discounted to present value based on our pretax cost of debt. See Note 18, Fair value measurement, for information regarding the estimated fair value of these obligations as of December 31, 2023.
The estimated fair values of acquired IPR&D assets totaled $991 million, of which $784 million related to AMG 340, and the balance related to four separate preclinical oncology programs. See Note 13, Goodwill and other intangible assets, for information regarding the acquired IPR&D assets as of December 31, 2023. The R&D technology rights of $115 million related to Teneobio’s proprietary bispecific and multispecific antibody technologies; the amount is being amortized over 10 years by using the straight-line method. Teneobio has also licensed its technology and certain identified targets to various third parties, representing contractual agreements valued at $41 million. The estimated fair values for these intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The projected cash flows were based on certain assumptions attributable to the respective intangible asset, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.
A deferred tax liability of $244 million was recognized on temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $273 million was recorded as goodwill, which is not deductible for tax purposes. The goodwill value represented expected synergies from both AMG 340 and the technologies acquired.
During the third quarter of 2023, the development of AMG 340 acquired in connection with our Teneobio acquisition was terminated. See Note 13, Goodwill and other intangible assets, and Note 18, Fair value measurement, for additional information.
F-19
Acquisition of Five Prime Therapeutics, Inc.
On April 16, 2021, Amgen completed its acquisition of Five Prime for a total cash consideration of $1.6 billion, net of cash acquired. The purchase price was funded with cash on hand. This transaction was accounted for as an asset acquisition because substantially all the value of the assets acquired was concentrated in the intellectual property rights of bemarituzumab, a Phase 3 first-in-class program for gastric cancer. Five Prime’s operations have been included in our consolidated financial statements commencing after the acquisition date.
We allocated the consideration to acquire Five Prime to the bemarituzumab IPR&D program of $1.5 billion, which was expensed immediately in Acquired IPR&D expense in the Consolidated Statements of Income; deferred tax assets of $177 million; and other net liabilities of $47 million. The acquired IPR&D expense was not tax deductible.
Divestiture of Gensenta İlaç Sanayi ve Ticaret A.Ş.
On November 2, 2022, we sold our shares in Gensenta, a subsidiary in Turkey, to Eczacıbaşı for net cash proceeds of approximately $130 million. The transaction was accounted for as a sale of a business and did not meet the criteria to be classified as discontinued operations. Upon closing of this transaction, net assets related to Gensenta of $86 million were divested, and during the year ended December 31, 2022, we recognized a loss on divestiture of $567 million recorded in Other operating expenses in the Consolidated Statements of Income, primarily due to the reclassification of $615 million of cumulative foreign currency translation losses from AOCI into earnings. See Note 17, Stockholders’ equity.
4. Revenues
We operate in one business segment: human therapeutics. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. Revenues by product and by geographic area, based on customers’ locations, are presented below. The majority of ROW revenues relates to products sold in Europe.
Revenues were as follows (in millions):
| Year ended December 31, 2023 | Year ended December 31, 2022 | Year ended December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | ROW | Total | U.S. | ROW | Total | U.S. | ROW | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| Prolia | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| ENBREL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Otezla | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| XGEVA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repatha | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nplate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KYPROLIS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aranesp | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EVENITY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vectibix | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BLINCYTO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TEPEZZA(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
KRYSTEXXA(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other products(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total product sales(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
____________
(1) TEPEZZA and KRYSTEXXA were acquired from the acquisition of Horizon on October 6, 2023, and includes product sales from the acquisition date through December 31, 2023.
(2) Consists of product sales of our non-principal products, as well as sales prior to the divestiture of our Bergamo and Gensenta subsidiaries in the second quarter of 2023 and fourth quarter of 2022, respectively.
(3) Hedging gains and losses, which are included in product sales, were not material for the years ended December 31, 2023, 2022 and 2021.
F-20
In the United States, we sell primarily to pharmaceutical wholesale distributors that we use as the principal means of distributing our products to healthcare providers. Outside the United States, we sell principally to healthcare providers and/or pharmaceutical wholesale distributors depending on the distribution practice in each country. We monitor the financial condition of our larger customers and limit our credit exposure by setting credit limits and, in certain circumstances, by requiring letters of credit or obtaining credit insurance.
We had product sales to three customers that individually accounted for more than 10% of total revenues for each of the years ended December 31, 2023, 2022 and 2021. For the year ended December 31, 2023, on a combined basis, these customers accounted for 79 % of total gross revenues as shown in the following table. Certain information with respect to these customers was as follows (dollar amounts in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| McKesson Corporation: | |||||||||||||||||
| Gross product sales | $ | $ | $ | ||||||||||||||
| % of total gross revenues | % | % | % | ||||||||||||||
| Cencora, Inc. (formerly AmerisourceBergen Corporation): | |||||||||||||||||
| Gross product sales | $ | $ | $ | ||||||||||||||
| % of total gross revenues | % | % | % | ||||||||||||||
| Cardinal Health, Inc.: | |||||||||||||||||
| Gross product sales | $ | $ | $ | ||||||||||||||
| % of total gross revenues | % | % | % | ||||||||||||||
As of both December 31, 2023 and 2022, amounts due from these three customers each exceeded 10% of gross trade receivables and accounted for 75 22 % and 26 %, respectively, of net trade receivables were due from customers located outside the United States, the majority of which were from Europe. Our total allowance for doubtful accounts as of December 31, 2023 and 2022, was not material.
5. Stock-based compensation
Our Amended 2009 Plan authorizes for issuance to employees of Amgen and nonemployee members of our Board of Directors shares of our common stock pursuant to grants of equity-based awards, including RSUs, stock options and performance units. The pool of shares available under the Amended 2009 Plan is reduced by one share for each stock option granted and by 1.9 1.9 12 million shares of our common stock. Stock-based awards under our employee compensation plans are made with newly issued shares reserved for this purpose.
The following table reflects the components of stock-based compensation expense recognized in our Consolidated Statements of Income (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| RSUs | $ | $ | $ | ||||||||||||||
| Performance units | |||||||||||||||||
| Stock options | |||||||||||||||||
| Total stock-based compensation expense, pretax | |||||||||||||||||
| Tax benefit from stock-based compensation expense | ( | ( | ( | ||||||||||||||
| Total stock-based compensation expense, net of tax | $ | $ | $ | ||||||||||||||
F-21
Restricted stock units and stock options
Eligible employees generally receive an annual grant of RSUs and, for certain executive-level employees, stock options, with the size and type of award generally determined by the employee’s salary grade and performance level. Certain management and professional-level employees typically receive RSU grants upon commencement of employment. Nonemployee members of our Board of Directors also receive an annual grant of RSUs.
Our RSU and stock option grants provide for accelerated or continued vesting in certain circumstances as defined in the plans and related grant agreements, including upon death, disability, termination in connection with a change in control and the retirement of employees who meet certain service and/or age requirements. RSUs and stock options generally vest in equal amounts on the second, third and fourth anniversaries of the grant date. RSUs accrue dividend equivalents, which are typically payable in shares only when and to the extent the underlying RSUs vest and are issued to the recipient.
Restricted stock units
The grant date fair value of an RSU equals the closing price of our common stock on the grant date, as RSUs accrue dividend equivalents during their vesting period, except with respect to Horizon replacement RSUs, discussed below. The weighted-average grant date fair values per unit of RSUs granted (excluding replacement awards granted to Horizon RSU holders) during the years ended December 31, 2023, 2022 and 2021, were $237.70 , $234.47 and $233.10 , respectively.
The following table summarizes information regarding our RSUs:
| Year ended December 31, 2023 | |||||||||||
| Units (in millions) | Weighted-average grant date fair value | ||||||||||
Balance nonvested as of December 31, 2022 | $ | ||||||||||
| Granted | $ | ||||||||||
| Replacement awards granted - Horizon acquisition | $ | ||||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
Balance nonvested as of December 31, 2023 | $ | ||||||||||
Holders of Horizon unvested RSUs were granted replacement Amgen RSUs under the original terms of the awards in connection with the Horizon acquisition based on the terms of the transaction. See Note 3, Acquisitions and divestitures. Subsequent to the acquisition, $42 million of the RSUs were accelerated and cash settled.
The total grant date fair values of RSUs that vested during the years ended December 31, 2023, 2022 and 2021, were $309 million, $192 million and $166 million, respectively.
Stock options
The exercise price of stock options is set as the closing price of our common stock on the grant date, and the related number of shares granted is fixed at that point in time. Awards expire 10 years from the date of grant. We use the Black–Scholes option valuation model to estimate the grant date fair value of stock options.
The weighted-average assumptions used in the option valuation model and the resulting weighted-average grant date fair values of stock options granted were as follows:
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Closing price of our common stock on grant date | $ | $ | $ | ||||||||||||||
| Expected volatility (average of implied and historical volatility) | % | % | % | ||||||||||||||
| Expected life (in years) | |||||||||||||||||
| Risk-free interest rate | % | % | % | ||||||||||||||
| Expected dividend yield | % | % | % | ||||||||||||||
| Fair value of stock options granted | $ | $ | $ | ||||||||||||||
F-22
The following table summarizes information regarding our stock options:
| Year ended December 31, 2023 | |||||||||||||||||||||||
| Options (in millions) | Weighted- average exercise price | Weighted- average remaining contractual life (in years) | Aggregate intrinsic value (in millions) | ||||||||||||||||||||
| Balance unexercised as of December 31, 2022 | $ | ||||||||||||||||||||||
| Granted | $ | ||||||||||||||||||||||
| Exercised | ( | $ | |||||||||||||||||||||
| Expired/forfeited | ( | $ | |||||||||||||||||||||
Balance unexercised as of December 31, 2023 | $ | $ | |||||||||||||||||||||
Vested or expected to vest as of December 31, 2023 | $ | $ | |||||||||||||||||||||
Exercisable as of December 31, 2023 | $ | $ | |||||||||||||||||||||
The total intrinsic values of options exercised during the years ended December 31, 2023, 2022 and 2021, were $33 million, $67 million and $56 million, respectively. The actual tax benefits realized from tax deductions from option exercises during the years ended December 31, 2023, 2022 and 2021, were $7 million, $14 million and $12 million, respectively.
As of December 31, 2023, $498 million of unrecognized compensation cost was related to nonvested RSUs and unvested stock options, which is expected to be recognized over a weighted-average period of 1.6 years.
Performance units
Certain management-level employees also receive annual grants of performance units, which give the recipient the right to receive common stock that is contingent upon achievement of specified preestablished goals over the performance period, which is generally three years . The performance goals for the units granted during the years ended December 31, 2023, 2022 and 2021, which are accounted for as equity awards, are based on (i) Amgen’s stockholder return compared with a comparator group of companies, which are considered market conditions and are therefore reflected in the grant date fair values of the units, and (ii) Amgen’s stand-alone financial performance measures, which are considered performance conditions. The expense recognized for awards is based on the grant date fair value of a unit multiplied by the number of units expected to be earned with respect to the related performance conditions, net of estimated forfeitures. Depending on the outcome of these performance goals, a recipient may ultimately earn a number of units greater or less than the number of units granted. Shares of our common stock are issued on a one
We use a payout simulation model to estimate the grant date fair value of performance units. The weighted-average assumptions used in the payout simulation model and the resulting weighted-average grant date fair values of performance units granted were as follows:
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Closing price of our common stock on grant date | $ | $ | $ | ||||||||||||||
| Volatility | % | % | % | ||||||||||||||
| Risk-free interest rate | % | % | % | ||||||||||||||
| Fair value of units granted | $ | $ | $ | ||||||||||||||
The payout simulation model assumes correlations of returns of the stock prices of our common stock and the common stocks of the comparator groups of companies and stock price volatilities of the comparator groups of companies to simulate stockholder returns over the performance periods and their resulting impact on the payout percentages based on the contractual terms of the performance units.
F-23
As of December 31, 2023 and 2022, 1.7 million and 1.6 million performance units were outstanding, respectively, with weighted-average grant date fair values per unit of $251.41 and $250.27 per unit, respectively. During the year ended December 31, 2023, 0.7 million performance units with a weighted-average grant date fair value per unit of $252.49 were granted, and 0.2 million performance units with a weighted-average grant date fair value per unit of $251.38 were forfeited.
The total fair values of performance units paid during the years ended December 31, 2023, 2022 and 2021, were $109 million, $150 million and $149 million, respectively, based on the number of performance units earned multiplied by the closing stock price of our common stock on the last day of the performance period.
As of December 31, 2023, $146 million of unrecognized compensation cost was related to nonvested performance units, which is expected to be recognized over a weighted-average period of one year .
6. Defined contribution plan
The Company has defined contribution plans to which certain employees of the Company and participating subsidiaries may defer compensation for income tax purposes. Participants are eligible to receive matching contributions based on their contributions, in addition to other Company contributions. Defined contribution plan expenses were $311 million, $243 million and $279 million for the years ended December 31, 2023, 2022 and 2021, respectively.
7. Income taxes
Income before income taxes included the following (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Domestic | $ | $ | $ | ||||||||||||||
| Foreign | |||||||||||||||||
| Total income before income taxes | $ | $ | $ | ||||||||||||||
The provision for income taxes included the following (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | $ | $ | ||||||||||||||
| State | |||||||||||||||||
| Foreign | |||||||||||||||||
| Total current provision | |||||||||||||||||
| Deferred benefit: | |||||||||||||||||
| Federal | ( | ( | ( | ||||||||||||||
| State | ( | ( | ( | ||||||||||||||
| Foreign | ( | ( | ( | ||||||||||||||
| Total deferred benefit | ( | ( | ( | ||||||||||||||
| Total provision for income taxes | $ | $ | $ | ||||||||||||||
F-24
Deferred income taxes reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, tax credit carryforwards and the tax effects of NOL carryforwards. As of December 31, 2022, we elected to establish deferred taxes with respect to the U.S. minimum tax on the earnings of our foreign subsidiaries for the reversal of temporary items in future years. Significant components of our deferred tax assets and liabilities were as follows (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Deferred income tax assets: | |||||||||||
| NOL and credit carryforwards | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Capitalized research and development expenses | |||||||||||
| Investments | |||||||||||
| Expenses capitalized for tax | |||||||||||
| Earnings of foreign subsidiaries | |||||||||||
| Stock-based compensation | |||||||||||
| Other | |||||||||||
| Total deferred income tax assets | |||||||||||
| Valuation allowance | ( | ( | |||||||||
| Net deferred income tax assets | |||||||||||
| Deferred income tax liabilities: | |||||||||||
| Acquired intangible assets | ( | ( | |||||||||
| Debt | ( | ( | |||||||||
| Fixed assets | ( | ( | |||||||||
Fair value of acquired inventory | ( | ( | |||||||||
Investments | ( | ||||||||||
| Other | ( | ( | |||||||||
| Total deferred income tax liabilities | ( | ( | |||||||||
| Total deferred income taxes, net | $ | $ | |||||||||
The Company has determined that unremitted foreign earnings are not considered indefinitely reinvested to the extent foreign earnings can be distributed without a significant tax cost. For the amount considered to be indefinitely reinvested, it is not practicable to determine the amount of the related deferred income tax liability due to the complexities of the tax laws and assumptions we would have to make.
Valuation allowances are provided to reduce the amounts of our deferred tax assets to an amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts.
The valuation allowance increased in 2023, primarily driven by the Company’s expectation that certain state R&D credits will expire unused as well as acquired state credits and state NOLs not expected to be realized.
As of December 31, 2023, we had $201 million of federal tax credit carryforwards available to reduce future federal income taxes and have provided a valuation allowance for $19 million of those federal tax credit carryforwards. The federal tax credit carryforwards expire between 2024 and 2044. We had $1.1 billion of state tax credit carryforwards available to reduce future state income taxes and have provided a valuation allowance for $971 million of those state tax credit carryforwards. We had $84 million of tax credit carryforwards related to our foreign jurisdictions available to offset future foreign income taxes for which we have provided $59 million valuation allowance.
As of December 31, 2023, we had $869 million of federal NOL carryforwards available to reduce future federal income taxes and have provided no valuation allowance on those federal NOL carryforwards. Additionally, $691 million of those federal NOL carryforwards have no expiration; the remainder begin to expire between 2025 and 2037. We had $872 million of state NOL carryforwards available to reduce future state income taxes and have provided a valuation allowance for
F-25
$738 million of those state NOL carryforwards. We had $1.3 billion of foreign NOL carryforwards available to reduce future foreign income taxes and have provided a valuation allowance for $238 million of those foreign NOL carryforwards. For the foreign NOLs with no valuation allowance provided, $243 million have no expiration; and the remainder will expire between 2024 and 2033.
The reconciliations of the total gross amounts of UTBs were as follows (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Beginning balance | $ | $ | $ | ||||||||||||||
| Additions based on tax positions related to the current year | |||||||||||||||||
| Additions based on tax positions related to prior years | |||||||||||||||||
| Reductions for tax positions of prior years | ( | ( | |||||||||||||||
| Reductions for expiration of statute of limitations | ( | ( | |||||||||||||||
| Settlements | ( | ( | |||||||||||||||
| Ending balance | $ | $ | $ | ||||||||||||||
Substantially all of the UTBs as of December 31, 2023, if recognized, would affect our effective tax rate. As a result, we remeasured our UTBs accordingly.
Interest and penalties related to UTBs are included in our provision for income taxes. During the years ended December 31, 2023, 2022 and 2021, we recognized $287 million, $189 million and $98 million, respectively, of interest and penalties through the income tax provision in the Consolidated Statements of Income. The increase in interest expense for the year ended December 31, 2023, was primarily due to higher interest rates during 2023 and acquired positions. As of December 31, 2023 and 2022, accrued interest and penalties associated with UTBs were $1.4 billion and $1.1 billion, respectively.
The reconciliations between the federal statutory tax rate applied to income before income taxes and our effective tax rate were as follows:
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Federal statutory tax rate | % | % | % | ||||||||||||||
| Foreign earnings | ( | % | ( | % | ( | % | |||||||||||
| Foreign-derived intangible income | ( | % | ( | % | ( | % | |||||||||||
| Credits, Puerto Rico excise tax | % | ( | % | ( | % | ||||||||||||
| Interest on uncertain tax positions | % | % | % | ||||||||||||||
| Credits, primarily federal R&D | ( | % | ( | % | ( | % | |||||||||||
| Acquisition IPR&D | % | % | % | ||||||||||||||
| Other, net | % | ( | % | ( | % | ||||||||||||
| Effective tax rate | % | % | % | ||||||||||||||
The effective tax rates for the years ended December 31, 2023, 2022 and 2021, differ from the federal statutory rate primarily due to impacts of the jurisdictional mix of income and expenses. Substantially all of the benefit to our effective tax rate from foreign earnings results from locations where the Company has significant manufacturing operations, including Singapore, Ireland and Puerto Rico, a territory of the United States that is treated as a foreign jurisdiction for U.S. tax purposes. Our operations in Puerto Rico are subject to tax incentive grants through 2050. Additionally, the Company’s operations conducted in Singapore are subject to a tax incentive grant through 2036. Our foreign earnings are also subject to U.S. tax at a reduced rate of 10.5%.
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We are no longer subject to a 4% excise tax in the U.S. territory of Puerto Rico on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico. As of January 1, 2023, we qualify for and are subject to the alternative income tax rate on industrial development income of our Puerto Rico affiliate. In the United States, this income tax qualifies for foreign tax credits. Both this income tax and the associated foreign tax credits are generally recognized in our provision for income taxes. We accounted for the 2022 excise tax that was capitalized in Inventories as an expense in Cost of sales when the related products were sold in 2023, and a foreign tax credit was not recognized in 2023 with respect to the excise tax.
Income taxes paid during the years ended December 31, 2023, 2022 and 2021, were $3.4 billion, $2.4 billion and $1.9 billion, respectively.
One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely examined by tax authorities in those jurisdictions. Significant disputes can and have arisen with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts. Tax authorities, including the IRS, are becoming more aggressive and are particularly focused on such matters.
In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.
In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.
We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The two cases were consolidated in the U.S. Tax Court on December 19, 2022. On February 10, 2023, the U.S. Tax Court entered an order setting a trial date of November 4, 2024.
We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we are under examination by a number of state and foreign tax jurisdictions.
Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our consolidated financial statements.
We are no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2009.
8. Earnings per share
The computation of basic EPS is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which primarily include shares that may be issued under our stock option, restricted stock and performance unit award programs (collectively, dilutive securities), as determined by using the treasury stock method.
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The computations for basic and diluted EPS were as follows (in millions, except per-share data):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Income (Numerator): | |||||||||||||||||
| Net income for basic and diluted EPS | $ | $ | $ | ||||||||||||||
| Shares (Denominator): | |||||||||||||||||
| Weighted-average shares for basic EPS | |||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||
| Weighted-average shares for diluted EPS | |||||||||||||||||
| Basic EPS | $ | $ | $ | ||||||||||||||
| Diluted EPS | $ | $ | $ | ||||||||||||||
For each of the three years ended December 31, 2023, the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.
9. Collaborations
A collaborative arrangement is a contractual arrangement that involves a joint operating activity. Such arrangements involve two or more parties that are both (i) active participants in the activity and (ii) exposed to significant risks and rewards dependent on the commercial success of the activity.
From time to time, we enter into collaborative arrangements for the R&D, manufacture and/or commercialization of products and/or product candidates. These collaborations generally provide for nonrefundable upfront license fees, development and commercial-performance milestone payments, cost sharing, royalties and/or profit sharing. Our collaboration arrangements are performed with no guarantee of either technological or commercial success, and each arrangement is unique in nature. See Note 1, Summary of significant accounting policies, for additional discussion of revenues recognized under these types of arrangements. Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line items in the Consolidated Statements of Income, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. Our significant arrangements are discussed below.
BeiGene, Ltd.
In January 2020, we acquired an equity stake in BeiGene for approximately $2.8 billion in cash as part of a collaboration to expand our oncology presence in China. For additional information regarding our equity investment in BeiGene, see Note 10, Investments. Under the collaboration, BeiGene began selling XGEVA in 2020, BLINCYTO in 2021 and KYPROLIS in 2022 in China, and Amgen shares profits and losses equally during the initial product-specific commercialization periods; thereafter, product rights may revert to Amgen, and Amgen will pay royalties to BeiGene on sales in China of such products for a specified period. Amgen manufactures and supplies the collaboration products to BeiGene.
In addition, we jointly develop a portion of our oncology portfolio with BeiGene, which shares in global R&D costs by providing cash and development services of up to $1.25 billion. Upon regulatory approval, BeiGene will assume commercialization rights in China for a specified period, and Amgen and BeiGene will share profits equally until certain of these product rights revert to Amgen. Upon return of the product rights, Amgen will pay royalties to BeiGene on sales in China for a specified period. For product sales outside China, Amgen will also pay royalties to BeiGene.
During the years ended December 31, 2023, 2022 and 2021, net costs recovered from BeiGene for oncology product candidates were $109 million, $199 million and $220 million, respectively, and were recorded as an offset to R&D expense in the Consolidated Statements of Income. During the years ended December 31, 2023, 2022 and 2021, product sales from Amgen to BeiGene under the collaboration were $125 million, $64 million and $72 million, respectively, and were recorded in Product sales in the Consolidated Statements of Income. During the years ended December 31, 2023, 2022 and 2021, profit and loss share expenses related to the initial product-specific commercialization period were $40 million, $53 million and $64 million, respectively, and were recorded in SG&A expense in the Consolidated Statements of Income. Amounts owed from BeiGene for product sales were $16 million and $6 million as of December 31, 2023 and 2022, respectively, which are included in Trade receivables, net, in the Consolidated Balance Sheets. Net amounts owed from BeiGene for cost recoveries and profit and loss
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share payments were $44 million and $47 million as of December 31, 2023 and 2022, respectively, which are included in Other current assets in the Consolidated Balance Sheets.
AstraZeneca plc
We are in a collaboration with AstraZeneca for the development and commercialization of TEZSPIRE. Under our collaboration, both companies share global costs, profits and losses equally after payment by AstraZeneca of a mid-single-digit royalty to Amgen. AstraZeneca leads global development, and both Amgen and AstraZeneca jointly commercialize TEZSPIRE in North America. In North America, Amgen, as the principal, recognizes product sales of TEZSPIRE in the United States, and AstraZeneca, as the principal, recognizes product sales of TEZSPIRE in Canada. AstraZeneca leads commercialization for TEZSPIRE outside North America. Amgen manufactures and supplies TEZSPIRE worldwide.
During the years ended December 31, 2023, 2022 and 2021, net costs due to AstraZeneca for global development were $77 million, $74 million and $49 million, respectively, and were recorded in R&D expense in the Consolidated Statements of Income. During the years ended December 31, 2023, 2022 and 2021, net costs due to AstraZeneca for global commercialization were $73 million, $60 million and $39 million, respectively, and were recorded in SG&A expense in the Consolidated Statements of Income. During the years ended December 31, 2023 and 2022, global profit and loss share expenses were $310 million and $119 million, respectively, and were recorded primarily in Cost of sales in the Consolidated Statements of Income. TEZSPIRE launched in the United States in January 2022.
UCB
We are in a collaboration with UCB for the development and commercialization of EVENITY. Under our collaboration, UCB has rights to lead commercialization for EVENITY in most countries in Europe. Amgen, as the principal, leads commercialization for EVENITY and recognizes product sales in all other territories, including the United States. Global development costs and commercialization profits and losses related to the collaboration are shared equally. Amgen manufactures and supplies EVENITY worldwide.
During the years ended December 31, 2023, 2022 and 2021, global profit and loss share expenses were $396 million, $255 million and $186 million, respectively, and were recorded in Cost of sales in the Consolidated Statements of Income. Net costs recovered from and due to UCB during the years ended December 31, 2023, 2022 and 2021, were not material.
Novartis Pharma AG
We are in a collaboration with Novartis to jointly develop and commercialize Aimovig. On January 31, 2022, we modified the terms of the collaboration. Effective January 1, 2022, in the United States, Novartis no longer collaborates with Amgen, shares Aimovig commercialization costs or is required to pay milestones, and Amgen no longer pays royalties to Novartis on U.S. sales of Aimovig. Novartis continues to hold global co-development rights and exclusive commercial rights outside the United States and Japan for Aimovig. Amgen and Novartis share global development expenses, and Novartis pays Amgen double-digit royalties on net sales of the product outside the United States and Japan. Amgen manufactures and supplies Aimovig worldwide.
During the years ended December 31, 2023 and 2022, net costs recovered from Novartis for migraine products were $42 million and $53 million, respectively, and were recorded in R&D expense in the Consolidated Statements of Income. During the year ended December 31, 2021, net costs recovered from Novartis for migraine products were $160 million and were recorded primarily in SG&A expense in the Consolidated Statements of Income. During the year ended December 31, 2021, royalties due to Novartis for Aimovig were $116 million and were recorded in Cost of sales in the Consolidated Statements of Income. During the years ended December 31, 2023, 2022 and 2021, royalties due from Novartis for Aimovig were not material.
Kyowa Kirin Co., Ltd.
We are in a collaboration and licensing agreement with Kyowa Kirin to jointly develop and commercialize rocatinlimab, an anti-OX40 fully human monoclonal antibody, worldwide, except in Japan. Rocatinlimab is for the treatment of atopic dermatitis, with potential for treatment of other autoimmune diseases.
Under the terms of the agreement, we lead the global development, manufacture and commercialization of rocatinlimab, except in Japan. Kyowa Kirin will co-promote rocatinlimab with Amgen in the United States and have opt in rights to co-promote rocatinlimab in various other markets outside the United States, including in Europe and Asia.
F-29
We made an upfront payment of $400 million to Kyowa Kirin that was recognized in R&D expense in the third quarter of 2021. Amgen and Kyowa Kirin share equally the global development costs, except in Japan, and the U.S. commercialization costs. Outside the United States and Japan, any commercialization costs incurred by Kyowa Kirin will be reimbursed by Amgen. We may also be required to make milestone payments of up to $850 million contingent upon the achievement of certain regulatory events and commercial thresholds. We will also pay Kyowa Kirin significant double-digit royalties on global sales, except in Japan. During the year ended December 31, 2023, net costs recovered from Kyowa Kirin were $93 million and were recorded in R&D expense in the Consolidated Statements of Income. Net costs due to or recovered from Kyowa Kirin during the years ended December 31, 2022 and 2021, were not
Other
In addition to the collaborations discussed above, we have various other collaborations that are not individually significant to our business at this time. Pursuant to the terms of those agreements, we may be required to pay additional amounts, or we may receive additional amounts upon the achievement of various development and commercial milestones that in the aggregate could be significant. We may also incur or have reimbursed to us significant R&D costs if a related product candidate were to advance to late-stage clinical trials. In addition, if any products related to these collaborations are approved for sale, we may be required to pay significant royalties, or we may receive significant royalties on future sales. The payments of these amounts, however, are contingent upon the occurrence of various future events that have high degrees of uncertainty of occurrence.
10. Investments
Available-for-sale investments
The amortized cost, gross unrealized gains, gross unrealized losses and fair values of interest-bearing securities, which are considered available-for-sale, by type of security were as follows (in millions):
| Types of securities as of December 31, 2023 | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair values | ||||||||||||||||||||||
| U.S. Treasury bills | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market mutual funds | ||||||||||||||||||||||||||
| Other short-term interest-bearing securities | ||||||||||||||||||||||||||
| Total available-for-sale investments | $ | $ | $ | $ | ||||||||||||||||||||||
| Types of securities as of December 31, 2022 | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair values | ||||||||||||||||||||||
| U.S. Treasury bills | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market mutual funds | ||||||||||||||||||||||||||
| Other short-term interest-bearing securities | ||||||||||||||||||||||||||
| Total available-for-sale investments | $ | $ | $ | $ | ||||||||||||||||||||||
The fair values of available-for-sale investments by location in the Consolidated Balance Sheets were as follows (in millions):
| December 31, | ||||||||||||||
| Consolidated Balance Sheets locations | 2023 | 2022 | ||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Marketable securities | ||||||||||||||
| Total available-for-sale investments | $ | $ | ||||||||||||
Cash and cash equivalents in the above table excludes bank account cash of $540 million and $4,970 million as of December 31, 2023 and 2022, respectively.
All interest-bearing securities as of December 31, 2023 and 2022, mature in one year or less. For the years ended December 31, 2023, 2022 and 2021, interest income on these investments were $1.2 billion, $127 million and $11 million, respectively.
F-30
For the years ended December 31, 2023, 2022 and 2021, realized gains and losses on interest-bearing securities were not material. Realized gains and losses on interest-bearing securities are recorded in Other income (expense), net, in the Consolidated Statements of Income. The cost of securities sold is based on the specific-identification method.
The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.
Equity securities
BeiGene, Ltd.
On January 2, 2020, we acquired a 20.5 % ownership interest in BeiGene for $2.8 billion, of which $2.6 billion was attributed to the fair value of equity securities upon closing, with the remainder attributed to prepaid R&D. Our equity investment in BeiGene is included in Other noncurrent assets in the Consolidated Balance Sheets. The fair value of equity securities acquired exceeded our proportionate share of the carrying value of BeiGene’s underlying net assets by $2.4 billion, and we began amortizing the intangible assets that gave rise to this basis difference over their useful lives.
Effective January 30, 2023, we relinquished our right to appoint a director to BeiGene’s Board of Directors. We no longer have the ability to exert significant influence over BeiGene. As a result, in the first quarter of 2023, we began to account for our ownership interest as an equity security with a readily determinable fair value, with changes in fair value recorded in Other income (expense), net, in the Consolidated Statements of Income. See Note 18, Fair value measurement. During the year ended December 31, 2023, we recognized an unrealized gain of $1.2 billion recorded in Other income (expense), net, in the Consolidated Statements of Income. As of December 31, 2023, the carrying and fair value of our investment in BeiGene was $3.4 billion and was included in Other noncurrent assets in the Consolidated Balance Sheets.
During the years ended December 31, 2022 and 2021, under the equity method of accounting, the carrying value of the investment was reduced by our share of BeiGene’s net losses of $394 million and $265 million, respectively, and amortization of the basis difference of $190 million and $172 million, respectively. During the year ended December 31, 2021, we increased the carrying value by $50 million as a result of our purchase of additional shares of BeiGene; we did not purchase additional shares of BeiGene during the years ended December 31, 2023 and 2022. In addition, during the years ended December 31, 2022 and 2021, the carrying value increased by $11 million and $265 million, respectively, from the impact of other BeiGene ownership transactions. As of December 31, 2022, the carrying and fair values of our investment in BeiGene were $2.2 billion and $4.2 billion, respectively, and our ownership percentage was 18.2 %. For information on a collaboration agreement we entered into with BeiGene in connection with this investment, see Note 9, Collaborations.
Other equity securities
Excluding our equity investments in BeiGene and Neumora (discussed below), we held investments in other equity securities with readily determinable fair values (publicly traded securities) of $494 million and $480 million as of December 31, 2023 and 2022, respectively, which are included in Other noncurrent assets in the Consolidated Balance Sheets. For the years ended December 31, 2023, 2022 and 2021, net unrealized gains and losses on publicly traded securities were a net gain of $98 million, a net loss of $165 million and a net gain of $161 million, respectively. Realized gains and losses on publicly traded securities for the years ended December 31, 2023, 2022 and 2021, were not material.
We held investments of $309 million and $233 million in equity securities without readily determinable fair values as of December 31, 2023 and 2022, respectively, which are included in Other noncurrent assets in the Consolidated Balance Sheets. For the years ended December 31, 2023 and 2022, gains due to upward adjustments and gains realized upon dispositions of these securities were not material. For the year ended December 31, 2021, gains due to upward adjustments were $152 million, and gains realized on the dispositions of these securities were $41 million. For the years ended December 31, 2023 and 2021, downward adjustments were not material. For the year ended December 31, 2022, downward adjustments to the carrying values of these securities were $67 million. Adjustments were based on observable price transactions.
Equity Method Investments
Neumora Therapeutics, Inc.
On September 30, 2021, we acquired an approximately 25.9 % ownership interest in Neumora, a then privately held company, for $257 million, which is included in Other noncurrent assets in the Consolidated Balance Sheets, in exchange for a $100 million cash payment and $157 million in noncash consideration primarily related to future services. During the third quarter of 2023, we made an additional $30 million equity investment in Neumora in connection with their initial public stock offering, and consequently, our investment now has a readily determinable fair value. Although our equity investment provides
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us with the ability to exercise significant influence over Neumora and therefore qualifies us for the equity method of accounting, we have elected the fair value option to account for our investment. Under the fair value option, changes in the fair value of the investment are recognized through earnings in Other income (expense), net, in the Consolidated Statements of Income each reporting period. We believe the fair value option best reflects the economics of the underlying transaction. As of December 31, 2023 and 2022, our ownership interests in Neumora were approximately 23.2 % and 24.9 %, respectively, and the fair values of our investment were $603 million and $335 million, respectively. During the years ended December 31, 2023, 2022 and 2021, we recognized gains of $238 million and $105 million and a loss of $37 million, respectively, for the change in fair values in Other income (expense), net, in the Consolidated Statements of Income.
For information on determination of fair values, see Note 18, Fair value measurement.
Limited partnerships
We held limited of $251 million and $249 million as of December 31, 2023 and 2022, respectively, which are included in Other noncurrent assets in the Consolidated Balance Sheets. These investments, which are primarily investment funds of early-stage biotechnology companies, are accounted for by using the equity method of accounting and are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships as a practical expedient. These investments are typically redeemable only through distributions upon liquidation of the underlying assets. As of December 31, 2023, unfunded additional commitments to be made for these investments during the next several years were $159 million. For the years ended December 31, 2023, 2022 and 2021, net gains and losses recognized from our limited partnership investments were net losses of $14 million and $284 million and a net gain of $143 million, respectively.
11. Inventories
Inventories consisted of the following (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
Total inventories(1) | $ | $ | |||||||||
____________
(1) The increase to Inventories was primarily due to the estimated fair value of the acquired inventory from the Horizon acquisition. See Note 3, Acquisitions and divestitures.
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12. Property, plant and equipment
Property, plant and equipment consisted of the following (dollar amounts in millions):
| December 31, | |||||||||||||||||
| Useful life (in years) | 2023 | 2022 | |||||||||||||||
| Land | — | $ | $ | ||||||||||||||
| Buildings and improvements | |||||||||||||||||
| Manufacturing equipment | |||||||||||||||||
| Laboratory equipment | |||||||||||||||||
| Fixed equipment | |||||||||||||||||
| Capitalized software | |||||||||||||||||
| Other | |||||||||||||||||
| Construction in progress | — | ||||||||||||||||
| Property, plant and equipment, gross | |||||||||||||||||
| Less accumulated depreciation and amortization | ( | ( | |||||||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||||||||
During the years ended December 31, 2023, 2022 and 2021, we recognized depreciation and amortization expense associated with our property, plant and equipment of $685 million, $661 million and $644 million, respectively.
Geographic information
Certain geographic information with respect to property, plant and equipment, net (long-lived assets), was as follows (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| U.S. | $ | $ | |||||||||
| Puerto Rico | |||||||||||
| ROW | |||||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
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13. Goodwill and other intangible assets
Goodwill
The changes in the carrying amounts of goodwill were as follows (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Beginning balance | $ | $ | |||||||||
Changes to goodwill resulting from acquisitions and divestitures, net(1) | |||||||||||
| Currency translation adjustments | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
____________
(1) For 2023, the increase to Goodwill was primarily due to goodwill resulting from the acquisition of Horizon. For 2022, the increase to goodwill was due to goodwill resulting from the acquisition of ChemoCentryx, changes to the acquisition date fair values of net assets acquired in the acquisition of Teneobio and the nonstrategic Gensenta divestiture. See Note 3, Acquisitions and divestitures.
Other intangible assets
Other intangible assets consisted of the following (in millions):
| December 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||
| Gross carrying amounts | Accumulated amortization | Other intangible assets, net | Gross carrying amounts | Accumulated amortization | Other intangible assets, net | ||||||||||||||||||||||||||||||
| Finite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
| Developed-product-technology rights | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Licensing rights | ( | ( | |||||||||||||||||||||||||||||||||
| Marketing-related rights | ( | ( | |||||||||||||||||||||||||||||||||
| R&D technology rights | ( | ( | |||||||||||||||||||||||||||||||||
| Total finite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
| IPR&D | — | — | |||||||||||||||||||||||||||||||||
| Total other intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Developed-product-technology rights consists of rights related to marketed products acquired in acquisitions. Licensing rights consists primarily of contractual rights acquired in acquisitions to receive future milestone, royalty and profit-sharing payments; capitalized payments to third parties for milestones related to regulatory approvals to commercialize products; and up-front payments associated with royalty obligations for marketed products. Marketing-related rights consists primarily of rights related to the sale and distribution of marketed products. R&D technology rights pertains to technologies used in R&D that have alternative future uses. Developed-product-technology rights include assets acquired with the Horizon and ChemoCentryx acquisitions. IPR&D includes assets acquired with the Horizon and Teneobio acquisitions. R&D technology rights and licensing rights includes assets acquired with the Teneobio acquisition. See Note 3, Acquisitions and divestitures.
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IPR&D consists of R&D projects acquired in a business combination that are not complete at the time of acquisition due to remaining technological risks and/or lack of receipt of required regulatory approvals. All IPR&D projects have major risks and uncertainties associated with the timely and successful completion of the development and commercialization of product candidates, including our ability to confirm safety and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted costs. We are not permitted to market a human therapeutic without obtaining regulatory approvals, and such approvals require the completion of clinical trials that demonstrate that a product candidate is safe and effective. In addition, the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans as well as competitive product launches, affect the revenues a product can generate. Consequently, the eventual realized values, if any, of acquired IPR&D projects may vary from their estimated fair values. We review IPR&D projects for impairment annually, whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and upon the establishment of technological feasibility or regulatory approval. During the third quarter of 2023, the development of AMG 340 acquired in connection with our Teneobio acquisition was terminated, resulting in an impairment charge of $783 million, which was recognized in in the Consolidated Statements of Income and included in Other items, net, in the Consolidated Statements of Cash Flows. See Note 18, Fair value measurement, for the impact on the related contingent consideration liability.
During the years ended December 31, 2023, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $3.2 billion, $2.6 billion and $2.6 billion, respectively. Amortization of intangible assets is included primarily in Cost of sales in the Consolidated Statements of Income. The total estimated amortization for our finite-lived intangible assets for the years ending December 31, 2024, 2025, 2026, 2027 and 2028, are $4.8 billion, $4.5 billion, $3.9 billion, $3.9 billion and $2.9 billion, respectively.
14. Leases
We lease certain facilities and equipment related primarily to R&D, administrative and commercial activities. Leases with terms of 12 months or less are expensed as incurred and are not recorded in the Consolidated Balance Sheets.
Most leases include one or more options to renew, with renewal terms that may extend the lease term up to seven years . The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain residual value guarantees nor impose significant restrictions or covenants. We sublease certain real estate to third parties. Our sublease portfolio consists of operating leases from former R&D and administrative space.
The following table summarizes information related to our leases, all of which are classified as operating, included in our Consolidated Balance Sheets (in millions):
| December 31, | ||||||||||||||
| Consolidated Balance Sheets locations | 2023 | 2022 | ||||||||||||
| Assets: | ||||||||||||||
| $ | $ | |||||||||||||
| Liabilities: | ||||||||||||||
| $ | $ | |||||||||||||
| Total lease liabilities | $ | $ | ||||||||||||
The components of net lease costs were as follows (in millions):
| Years ended December 31, | ||||||||||||||||||||
| Lease costs | 2023 | 2022 | 2021 | |||||||||||||||||
Operating(1) | $ | $ | $ | |||||||||||||||||
| Sublease income | ( | ( | ( | |||||||||||||||||
| Total net lease costs | $ | $ | $ | |||||||||||||||||
____________
(1) Includes short-term leases and variable lease costs, which were not material for the years ended December 31, 2023, 2022 and 2021.
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Maturities of lease liabilities as of December 31, 2023, were as follows (in millions):
| Maturity dates | Amounts | |||||||
| 2024 | $ | |||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Thereafter | ||||||||
Total lease payments(1) | ||||||||
| Less imputed interest | ( | |||||||
| Present value of lease liabilities | $ | |||||||
____________
(1) Includes future rental commitments for abandoned leases of $67 million. We expect to receive total future rental income of $70 million related to noncancellable subleases for abandoned facilities.
The weighted-average remaining lease terms and weighted-average discount rates were as follows:
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Weighted-average remaining lease term (in years) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
Cash and noncash information related to our leases was as follows (in millions):
| Years ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows for operating leases | $ | $ | $ | ||||||||||||||
| ROU assets obtained in exchange for lease obligations: | |||||||||||||||||
| Operating leases | $ | $ | $ | ||||||||||||||
As of December 31, 2023, there were no future lease payments for leases that have not yet commenced.
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15. Other current assets and accrued liabilities
Other current assets consisted of the following (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Corporate partner receivables | |||||||||||
| Tax receivables | |||||||||||
| Other | |||||||||||
| Total other current assets | $ | $ | |||||||||
Accrued liabilities consisted of the following (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Sales deductions | $ | $ | |||||||||
| Income taxes payable | |||||||||||
| Employee compensation and benefits | |||||||||||
| Dividends payable | |||||||||||
| Accrued interest payable | |||||||||||
| Other | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
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16. Financing arrangements
Our borrowings consisted of the following (in millions):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| $ | — | $ | |||||||||
| — | |||||||||||
| — | |||||||||||
| Term loan due April 2025 | — | ||||||||||
| — | |||||||||||
| Term loan due October 2026 | — | ||||||||||
| — | |||||||||||
| — | |||||||||||
| — | |||||||||||
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| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Other notes due 2097 | |||||||||||
| Unamortized bond discounts, premiums and issuance costs, net | ( | ( | |||||||||
| Fair value adjustments | ( | ( | |||||||||
| Other | |||||||||||
| Total carrying value of debt | |||||||||||
| Less current portion | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
There are no material differences between the effective interest rates and the coupon rates of any of our borrowings, except for the 4.563 % 2048 Notes, the 4.663 % 2051 Notes and the 2.77 % 2053 Notes, which have effective interest rates of 6.3 %, 5.6 % and 5.2 %, respectively.
Under the terms of all of our outstanding notes, except our Other notes due 2097, in the event of a change-in-control triggering event we may be required to purchase all or a portion of these debt securities at prices equal to 101 one month to six months prior to maturity, except for the 5.507 % 2026 Notes, which may be redeemed without payment of the make-whole amount if redemption occurs after two years prior to maturity.
Debt issuances and acquisition-related financing
In March 2023, in connection with the acquisition of Horizon (see Note 3, Acquisitions and divestitures—Acquisition of Horizon Therapeutics plc), we issued the following series of notes (in millions):
| Principal Amount | |||||
| $ | |||||
| Total | $ | ||||
In December 2022, in connection with the acquisition of Horizon, we entered into a bridge credit agreement, which provided for borrowings with an aggregate principal amount of $24.5 billion as of December 31, 2022. Subsequent to our March 2023 debt issuance described above, we terminated the bridge credit agreement. Accordingly, during the first quarter of 2023, we recognized $98 million of financing cost associated with the bridge credit agreement, primarily in Other income (expense), net, in the Consolidated Statements of Income.
Also in connection with the acquisition of Horizon, we entered into a $4.0 billion term loan credit agreement in December 2022. In October 2023, in connection with the completion of the acquisition of Horizon, we borrowed $4.0 billion under the term loan credit agreement with an interest rate of three-month SOFR plus 1.225 %, of which $2.0 billion is due in April 2025 and $2.0 billion is due in October 2026. No amounts under this agreement were outstanding as of December 31, 2022.
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During the years ended December 31, 2022 and 2021, we issued debt securities in the following offerings:
•In 2022, we issued $7.0 billion of debt consisting of $750 million of the 3.00 % 2029 Notes, $1.25 billion of the 4.05 % 2029 Notes, $1.0 billion of the 3.35 % 2032 Notes, $750 million of the 4.20 % 2033 Notes, $1.0 billion of the 4.20 % 2052 Notes, $1.0 billion of the 4.875 % 2053 Notes and $1.25 billion of the 4.40 % 2062 Notes. The 3.00 % 2029 Notes were issued and used to finance eligible projects that met specified criteria to reduce our impact on the environment.
•In 2021, we issued $5.0 billion of debt consisting of $1.25 billion of the 1.65 % 2028 Notes, $1.25 billion of the 2.00 % 2032 Notes, $1.15 billion of the 2.80 % 2041 Notes and $1.35 billion of the 3.00 % 2052 Notes.
Debt extinguishment
In 2023, we repurchased portions of the 2.00 % 2032 Notes, 3.15 % 2040 Notes, 2.80 % 2041 Notes, 3.375 % 2050 Notes, 3.00 % 2052 Notes, 4.20 % 2052 Notes and 4.40 % 2062 Notes for an aggregate cost of $647 million, which resulted in the recognition of a $225 million gain on extinguishment of debt recorded in Other income (expense), net, in the Consolidated Statements of Income.
In 2022, we repurchased portions of the 2.20 % 2027 Notes, the 1.65 % 2028 Notes, the 2.00 % 2032 Notes, the 2.80 % 2041 Notes and the 3.00 % 2052 Notes for an aggregate cost of $297 million, which resulted in the recognition of a $78 million gain on extinguishment of debt recorded in Other income (expense), net, in the Consolidated Statements of Income.
Debt repayments/redemptions
We made debt repayments/redemptions during the years ended December 31, 2023, 2022 and 2021, as follows:
•In 2023, we repaid $750 million aggregate principal amount of the 2.25 % 2023 Notes as well as the CHF700 million aggregate principal amount ($704 million upon settlement of the related cross-currency swap) of the 0.41 % 2023 Swiss franc Bonds.
•In 2022, no debt was repaid/redeemed.
•In 2021, we redeemed $4.2 billion of debt, including the €1.25 billion aggregate principal amount ($1.4 billion upon settlement of the related cross-currency swap) of the 1.25 % 2022 euro Notes, the $500 million aggregate principal amount of the 2.70 % 2022 Notes, the $1.5 billion aggregate principal amount of the 2.65 % 2022 Notes and the $750 million aggregate principal amount of the 3.625 % 2022 Notes. In connection with the redemption of these notes, we paid a total of $24 million in make-whole amounts plus associated accrued and unpaid interest, all of which was recognized in Interest expense, net, in the Consolidated Statements of Income.
Interest rate swaps
To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that effectively converted fixed-rate interest coupons for certain of our debt issuances to floating SOFR-based coupons over the lives of the respective notes. These interest rate swap contracts qualified and are designated as fair value hedges.
During the year ended December 31, 2021, we entered into interest rate swap contracts with an aggregate notional amount of $1.0 billion with respect to the 2.45 % 2030 Notes and an aggregate notional amount of $500 million with respect to the 2.30 % 2031 Notes. In connection with the redemption of the 3.625 % 2022 Notes, discussed above, associated interest rate swap contracts with an aggregate notional amount of $750 million were terminated.
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As of December 31, 2023 and 2022, the effective interest rates on notes for which we have entered into interest rate swap contracts and the related notional amounts of these contracts were as follows (dollar amounts in millions):
| Notes | Notional amounts | Effective interest rates | |||||||||
| $ | SOFR + | ||||||||||
SOFR + | |||||||||||
SOFR + | |||||||||||
SOFR + | |||||||||||
SOFR + | |||||||||||
SOFR + | |||||||||||
| Total notional amounts | $ | ||||||||||
Cross-currency swaps
To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated in foreign currencies, we entered into cross-currency swap contracts. The terms of these contracts outstanding as of December 31, 2023, effectively convert the interest payments and principal repayments on our 2.00 % 2026 euro Notes, 5.50 % 2026 pound sterling Notes and 4.00 % 2029 pound sterling Notes from euros and pounds sterling to U.S. dollars. These cross-currency swap contracts have been designated as cash flow hedges. For information regarding the terms of these contracts, see Note 19, Derivative instruments. Cross-currency swap contracts associated with other foreign denominated debt previously outstanding were settled in connection with the repayment/redemption of such debt, as discussed above.
Shelf registration statement and other facilities
As of December 31, 2023, we have a commercial paper program that allows us to issue up to $2.5 billion of unsecured commercial paper to fund our working-capital needs. As of December 31, 2023 and 2022, we had no
In the first quarter of 2023, we amended and restated our syndicated, unsecured, revolving credit agreement, under which we may borrow up to $4.0 billion (increased from $2.5 billion prior to the amendment) for general corporate purposes, including as a liquidity backstop for our commercial paper program. The commitments under the revolving credit agreement may be increased by up to $1.25 billion with the agreement of the banks (increased from $750 million prior to the amendment). Each bank that is a party to the agreement has an initial commitment term of five years . This term may be extended for up to two additional one-year periods with the agreement of the banks. Annual commitment fees for this agreement are 0.09 % of the unused portion of the facility based on our current credit rating. Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.01 % or (ii) the highest of (A) the administrative agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50 % or (C) one-month SOFR plus 1.1 %. As of December 31, 2023 and 2022, no
In February 2023, we filed a shelf registration statement with the SEC that allows us to issue unspecified amounts of debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depositary shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depositary shares. Under this shelf registration statement, all of the securities available for issuance may be offered from time to time, with terms to be determined at the time of issuance. This shelf registration statement expires in February 2026.
Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement and term loan agreement include a financial covenant, which requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (Consolidated EBITDA) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements. We were in compliance with all applicable covenants under these arrangements as of December 31, 2023.
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Contractual maturities of debt obligations
The aggregate contractual maturities of all borrowings due subsequent to December 31, 2023, are as follows (in millions):
| Maturity dates | Amounts | |||||||
| 2024 | $ | |||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
Interest costs
Interest costs are expensed as incurred except to the extent such interest is related to construction in progress, in which case interest is capitalized. Interest costs capitalized for the years ended December 31, 2023, 2022 and 2021, were not material. Interest paid, including the ongoing impact of interest rate and cross-currency swap contracts, during the year ended December 31, 2023 was $2.4 billion, and for each of the years ended December 31, 2022 and 2021 was $1.2
17. Stockholders’ equity
Stock repurchase program
Activity under our stock repurchase program, on a trade date basis, was as follows (in millions):
| Years ended December 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| Shares | Dollars | Shares | Dollars | Shares | Dollars | ||||||||||||||||||||||||||||||
| First quarter | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Second quarter | |||||||||||||||||||||||||||||||||||
| Third quarter | |||||||||||||||||||||||||||||||||||
| Fourth quarter | |||||||||||||||||||||||||||||||||||
| Total stock repurchases | $ | $ | $ | ||||||||||||||||||||||||||||||||
During the year ended December 31, 2023, we did not repurchase shares of our common stock.
During the first quarter of 2022, the Company entered into ASR agreements with third-party financial institutions (Dealers) whereby the Company made payments in an aggregate amount of $6.0 billion to the Dealers and received and retired an initial 23.3 million shares of the Company’s common stock from the Dealers; during the third quarter of 2023, the ASR agreements were settled. In total, we repurchased 26.1 million shares of common stock during the year ended December 31, 2022, consisting primarily of the 24.8 million shares received under the ASR agreements.
As of December 31, 2023, $7.0 billion remained available under our stock repurchase program.
Dividends
Our Board of Directors declared quarterly dividends per share of $2.13 1.94 1.76
Historically, we have declared dividends in December of each year, which were paid in the first quarter of the following fiscal year and in March, July and October, which were paid in the second, third and fourth quarters, respectively, of the same fiscal year. Additionally, on December 12, 2023, the Board of Directors declared a quarterly cash dividend of $2.25
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Accumulated other comprehensive loss
The components of AOCI were as follows (in millions):
| Foreign currency translation | Cash flow hedges | Available-for-sale securities | Other | AOCI | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | ( | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||||||||
| Unrealized gains (losses) | ( | ||||||||||||||||||||||||||||
| Reclassification adjustments to income | |||||||||||||||||||||||||||||
Other gains | |||||||||||||||||||||||||||||
| Income taxes | ( | ( | |||||||||||||||||||||||||||
| Balance as of December 31, 2021 | ( | ( | ( | ||||||||||||||||||||||||||
| Foreign currency translation adjustments | |||||||||||||||||||||||||||||
| Unrealized gains | |||||||||||||||||||||||||||||
| Reclassification adjustments to income | |||||||||||||||||||||||||||||
| Other gains | |||||||||||||||||||||||||||||
| Income taxes | ( | ( | |||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ( | ( | ||||||||||||||||||||||||||
| Foreign currency translation adjustments | |||||||||||||||||||||||||||||
| Unrealized gains | |||||||||||||||||||||||||||||
| Reclassification adjustments to income | ( | ( | |||||||||||||||||||||||||||
| Other gains | |||||||||||||||||||||||||||||
| Income taxes | |||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||
With respect to the table above, income tax expenses or benefits for unrealized gains and losses and the related reclassification adjustments to income for cash flow hedges were a $6 million expense and a $50 million benefit in 2023, a $19 million expense and a $0 million expense in 2022 and a $33 million expense and a $55 million expense in 2021, respectively.
Reclassifications out of AOCI and into earnings were as follows (in millions):
| Years ended December 31, | ||||||||||||||||||||||||||
| Components of AOCI | 2023 | 2022 | 2021 | Consolidated Statements of Income locations | ||||||||||||||||||||||
| Cash flow hedges: | ||||||||||||||||||||||||||
| Foreign currency contract gains (losses) | $ | $ | $ | ( | Product sales | |||||||||||||||||||||
| Cross-currency swap contract gains (losses) | ( | ( | Other income (expense), net | |||||||||||||||||||||||
| ( | ( | Income before income taxes | ||||||||||||||||||||||||
| ( | Provision for income taxes | |||||||||||||||||||||||||
| $ | $ | ( | $ | ( | Net income | |||||||||||||||||||||
Other
In addition to common stock, our authorized capital includes 5 million shares of preferred stock, $0.0001 par value. As of December 31, 2023 and 2022, no
18. Fair value measurement
To estimate the fair value of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing an asset or liability and are developed based on the
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best information available in the circumstances. The fair value hierarchy is divided into three levels based on the source of inputs as follows:
| Level 1 | — | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access | ||||||
| Level 2 | — | Valuations for which all significant inputs are observable either directly or indirectly—other than Level 1 inputs | ||||||
| Level 3 | — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement | ||||||
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.
The fair values of each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
Fair value measurement as of December 31, 2023, using: | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Available-for-sale securities: | ||||||||||||||||||||||||||
| U.S. Treasury bills | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market mutual funds | ||||||||||||||||||||||||||
| Other short-term interest-bearing securities | ||||||||||||||||||||||||||
| Other investments | ||||||||||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Interest rate swap contracts | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Interest rate swap contracts | ||||||||||||||||||||||||||
| Forward interest rate contracts | ||||||||||||||||||||||||||
Contingent consideration obligations | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
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Fair value measurement as of December 31, 2022, using: | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Available-for-sale securities: | ||||||||||||||||||||||||||
| U.S. Treasury bills | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market mutual funds | ||||||||||||||||||||||||||
| Other short-term interest-bearing securities | ||||||||||||||||||||||||||
| Other investments | ||||||||||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Interest rate swap contracts | ||||||||||||||||||||||||||
| Forward interest rate contracts | ||||||||||||||||||||||||||
| Contingent consideration obligations | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
Interest-bearing and equity securities
The fair values of our U.S. Treasury securities, money market mutual funds and equity investments in publicly traded securities, including our equity investments in BeiGene and Neumora, as of December 31, 2023, are based on quoted market prices in active markets, with no valuation adjustment. Previously, the fair value of our equity investment in Neumora did not have a readily determinable fair value and was initially valued at the acquisition price and subsequently valued based on a combination of observable price transactions when available, market performance and publicly available market information for similar companies that have actively traded equity securities. During the third quarter of 2023, Neumora became a publicly traded company, and its equity securities now have a readily determinable fair value. Accordingly, the fair value inputs of our equity investment in Neumora changed from using Level 3 inputs as of December 31, 2022, to using a Level 1 input as of December 31, 2023. See Note 10, Investments— Neumora Therapeutics, Inc.
As of the first quarter of 2023, we no longer account for our equity investment in BeiGene under the equity method of accounting. As of December 31, 2022, the fair value and carrying value were $4.2 billion and $2.2 billion, respectively, with the fair value estimated by using a Level 1 input. See Note 10, Investments—BeiGene, Ltd.
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Derivatives
Our foreign currency forward contracts, cross-currency swap contracts and interest rate swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch. We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that uses an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs, as applicable, include foreign currency exchange rates, LIBOR, SOFR, swap rates, obligor credit default swap rates and cross-currency basis swap spreads. Certain inputs, when applicable, are at commonly quoted intervals. Starting in the third quarter of 2023, terms under our existing derivative contracts reference the SOFR benchmark consistent with the ISDA protocol. See Note 19, Derivative instruments.
Contingent consideration obligations
As a result of our business acquisitions, we have incurred contingent consideration obligations as discussed below. The contingent consideration obligations are recorded at their fair values by using probability-adjusted discounted cash flows, and we revalue these obligations each reporting period until the related contingencies have been resolved. The fair value measurements of these obligations are based on significant unobservable inputs related to licensing rights and product candidates acquired in business combinations, and they are reviewed quarterly by management in our R&D and commercial sales organizations. The inputs include, as applicable, estimated probabilities and the timing of achieving specified development, regulatory and commercial milestones as well as estimated annual sales. Significant changes that increase or decrease the probabilities of achieving the related development, regulatory and commercial events or that shorten or lengthen the time required to achieve such events or that increase or decrease estimated annual sales would result in corresponding increases or decreases in the fair values of the obligations, as applicable. Changes in the fair values of contingent consideration obligations are recognized in Other operating expenses in the Consolidated Statements of Income.
Changes in the carrying amounts of contingent consideration obligations were as follows (in millions):
| Years ended December 31, | ||||||||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||||||||
| Beginning balance | $ | $ | $ | |||||||||||||||||
| Additions | ||||||||||||||||||||
| Payments | ( | ( | ( | |||||||||||||||||
| Net changes in valuations | ( | ( | ||||||||||||||||||
| Ending balance | $ | $ | $ | |||||||||||||||||
As of December 31, 2023 and 2022, our contingent consideration obligations are primarily the result of our acquisition of Teneobio in October 2021, which obligated us to pay the former shareholders up to $1.6 billion upon achieving separate development and regulatory milestones with regard to various R&D programs. See Note 3, Acquisitions and divestitures. During the third quarter of 2023, the development of AMG 340 was terminated, resulting in a decrease of the related contingent consideration liability. The remeasurement of this liability of $165 million was recognized in Other operating expenses in the Consolidated Statements of Income and included in Other items, net, in the Consolidated Statements of Cash Flows. See Note 13, Goodwill and other intangible assets, for the impact on the related IPR&D asset. The remaining contingent consideration liability as of December 31, 2023, primarily relates to potential development and regulatory milestones for R&D programs acquired via the Teneobio acquisition that we continue to pursue.
Summary of the fair values of other financial instruments
Cash equivalents
The fair values of cash equivalents approximate their carrying values due to the short-term nature of such financial instruments.
Borrowings
We estimated the fair values of our borrowings by using Level 2 inputs. As of December 31, 2023 and 2022, the aggregate fair values of our borrowings were $59.2 billion and $35.0 billion, respectively, and the carrying values were $64.6 billion and $38.9 billion, respectively.
During the years ended December 31, 2023 and 2022, there were no transfers of assets or liabilities between fair value measurement levels, and except with respect to the impairment of AMG 340 disclosed in Note 13, Goodwill and other
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intangible assets, there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.
19. Derivative instruments
The Company is exposed to foreign currency exchange rate and interest rate risks related to its business operations. To reduce our risks related to such exposures, we use or have used certain derivative instruments, including foreign currency forward, foreign currency option, cross-currency swap, forward interest rate and interest rate swap contracts. We have designated certain of our derivatives as cash flow and fair value hedges; we also have derivatives not designated as hedges. We do not use derivatives for speculative trading purposes.
Cash flow hedges
We are exposed to possible changes in the values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates primarily associated with our euro-denominated international product sales. The foreign currency exchange rate fluctuation exposure associated with cash inflows from our international product sales is partially offset by corresponding cash outflows from our international operating expenses. To further reduce this exposure, we enter into foreign currency forward contracts to hedge a portion of our projected international product sales up to a maximum of three years into the future; and at any given point in time, a higher percentage of nearer-term projected product sales is being hedged than in successive periods.
As of December 31, 2023, 2022 and 2021, we had outstanding foreign currency forward contracts with aggregate notional amounts of $6.6 billion, $6.0 billion and $5.7 billion, respectively. We have designated these foreign currency forward contracts, which are primarily euro based, as cash flow hedges. Accordingly, we report unrealized gains and losses on these contracts in AOCI in the Consolidated Balance Sheets, and we reclassify them to Product sales in the Consolidated Statements of Income in the same periods during which the hedged transactions affect earnings.
To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term debt denominated in foreign currencies, we enter into cross-currency swap contracts. Under the terms of such contracts, we paid euros, pounds sterling and Swiss francs and received U.S. dollars for the notional amounts at inception of the contracts; and based on these notional amounts, we exchange interest payments at fixed rates over the lives of the contracts by paying U.S. dollars and receiving euros, pounds sterling and Swiss francs. In addition, we will pay U.S. dollars to and receive euros, pounds sterling and Swiss francs from the counterparties at the maturities of the contracts for these same notional amounts. The terms of these contracts correspond to the related hedged debt, thereby effectively converting the interest payments and principal repayment on the debt from euros, pounds sterling and Swiss francs to U.S. dollars. We have designated these cross-currency swap contracts as cash flow hedges. Accordingly, the unrealized gains and losses on these contracts are reported in AOCI in the Consolidated Balance Sheets and reclassified to Other income (expense), net, in the Consolidated Statements of Income in the same periods during which the hedged debt affects earnings.
| Foreign currency | U.S. dollars | |||||||||||||||||||||||||
| Hedged notes | Notional amounts | Interest rates | Notional amounts | Interest rates | ||||||||||||||||||||||
| € | % | $ | % | |||||||||||||||||||||||
| £ | % | $ | % | |||||||||||||||||||||||
| £ | % | $ | % | |||||||||||||||||||||||
During the first quarter of 2023, our 0.41 % 2023 Swiss franc Bonds matured, and the related cross-currency swaps were settled.
In connection with the anticipated issuance of long-term fixed-rate debt, we occasionally enter into forward interest rate contracts in order to hedge the variability in cash flows due to changes in the applicable U.S. Treasury rate between the time we enter into these contracts and the time the related debt is issued. Gains and losses on forward interest rate contracts, which are designated as cash flow hedges, are recognized in AOCI in the Consolidated Balance Sheets and are amortized into Interest expense, net, in the Consolidated Statements of Income over the lives of the associated debt issuances. Amounts expected to be recognized during the subsequent 12 months on forward interest rate contracts are not material.
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The unrealized gains and losses recognized in AOCI for our derivative instruments designated as cash flow hedges were as follows (in millions):
| Years ended December 31, | ||||||||||||||||||||||||||
| Derivatives in cash flow hedging relationships | 2023 | 2022 | 2021 | |||||||||||||||||||||||
| Foreign currency forward contracts | $ | ( | $ | $ | ||||||||||||||||||||||
| Cross-currency swap contracts | ( | ( | ||||||||||||||||||||||||
| Forward interest rate contracts | ( | ( | ||||||||||||||||||||||||
| Total unrealized gains | $ | $ | $ | |||||||||||||||||||||||
Fair value hedges
To achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that qualified for and were designated as fair value hedges. These interest rate swap contracts effectively convert fixed-rate coupons to floating-rate SOFR-based coupons over the terms of the related hedge contracts. As of both December 31, 2023 and 2022, we had interest rate swap contracts with aggregate notional amounts of $6.7
For interest rate swap contracts that qualify for and are designated as fair value hedges, we recognize in Interest expense, net, in the Consolidated Statements of Income the unrealized gain or loss on the derivative resulting from the change in fair value during the period, as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk. If a hedging relationship involving an interest rate swap contract is terminated, the gain or loss realized on contract termination is recorded as an adjustment to the carrying value of the debt and amortized into Interest expense, net, over the remaining life of the previously hedged debt.
The hedged liabilities and related cumulative-basis adjustments for fair value hedges of those liabilities were recorded in the Consolidated Balance Sheets as follows (in millions):
Carrying amounts of hedged liabilities(1) | Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2) | |||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||
| Consolidated Balance Sheets locations | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Current portion of long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term debt | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
____________
(1)Current portion of long-term debt includes $69 million and $82 million of carrying value with discontinued hedging relationships as of December 31, 2023 and 2022, respectively. Long-term debt includes $288 million and $357 million of carrying value with discontinued hedging relationships as of December 31, 2023 and 2022, respectively.
(2)Current portion of long-term debt includes $69 million and $82 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively. Long-term debt includes $188 million and $257 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively.
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Impact of hedging transactions
The following tables summarize the amounts recorded in income and expense line items and the effects thereon from fair value and cash flow hedging, including discontinued hedging relationships (in millions):
| Year ended December 31, 2023 | ||||||||||||||||||||
| Product sales | Other income (expense), net | Interest expense, net | ||||||||||||||||||
| Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income | $ | $ | $ | ( | ||||||||||||||||
| The effects of cash flow and fair value hedging: | ||||||||||||||||||||
| Gains on cash flow hedging relationships reclassified out of AOCI: | ||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | — | $ | — | |||||||||||||||
| Cross-currency swap contracts | $ | — | $ | $ | — | |||||||||||||||
| (Losses) gains on fair value hedging relationships—interest rate swap agreements: | ||||||||||||||||||||
Hedged items(1) | $ | — | $ | — | $ | ( | ||||||||||||||
| Derivatives designated as hedging instruments | $ | — | $ | — | $ | |||||||||||||||
| Year ended December 31, 2022 | ||||||||||||||||||||
| Product sales | Other income (expense), net | Interest expense, net | ||||||||||||||||||
| Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income | $ | $ | ( | $ | ( | |||||||||||||||
| The effects of cash flow and fair value hedging: | ||||||||||||||||||||
| Gains (losses) on cash flow hedging relationships reclassified out of AOCI: | ||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | — | $ | — | |||||||||||||||
| Cross-currency swap contracts | $ | — | $ | ( | $ | — | ||||||||||||||
| Gains (losses) on fair value hedging relationships—interest rate swap agreements: | ||||||||||||||||||||
Hedged items(1) | $ | — | $ | — | $ | |||||||||||||||
| Derivatives designated as hedging instruments | $ | — | $ | — | $ | ( | ||||||||||||||
| Year ended December 31, 2021 | ||||||||||||||||||||
| Product sales | Other income (expense), net | Interest expense, net | ||||||||||||||||||
| Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income | $ | $ | $ | ( | ||||||||||||||||
| The effects of cash flow and fair value hedging: | ||||||||||||||||||||
| Losses on cash flow hedging relationships reclassified out of AOCI: | ||||||||||||||||||||
| Foreign currency forward contracts | $ | ( | $ | — | $ | — | ||||||||||||||
| Cross-currency swap contracts | $ | — | $ | ( | $ | — | ||||||||||||||
| Gains (losses) on fair value hedging relationships—interest rate swap agreements: | ||||||||||||||||||||
Hedged items(1) | $ | — | $ | — | $ | |||||||||||||||
| Derivatives designated as hedging instruments | $ | — | $ | — | $ | ( | ||||||||||||||
__________
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No portions of our cash flow hedge contracts were excluded from the assessment of hedge effectiveness. As of December 31, 2023, we expected to reclassify $35 million of net gains on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months.
Derivatives not designated as hedges
To reduce our exposure to foreign currency fluctuations in certain assets and liabilities denominated in foreign currencies, we enter into foreign currency forward contracts that are not designated as hedging transactions. Most of these exposures are hedged on a month-to-month basis. As of December 31, 2023, 2022 and 2021, the total notional amounts of these foreign currency forward contracts were $457 million, $517 million and $680 million, respectively. Gains and losses recognized in earnings for our derivative instruments not designated as hedging instruments were not material for the years ended December 31, 2023, 2022 and 2021.
Fair values of derivatives
The fair values of derivatives included in the Consolidated Balance Sheets were as follows (in millions):
| Derivative assets | Derivative liabilities | |||||||||||||||||||||||||
| December 31, 2023 | Consolidated Balance Sheets locations | Fair values | Consolidated Balance Sheets locations | Fair values | ||||||||||||||||||||||
| Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | Other current assets/ Other noncurrent assets | $ | Accrued liabilities/ Other noncurrent liabilities | $ | ||||||||||||||||||||||
| Cross-currency swap contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
Interest rate swap contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
| Forward interest rate contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
Total derivatives designated as hedging instruments | ||||||||||||||||||||||||||
| Total derivatives | $ | $ | ||||||||||||||||||||||||
| Derivative assets | Derivative liabilities | |||||||||||||||||||||||||
| December 31, 2022 | Consolidated Balance Sheets locations | Fair values | Consolidated Balance Sheets locations | Fair values | ||||||||||||||||||||||
| Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | Other current assets/ Other noncurrent assets | $ | Accrued liabilities/ Other noncurrent liabilities | $ | ||||||||||||||||||||||
| Cross-currency swap contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
Interest rate swap contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
| Forward interest rate contracts | Other current assets/ Other noncurrent assets | Accrued liabilities/ Other noncurrent liabilities | ||||||||||||||||||||||||
Total derivatives designated as hedging instruments | ||||||||||||||||||||||||||
| Total derivatives | $ | $ | ||||||||||||||||||||||||
For additional information, see Note 18, Fair value measurement.
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Our derivative contracts that were in liability positions as of December 31, 2023, contain certain credit-risk-related contingent provisions that would be triggered if (i) we were to undergo a change-in-control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change-in-control. If these events were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early-termination provisions. In such circumstances, the counterparties could request immediate settlement of these contracts for amounts that approximate the then current fair values of the contracts. In addition, our derivative contracts are not subject to any type of master netting arrangement, and amounts due either to or from a counterparty under the contracts may be offset against other amounts due either to or from the same counterparty only if an event of default or termination, as defined, were to occur.
The cash flow effects of our derivative contracts in the Consolidated Statements of Cash Flows are included in Net cash provided by operating activities, except for the settlement of notional amounts of cross-currency swaps, which are included in Net cash used in financing activities.
20. Contingencies and commitments
Contingencies
In the ordinary course of business, we are involved in various legal proceedings, government investigations and other matters that are complex in nature and have outcomes that are difficult to predict. See Part I, Item 1A. Risk Factors—Our business may be affected by litigation and government investigations. We describe our legal proceedings and other matters that are significant or that we believe could become significant in this footnote.
We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously.
Our legal proceedings involve various aspects of our business and a variety of claims, some of which present novel factual allegations and/or unique legal theories. In each of the matters described in this filing, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material. In addition, a number of the matters pending against us are at very early stages of the legal process, which in complex proceedings of the sort we face often extend for several years. As a result, none of the matters described in this filing, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material. While it is not possible to accurately predict or determine the eventual outcomes of these matters, an adverse determination in one or more of these matters currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Certain recent developments concerning our legal proceedings and other matters are discussed below.
Repatha Patent Litigation
Patent Disputes in the International Region
We are involved in and expect future involvement in additional disputes regarding our PCSK9 patents in other jurisdictions and regions. This includes matters filed against us and that we have filed in Germany and Japan.
Germany
In February 2016, the European Patent Office (EPO) granted European Patent No. 2,215,124 (the EP’124 Patent) to Amgen. This patent describes and claims monoclonal antibodies to PCSK9 and methods of treatment and Sanofi filed an opposition to the patent in the EPO seeking to invalidate it. In November 2016, Sanofi-Aventis Deutschland GmbH, Sanofi-Aventis Groupe S.A. and Sanofi Winthrop Industrie S.A. filed a joint opposition against Amgen’s patent, and each of Lilly, Regeneron Pharmaceuticals, Inc. (Regeneron) and Strawman Ltd. also filed oppositions to Amgen’s patent. In November 2018, the EPO confirmed the validity of Amgen’s EP’124 Patent, which was appealed to the Technical Board of Appeal (TBA). On October 29, 2020, the TBA upheld the validity of certain claims, including claims that protect Repatha, but ruled that broader claims encompassing PRALUENT were invalid. As a result of the TBA’s decision, national litigations regarding PRALUENT in Germany are in the process of being resolved.
In Germany, Sanofi-Aventis Deutschland GmbH and Regeneron filed actions seeking damages arising from the provisional enforcement of an injunction against PRALUENT that was lifted after the TBA’s October 2020 ruling. Amgen filed counterclaims alleging that PRALUENT infringes Amgen’s European Patent No. 2,641,917 (the EP’917 Patent). On November 29, 2023, the Regional Court of Munich ruled that PRALUENT does not infringe the EP’917 Patent. A hearing has been
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scheduled for February 28, 2024 in the Munich Regional Court on Sanofi-Aventis Deutschland GmbH’s and Regeneron’s action for damages.
On July 21, 2022, Sanofi Biotechnology SAS filed an action against Amgen GmbH and Amgen (Europe) B.V. before the Regional Court of Dusseldorf alleging that the marketing and sale of Repatha infringes European Patent No. 2,756,004 (the EP’004 Patent), which Sanofi Biotechnology SAS licensed from Regeneron. Sanofi Biotechnology SAS is seeking infringement damages and injunctive relief. The court scheduled a hearing on this infringement action for May 28, 2024.
On August 3, 2023, Amgen GmbH filed a Nullity Action before the German Federal Patent Court seeking invalidation of Regeneron’s EP’004 Patent. Regeneron filed a Statement of Defense on November 20, 2023. On January 22, 2024, Amgen filed its brief in reply.
Amgen and an anonymous third party opposed the EP’004 Patent in the EPO, but on December 6, 2023 the patent was finally upheld by the TBA as granted.
Unified Patent Court of the European Union
On June 1, 2023, Amgen filed an action before the Local Division of the Unified Patent Court in Munich against Sanofi-Aventis Deutschland GmbH, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A. (collectively, Sanofi-Aventis), and Regeneron alleging that the importation, marketing, sale and use of PRALUENT infringes European Patent 3,666,797 (the EP’797 Patent) seeking an injunction and damages for past infringement. Regeneron filed counterclaims for revocation, but on February 5, 2024, the court transferred the counterclaims to the Central Division of the Unified Patent Court that is presiding over Sanofi’s revocation action. The Local Division scheduled the hearing on our EP’797 Patent infringement action to begin on October 16, 2024.
On June 29, 2023, the Central Division of the Unified Patent Court in Munich served Amgen with an action that was filed by Sanofi-Aventis that seeks revocation of the EP’797 Patent. The Central Division scheduled a hearing on the revocation action to begin on June 4, 2024.
On January 10, 2024, Sanofi Biotechnologies SAS and Regeneron filed an action against Amgen Inc., Amgen Europe B.V., Amgen N.V., Amgen GmbH, Amgen B.V., Amgen SAS, and Amgen S.R.L before the Unified Patent Court, alleging infringement of EP 3,536,712, which Sanofi Biotechnology SAS licensed from Regeneron. Sanofi and Regeneron are seeking an injunction against the sale, marketing, use, importation, or storage of Repatha for certain specified uses in Belgium, France, Germany, Italy and the Netherlands.
Japan
On April 24, 2020, the Supreme Court of Japan declined to hear Sanofi K.K.’s appeals making final the Japanese High Court’s decisions that PRALUENT infringes Amgen’s valid patent rights in Japan. On June 24, 2020, Amgen filed written answers to the invalidity trials initiated by Regeneron on February 12, 2020 before the Japan Patent Office seeking to invalidate Amgen’s Japanese patents that were previously held infringed by PRALUENT and valid over challenges filed by Sanofi K.K. On April 15, 2021, the Japanese Patent Office dismissed Regeneron’s invalidity trials, and in August 2021 Regeneron appealed the decisions to the Japanese High Court. On January 26, 2023, the Japanese High Court found Amgen’s patent claims invalid for lacking adequate support. On March 13, 2023, Amgen appealed to the Japanese Supreme Court the High Court’s decision that Amgen’s Japanese patent claims relating to PCSK9 were invalid for lacking adequate support. On September 15, 2023, the Japanese Supreme Court declined to hear Amgen’s appeal. The case will be remanded to the Japan Patent Office for further proceedings.
Damages proceedings against Sanofi K.K. are ongoing before the Tokyo District Court, where Sanofi K.K. has initiated new validity challenges to Amgen patents in Japan. On September 27, 2023, the Tokyo District Court found Amgen’s patent claims invalid and dismissed Amgen’s lawsuit for damages. Amgen appealed the District Court’s decision to the IP High Court on December 28, 2023.
Prolia/XGEVA Biologics Price Competition and Innovation Act (BPCIA) Litigation
Amgen Inc. et al. v. Sandoz Inc., et al.
On May 1, 2023, Amgen Inc. and Amgen Manufacturing Limited filed a lawsuit in the U.S. District Court for the District of New Jersey (New Jersey District Court) against Sandoz Inc., Sandoz GmbH, Lek Pharmaceuticals d.d., Novartis Pharmaceutical Productions d.o.o., and Novartis AG (collectively, Defendants) based on the submission to the FDA of a BLA seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products. The complaint asserts infringement of the following 21 patents, which are listed in the FDA’s Purple Book for Amgen’s Prolia and XGEVA products: U.S. Patent Nos. 7,364,736; 7,928,205; 8,058,418; 9,012,178; 9,133,493; 9,228,168; 9,320,816; 9,328,134; 9,359,435;
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9,481,901; 10,167,492; 10,513,723; 10,583,397; 10,822,630; 10,894,972; 11,077,404; 11,098,079; 11,130,980; 11,254,963; 11,299,760; and 11,434,514 (collectively, the Asserted Patents). Amgen seeks a judgment from the New Jersey District Court that Defendants have infringed or will infringe one or more claims of each of the Asserted Patents and based on that judgment, a permanent injunction prohibiting the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of Defendants’ proposed denosumab biosimilar before expiration of each of the Asserted Patents found to infringe. Amgen also seeks monetary remedies for any past acts of infringement.
On June 16, 2023, Amgen filed an amended and supplemental complaint to include additional information regarding the completion of the BPCIA information exchange after the filing of the original complaint. Sandoz Inc. (Sandoz) responded to the amended and supplemental complaint on July 7, 2023, denying infringement and asserting counterclaims seeking a declaratory judgment that asserted patents are invalid and/or unenforceable. On July 28, 2023, Amgen responded, seeking a denial and dismissal of Sandoz’s counterclaims.
On August 23, 2023, the New Jersey District Court entered a stipulation and order dismissing without prejudice Sandoz GmbH, Lek Pharmaceuticals d.d., Novartis Pharmaceutical Productions d.o.o., and Novartis AG (collectively, Foreign Defendants) from the action. Pursuant to the stipulation entered by the New Jersey District Court, the Foreign Defendants agreed to be bound by any judgment order or decision in the matter (including appeals) as if the Foreign Defendants were named as defendants and parties to the judgment order or decision. Sandoz is now the sole named Defendant in the action.
On October 30, 2023, the New Jersey District Court commenced a hearing on Amgen’s motion for a preliminary injunction to prohibit Sandoz from engaging in the commercial manufacture, use, offer for sell or sale within the United States, or importation into the United States of its proposed denosumab biosimilar until judgment is entered after trial on the merits. Closing arguments on Amgen’s motion for the preliminary injunction were held on December 21, 2023.
ABP 938 (aflibercept) Patent Litigation
On January 10, 2024, Regeneron filed a lawsuit in the U.S. District Court for the Central District of California (the California Central District Court) against Amgen alleging infringement of 32 patents listed by Regeneron in the BPCIA exchange. The lawsuit stems from Amgen’s submission of an application under the BPCIA for FDA licensure of ABP 938 as biosimilar to Regeneron’s EYLEA. By its complaint, Regeneron seeks, among other remedies, an injunction prohibiting the commercial manufacture, use, offer for sale or sale in the United States or import into the United States of ABP 938 before the expiration of each of the patents found to be infringed. On January 11, 2024, Regeneron filed a motion with the Judicial Panel on Multidistrict Litigation to transfer this case from the California Central District Court to the U.S. District Court for the Northern District of West Virginia for coordinated pretrial proceedings with the five other cases involving EYLEA biosimilars pending in that district. A hearing on Regeneron’s motion to transfer has been scheduled for March 28, 2024. Amgen responded to Regeneron’s complaint on February 2, 2024, denying infringement and asserting counterclaims seeking a declaratory judgment that the asserted patents are not infringed, invalid, and/or unenforceable.
Antitrust Class Action
Sensipar Antitrust Class Actions
From February to April 2019, four plaintiffs filed putative class action lawsuits against Amgen and various entities affiliated with Teva Pharmaceuticals USA, Inc. (Teva) alleging anticompetitive conduct in connection with settlements between Amgen and manufacturers of generic cinacalcet product. Two of those actions were brought in the U.S. District Court for the District of Delaware (the Delaware District Court), captioned UFCW Local 1500 Welfare Fund v. Amgen Inc., et al. (February 21, 2019) (Local 1500) and Cesar Castillo, Inc. v. Amgen Inc., et al. (February 26, 2019) (Castillo). The third action was brought in the New Jersey District Court, captioned Teamsters Local 237 Welfare Fund, et al. v. Amgen Inc., et al. (March 14, 2019) (Local 237) and the fourth action was brought in the U.S. District Court for the Eastern District of Pennsylvania (the Eastern Pennsylvania District Court), captioned KPH Healthcare Services, Inc. a/k/a Kinney Drugs, Inc. v. Amgen Inc., et al (April 10, 2019) (KPH). Each of the lawsuits is brought on behalf of a putative class of direct or indirect purchasers of Sensipar and alleges that the plaintiffs have overpaid for Sensipar as a result of Amgen’s conduct that allegedly improperly delayed market entry by manufacturers of generic cinacalcet products. The lawsuits focus predominantly on the settlement among Amgen, Watson Laboratories, Inc. (Watson) and Teva of the parties’ patent infringement litigation. Each of the lawsuits seeks, among other things, treble damages, equitable relief and attorneys’ fees and costs. On April 10, 2019, the plaintiff in the KPH lawsuit filed a motion seeking to have the four lawsuits consolidated and designated as a multidistrict litigation (MDL) in the Eastern Pennsylvania District Court, and the plaintiff in the Local 1500 lawsuit filed a motion seeking to have the four lawsuits, along with Cipla Ltd. v. Amgen Inc., consolidated and designated as an MDL in the Delaware District Court.
On July 31, 2019, the MDL panel entered an order consolidating in the Delaware District Court the four class action lawsuits. On September 13, 2019, the plaintiffs filed amended complaints, and on October 15, 2019, Amgen filed its motion to dismiss both the direct purchaser plaintiffs’ consolidated class action complaint and the indirect purchaser end payer plaintiffs’
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complaint. On December 6, 2019, the plaintiffs responded to Amgen’s motion to dismiss and, on January 10, 2020, Amgen filed its response. On February 6, 2020, the motions in the class action lawsuits were transferred to the U.S. Magistrate Judge for the District of Delaware (Magistrate Judge) for a recommendation. The MDL panel certified its conditional transfer order on February 6, 2020 transferring the additional class action lawsuit brought in the U.S. District Court for the Southern District of Florida, captioned MSP Recovery Claims v. Amgen Inc., et al., to the Delaware District Court.
On July 22, 2020, the Magistrate Judge issued a recommendation to the Delaware District Court that the claims against Amgen be dismissed but leave be given to plaintiffs to amend their complaints. On August 5, 2020, the plaintiffs filed objections to the Magistrate Judge’s report and recommendation. On August 19, 2020, Amgen filed a response to the plaintiffs’ objections. On November 30, 2020, the Delaware District Court adopted the Magistrate Judge’s recommendation in part and denied it in part, denying Amgen’s motion to dismiss on the grounds that plaintiffs adequately alleged reverse payment claims but granted Amgen’s motion to dismiss with respect to the other Federal antitrust claims. On December 23, 2020, Teva, Watson and Actavis filed a motion for interlocutory appeal and for a stay pending appeal and Amgen filed its joinder (the 1292 Motion). On January 5, 2021, a joint status report was filed advising the Delaware District Court that the defendants are still considering whether to withdraw the 1292 Motion and plaintiffs’ offer to stay discovery, pending further rulings on motions to dismiss the amended complaints. On January 19, 2021, a joint status report was filed pursuant to the Delaware District Court’s January 6, 2021 order along with a stipulation to defer the 1292 Motion until after rulings on the amended complaints.
On February 16, 2021, the plaintiffs in the antitrust class action lawsuit brought on behalf of putative classes of direct or indirect purchasers of Sensipar filed their amended complaints. On March 4, 2021, a stipulation and order regarding the filing of a second amended complaint were filed to add another plaintiff: Teamsters Western Region & Local 177 Health Care Fund. On March 17, 2021, a defendant, MSP Recovery Claims, Series LLC, filed its notice of voluntary dismissal. On March 30, 2021, the remaining defendants, including Amgen, filed their motions to dismiss the second amended complaint.
On April 27, 2021, plaintiffs filed their oppositions to defendants’ (including Amgen’s) motion to dismiss, and defendants’ reply was filed on May 25, 2021. A hearing on defendants’ motion to dismiss was held in the Delaware District Court on July 13, 2021.
On March 11, 2022, the Delaware District Court granted defendants’ (including Amgen’s) motion to dismiss except as to the reverse payment claim and various state law claims from ten of the states in which plaintiffs reside. On May 11, 2022, the parties filed motions asking permission to seek interlocutory appeal. The plaintiffs did not oppose Amgen’s motion and instead argued all issues should be appealed at this time. Amgen filed its opposition to plaintiffs’ motion on June 10, 2022, and reply briefs were filed on June 24, 2022.
On February 16, 2023, the Delaware District Court denied Amgen’s motion for interlocutory appeal. On March 2, 2023, Amgen filed a motion for reargument, which the Delaware District Court denied while also certifying a question regarding whether the current judge has the authority to certify a question decided by a predecessor judge. On April 17, 2023, Amgen filed a petition with the U.S. Court of Appeals for the Third Circuit (the Third Circuit Court), seeking a grant of our request for interlocutory appeal of the certified question as well as the Delaware District Court’s denial of our motion to dismiss the reverse payment claim. Amgen’s response to the class action complaints is due 30 days after resolution or denial of the interlocutory appeal.
On June 26, 2023, the Third Circuit Court entered an order granting defendants’ (including Amgen’s) petition for interlocutory appeal and denying plaintiffs’ cross-petition. The questions certified are whether (1) the statute for interlocutory decisions authorizes a district court judge to certify for interlocutory appeal an order issued in the same case by a predecessor district court judge; and (2) the settlement of a patent infringement claim that involves the forgiveness of damages associated with that patent’s alleged infringement, on its own or combined with an acceleration clause, constitutes a reverse payment. On July 3, 2023, Amgen and Teva Pharmaceuticals USA, Inc. filed a notice of appeal, and on October 17, 2023, Amgen submitted its initial brief in its appeal before the Third Circuit Court.
On January 12, 2024, Amgen reached an agreement in principle to settle with the putative class of indirect purchasers of Sensipar. The action with respect to the putative class of direct purchasers of Sensipar will proceed with the pending appeal before the Third Circuit Court.
Regeneron Pharmaceuticals, Inc. Antitrust Action
On May 27, 2022, Regeneron filed suit against Amgen in the Delaware District Court for federal and state antitrust and unfair competition violations and tortious interference with prospective business relations. Regeneron alleges that Amgen’s sales contracting practices for Repatha, ENBREL and Otezla with key insurers, third-party payers and PBMs have harmed the sales of its product PRALUENT and focuses on two primary arguments: that Amgen improperly bundled sales of Repatha with ENBREL, Otezla and potentially other products and sought exclusive or de facto exclusive formulary positioning for Repatha. Amgen’s initial responsive pleading, a motion to dismiss, was filed on August 1, 2022.
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On August 11, 2022, Amgen moved to stay the case pending the ultimate decision on the merits of the ongoing patent litigation between Amgen and Regeneron in Amgen Inc., et al. v. Sanofi, et al. On January 6, 2023, the Delaware District Court heard oral argument on the motion to stay and the motion to dismiss. On February 10, 2023, the Delaware District Court denied Amgen’s motion to stay this action, and on March 21, 2023, the Delaware District Court denied Amgen’s motion to dismiss the complaint.
On August 28, 2023, Regeneron filed its amended complaint, and on September 20, 2023, Amgen filed a counterclaim, alleging Regeneron’s own anticompetitive conduct with respect to formulary position for Regeneron’s drug, PRALUENT, at CVS.
Trial is scheduled to begin on November 12, 2024.
U.S. Tax Litigation and Related Matters
Amgen Inc. & Subsidiaries v. Commissioner of Internal Revenue
See Note 7, Income taxes, for discussion of the IRS tax dispute and the Company’s petitions in the U.S. Tax Court.
Securities Class Action Litigation
On March 13, 2023, Roofers Local No. 149 Pension Fund filed a purported class action against Amgen, Robert Bradway and Peter Griffith. The action was brought on behalf of an alleged class of Amgen shareholders who owned stock between July 29, 2020 and April 27, 2022 (the alleged class period). Plaintiffs allege that the defendants made a series of materially false and misleading statements and omissions during the alleged class period regarding the failure to timely disclose the potential tax liability claimed by the IRS. Plaintiffs further allege that they and other purported class members suffered losses and damages resulting from declines in the market value of Amgen’s common stock after the potential tax liability claimed by the IRS was disclosed.
On August 31, 2023, plaintiff filed an amended complaint and Amgen filed its motion to dismiss on November 6, 2023. Plaintiff’s response was filed on January 12, 2024 and Amgen’s reply is due February 26, 2024.
Shareholder Derivative Litigation (Martin)
On August 2, 2023, Leon Martin filed a derivative action (the Martin Derivative Action) captioned Leon Martin v. Robert A. Bradway, et al., No. 1:23-cv-06754 (S.D.N.Y. Aug. 2, 2023), purportedly on behalf of Amgen, against Amgen, Robert Bradway, Peter Griffith and Amgen’s independent Board members. The action was filed in the U.S. District Court for the Southern District of New York (Southern District Court of New York) as related to the pending federal securities class action filed by Roofers Local No. 149 Pension Fund on March 13, 2023 (the Roofers securities class action). The complaint in this matter alleges claims for violations of the Securities Exchange Act of 1934, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and waste of corporate assets. The factual allegations that form the basis for these claims are essentially the same as the allegations asserted in the Roofers securities class action regarding purportedly false and misleading statements and omissions made from July 29, 2020 through April 27, 2022 relating to Amgen’s tax liabilities, business and finances, and the adequacy and maintenance of its internal controls.
On October 2, 2023, the Southern District Court of New York granted a stay of the matter pending an outcome on the motion to dismiss in the federal securities class action filed by plaintiff. On December 7, 2023, Plaintiff filed a Notice of Voluntary Dismissal as to Board member Michael Drake.
Shareholder Derivative Litigation (Clearwater)
On December 1, 2023, a second derivative action (the Clearwater Derivative Action) was filed, captioned Cheri Clearwater v. Robert A. Bradway, et al., No. 1:23-cv-10538 (S.D.N.Y. Dec. 1, 2023), in the same court as the earlier-filed Martin Derivative Action. The second action is largely duplicative of the Martin Derivative Action, asserting the same claims purportedly on behalf of the Company against the individual directors that sat on Amgen’s Board during the relevant time period (July 29, 2020 through April 27, 2022). The complaint asserts claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control, gross mismanagement, and violations of Section 10(b) of the Exchange Act arising out of Amgen’s disclosures with respect to its transfer pricing dispute with the IRS. However, the Clearwater Derivative Action complaint adds (1) two additional claims for violations of Sections 14(a) and 20(a) of the Exchange Act; (2) allegations that Amgen repurchased its own stock at artificially inflated prices during the relevant period; and (3) more detailed allegations as to why first making a demand on the Board would have been futile.
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On January 16, 2024, the Southern District Court of New York consolidated the Martin Derivative Action and Clearwater Derivative Action (the Consolidated Action). The stay entered in the Martin Derivative Action also applies to the Consolidated Action.
ChemoCentryx, Inc. Securities Matters
On May 5 and June 8 of 2021, ChemoCentryx and its Chief Executive Officer were named as defendants in two putative shareholder class actions filed in the U.S. District Court for the Northern District of California (Northern District Court of California). These cases were consolidated into Homyk v. ChemoCentryx, Inc. in which the plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act in connection with statements regarding the New Drug Application for TAVNEOS and the underlying Phase 3 clinical trial, seeking an award of damages, interest and attorneys’ fees. On March 28, 2022, the plaintiffs filed their consolidated amended complaint, and on May 19, 2022, ChemoCentryx moved to dismiss these claims.
On February 23, 2023, the Northern District Court of California substantially denied ChemoCentryx’s motion to dismiss the matter in its entirety, while granting the motion to dismiss with respect to certain allegations of the plaintiffs. On April 4, 2023, the parties submitted a case management statement to the Northern District Court of California, and on April 10, 2023, the Northern District Court of California entered an order setting dates for amendment of pleadings and briefing on class certification. On April 27, 2023, ChemoCentryx submitted its answer to the complaint.
On August 25, 2023, the lead plaintiff moved to certify a class composed of all purchasers of ChemoCentryx stock between November 25, 2019 and May 6, 2021. ChemoCentryx filed its opposition on November 22, 2023.
Lead plaintiff filed its reply brief in support of class certification on January 23, 2024. A hearing on class certification is set for February 15, 2024.
Commitments – U.S. repatriation tax
Under the 2017 Tax Act, we elected to pay in eight annual installments the repatriation tax related primarily to prior indefinitely invested earnings of our foreign operations. The following table summarizes the remaining scheduled repatriation tax payments as of December 31, 2023 (in millions):
| Amounts | |||||
| 2024 | $ | ||||
| 2025 | |||||
| Total remaining U.S. repatriation tax commitments | $ | ||||
F-56
SCHEDULE II
AMGEN INC.
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2023, 2022 and 2021
(In millions)
| Allowance for doubtful accounts | Balance at beginning of period | Additions charged to costs and expenses | Other additions | Deductions | Balance at end of period | |||||||||||||||||||||||||||
Year ended December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Year ended December 31, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Year ended December 31, 2021 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
F-57
EXHIBIT 4.33
DESCRIPTION OF AMGEN INC.’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
As of February 9, 2024, Amgen Inc. has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) our common stock, par value $0.0001 per share (the “Common Stock”); and (2) our 2.000% Senior Notes due 2026 (the “Notes”).
DESCRIPTION OF COMMON STOCK
The following description of our capital stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our restated certificate of incorporation, as amended (“certificate of incorporation”) and our amended and restated bylaws, each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K (“Annual Report”). The terms “Amgen” “we,” “our,” and “us” refer solely to Amgen Inc. and not its subsidiaries.
Our authorized capital stock includes 2,750,000,000 shares of Common Stock. Each holder of our Common Stock is entitled to one vote per share on all matters to be voted upon by our stockholders. Upon any liquidation, dissolution or winding up of our business, the holders of our Common Stock are entitled to share equally in all assets available for distribution after payment of all liabilities, subject to the liquidation preference of shares of preferred stock, if any, then outstanding. Our Common Stock has no preemptive or conversion rights. All outstanding shares of common stock are fully paid and non-assessable. Our outstanding shares of common stock are quoted on the Nasdaq Global Select Market under the symbol “AMGN.”
Dividends
Subject to preferences that may be applicable to any preferred stock (if any such stock be issued and outstanding), the holders of Common Stock are entitled ratably to receive dividends, if any, declared by our board of directors out of funds legally available for the payment of dividends.
Anti-Takeover Effects of Delaware Law
We are subject to the provisions of Section 203 of the Delaware General Corporation Law. Under Section 203, we would generally be prohibited from engaging in any business combination with any interested stockholder for a period of three years following the time that this stockholder became an interested stockholder unless:
•prior to such time, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
•upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
•at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
Under Section 203, a “business combination” includes:
•any merger or consolidation involving the corporation and the interested stockholder;
•any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
•any transaction which results in the issuance or transfer by the corporation or by any direct or indirect majority-owned subsidiary of the corporation of any stock of the corporation or of such subsidiary to the interested stockholder, subject to limited exceptions;
•any transaction involving the corporation or any direct or indirect majority-owned subsidiary of the corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation or of any such subsidiary which is owned by the interested stockholder; or
•the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or any direct or indirect majority-owned subsidiary of the corporation.
In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.
Transfer Agent
The transfer agent and registrar for our Common Stock is Equiniti Trust Company, LLC.
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DESCRIPTION OF THE NOTES
The following description of our Notes is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the indenture, dated as of May 22, 2014 (the “Indenture”), between us and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), which are incorporated by reference as exhibits to the Annual Report of which this Exhibit 4.33 is a part. The Notes are traded on The Nasdaq Stock Market LLC under the trading symbol of “AMGN26.” We encourage you to read the above referenced Indenture for additional information.
General
We issued €750,000,000 in aggregate principal amount of 2.000% Senior Notes, maturing February 25, 2026 and bearing interest at a rate of 2.000% per annum, payable annually on February 25 of each year. As of February 9, 2024, €750,000,000 aggregate principal amount of the Notes was outstanding.
We may, without notice to or the consent of the holders or beneficial owners of the Notes of any series, create and issue additional Notes and/or notes having the same ranking, interest rate, maturity and other terms as the Notes of that series. Any additional debt securities having such similar terms, together with that series of Notes, could be considered part of the same series of Notes under the Indenture; provided that, in the case of any notes represented by global notes, for so long as may be required by the United States Securities Act of 1933, as amended (the “Securities Act”), or the procedures of the common depositary, the Euroclear System (“Euroclear”) or Clearstream Banking, S.A. (“Clearstream”) (or a successor or clearing system), such additional Notes will be represented by one or more separate global notes in accordance with the terms of the Indenture and subject to applicable transfer or other restrictions.
The Notes are redeemable prior to maturity as described below under the headings “—Optional Redemption” and “—Redemption Upon Changes in Withholding Taxes.” The Notes do not have the benefit of any sinking funds. The Notes of each series are issued only in registered form without coupons attached in minimum denominations of €100,000 and any integral multiple of €1,000 in excess thereof. Each series of Notes are represented by one or more global securities deposited with, or on behalf of, a common depositary for Euroclear and Clearstream (the “global notes”).
Certain Definitions
As used herein, the following terms have the meanings set forth below.
“Attributable Liens” means in connection with a sale and lease-back transaction the lesser of:
| (1) | the fair market value of the assets subject to such transaction; and | |||||||
| (2) | the present value (discounted at a rate per annum equal to the average interest borne by all outstanding debt securities issued under the Indenture (which may include debt securities in addition to the Notes) determined on a weighted average basis and compounded semi-annually) of the obligations of the lessee for rental payments during the term of the related lease. | |||||||
“Business Day” means any day on which commercial banks and foreign exchange markets are open for business in New York and London and which is a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer System (TARGET2) is operating.
“Calculation Agent” means an independent financial institution appointed by Amgen, which may include the paying agent, any of the managers or their respective affiliates who agree to serve in such capacity.
“Capital Lease” means any Indebtedness represented by a lease obligation of a Person incurred with respect to real property or equipment acquired or leased by such Person and used in its business that is required to be recorded as a capital lease in accordance with GAAP.
“Consolidated Net Worth” means, as of any date of determination, the Stockholders’ Equity of us and our Consolidated Subsidiaries on that date.
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“Consolidated Subsidiary” means, as of any date of determination and with respect to any Person, any Subsidiary of that Person whose financial data is, in accordance with GAAP, reflected in that Person’s consolidated financial statements.
“Credit Facilities” means, one or more debt facilities (including, without limitation, the revolving credit agreement and the term loan credit agreement, as applicable) or commercial paper facilities, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.
“Exempted Debt” means the sum of the following as of the date of determination:
| (1) | our Indebtedness incurred after the first issue date of the Notes and secured by Liens not permitted by the first sentence under “—Limitation on Liens” below; and | |||||||
| (2) | our and our Subsidiaries’ Attributable Liens in respect of sale and lease-back transactions entered into after the first issue date of the Notes pursuant to the second paragraph of “—Limitation on Sale and Lease-Back Transactions” below. | |||||||
“GAAP” means accounting principles generally accepted in the United States set forth in the Accounting Standards Codification of the Financial Accounting Standards Board or in such other documents by such other entity as have been approved by a significant segment of the accounting profession, which are in effect as of the date of determination.
“Governmental Agency” means:
| (1) | any foreign, federal, state, county or municipal government, or political subdivision thereof; | |||||||
| (2) | any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body; | |||||||
| (3) | any court or administrative tribunal; and | |||||||
| (4) | with respect to any Person, any arbitration tribunal or other nongovernmental authority to whose jurisdiction that Person has consented. | |||||||
“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:
| (1) | interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; | |||||||
| (2) | other agreements or arrangements designed to manage interest rates or interest rate risk; and | |||||||
| (3) | other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices. | |||||||
“Indebtedness” of any Person means, without duplication, any indebtedness, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements with respect thereto) or representing the balance deferred and unpaid of the purchase price of any Property (including pursuant to Capital Leases), except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet of such Person prepared on a consolidated basis in accordance with GAAP (but does not include
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contingent liabilities which appear only in a footnote to a balance sheet), and shall also include, to the extent not otherwise included, the guaranty of items which would be included within this definition.
“Laws” means, collectively, all foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or controlling precedents of any Governmental Agency.
“Lien” means any lien, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest).
“Make-Whole Amount” means the excess of (1) the net present value, on the redemption date, of the principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable if such redemption had not been made, over (2) the aggregate principal amount of the Notes being redeemed or paid. Net present value shall be determined by discounting, on a semi-annual basis, such principal and interest at the Reinvestment Rate (as defined below and as determined on the third Business Day preceding the date such notice of redemption is given) from the respective dates on which such principal and interest would have been payable if such redemption had not been made.
“Permitted Liens” means:
| (1) | Liens securing Indebtedness under Credit Facilities; | |||||||
| (2) | Liens on accounts receivable, merchandise inventory, equipment, and patents, trademarks, trade names and other intangibles, securing our Indebtedness; | |||||||
| (3) | Liens on any of our assets, any of our Subsidiaries’ assets, or the assets of any joint venture to which we or any of our Subsidiaries is a party, created solely to secure obligations incurred to finance the refurbishment, improvement or construction of such asset, which obligations are incurred no later than 24 months after completion of such refurbishment, improvement or construction, and all renewals, extensions, refinancings, replacements or refundings of such obligations; | |||||||
| (4) | (a) Liens given to secure the payment of the purchase price incurred in connection with the acquisition (including acquisition through merger or consolidation) of Property (including shares of stock), including Capital Lease transactions in connection with any such acquisition, and (b) Liens existing on Property at the time of acquisition thereof or at the time of acquisition by us or one of our Subsidiaries of any Person then owning such Property whether or not such existing Liens were given to secure the payment of the purchase price of the Property to which they attach; provided that, with respect to clause (a), the Liens shall be given within 24 months after such acquisition and shall attach solely to the Property acquired or purchased and any improvements then or thereafter placed thereon; | |||||||
| (5) | Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; | |||||||
| (6) | Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; | |||||||
| (7) | Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other Property relating to such letters of credit and the products and proceeds thereof; | |||||||
| (8) | Liens on key-man life insurance policies granted to secure our Indebtedness against the cash surrender value thereof; | |||||||
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| (9) | Liens encumbering customary initial deposits and margin deposits and other Liens in the ordinary course of business, in each case securing Hedging Obligations and forward contract, option, futures contracts, futures options or similar agreements or arrangements designed to protect us or any of our Subsidiaries from fluctuations in interest rates, currencies or the price of commodities; | |||||||
| (10) | Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by us or any of our Subsidiaries in the ordinary course of business; | |||||||
| (11) | pre-existing Liens on assets acquired by us or any of our Subsidiaries after the first issue date of the Notes; | |||||||
| (12) | Liens in our favor or the favor of any of our Subsidiaries; | |||||||
| (13) | inchoate Liens incident to construction or maintenance of real property, or Liens incident to construction or maintenance of real property, now or hereafter filed of record for sums not yet delinquent or being contested in good faith, if reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor; | |||||||
| (14) | statutory Liens arising in the ordinary course of business with respect to obligations which are not delinquent or are being contested in good faith, if reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor; | |||||||
| (15) | Liens consisting of pledges or deposits to secure obligations under workers’ compensation laws or similar legislation, including Liens of judgments thereunder which are not currently dischargeable; | |||||||
| (16) | Liens consisting of pledges or deposits of Property to secure performance in connection with operating leases made in the ordinary course of business to which we or any of our Subsidiaries is a party as lessee, provided the aggregate value of all such pledges and deposits in connection with any such lease does not at any time exceed 16 2⁄3% of the annual fixed rentals payable under such lease; | |||||||
| (17) | Liens consisting of deposits of Property to secure our statutory obligations or statutory obligations of any of our Subsidiaries in the ordinary course of its business; | |||||||
| (18) | Liens consisting of deposits of Property to secure (or in lieu of) surety, appeal or customs bonds in proceedings to which we or any of our Subsidiaries is a party in the ordinary course of its business, but not in excess of $75,000,000; | |||||||
| (19) | purchase money Liens or purchase money security interests upon or in any Property acquired or held by us or any of our Subsidiaries in the ordinary course of business to secure the purchase price of such Property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such Property; | |||||||
| (20) | Liens on an asset created in connection with the acquisition, construction or development of additions, extensions or improvements to such asset which shall be financed by obligations described in Sections 142, 144(a) or 144(c) of the Code, or by obligations entitled to substantially similar tax benefits under other legislation or regulations in effect from time to time; and | |||||||
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| (21) | Liens on Property subject to escrow or similar arrangements established in connection with litigation settlements. | |||||||
“Person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Property” means any property or asset, whether real, personal or mixed, or tangible or intangible.
“Reference Bund” means the Federal Government Bond of Bundesrepublik Deutschland due February 15, 2026, with ISIN 0001102390.
“Reference Dealers” means each of the four banks selected by a Calculation Agent which are primary European government security dealers, and their respective successors, or market makers in pricing corporate bond issues.
“Reinvestment Rate” means 0.300% plus the average of the four quotations given by the Reference Dealers of the mid-market annual yield to maturity of the Reference Bund at 11: 00 a.m. (Central European time (“CET”)) on the fourth Business Day preceding such redemption date and if the Reference Bund is no longer outstanding, a Similar Security will be chosen by the Calculation Agent at 11: 00 a.m. (CET) on the third Business Day in London preceding such redemption date, quoted in writing by the Calculation Agent to us.
“Similar Security” means a reference bond or reference bonds issued by the German Federal Government having an actual or interpolated maturity comparable with the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“Stockholders’ Equity” means, as of any date of determination, stockholders’ equity as of that date determined in accordance with GAAP; provided that there shall be excluded from Stockholders’ Equity any amount attributable to capital stock that is, directly or indirectly, required to be redeemed or repurchased by the issuer thereof at a specified date or upon the occurrence of specified events or at the election of the holder thereof.
“Subsidiary” of any specified person means any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of that person or a combination thereof.
Paying Agent and Registrar
The Bank of New York Mellon, London Branch, is the principal paying agent for the Notes (the “principal paying agent”). The Bank of New York Mellon Trust Company, N.A., is the security registrar for the Notes. Upon notice to the Trustee, we may change any paying agent or security registrar, and we or any of our subsidiaries may act as paying agent or registrar.
Interest
The Notes accrue interest at a rate of 2.000% per annum. The Notes accrue interest on their stated principal amounts from the most recent interest payment date on which interest has been paid or duly provided for. Accrued and unpaid interest on the Notes are payable annually in arrears on February 25 of each year. In each case, interest is paid to the holder in whose name a note is registered at the close of business on the day that is one Business Day prior to the relevant interest payment date.
Interest on the Notes is computed on the basis of the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the Notes, to but excluding the next scheduled interest payment date. This payment convention is referred to as Actual/Actual (ICMA) as defined in the rulebook of the International Capital Market Association. If any date on which interest, principal or premium is payable on the Notes is not a Business Day, then payment of such amounts payable on such date will be made on the next succeeding day that is a Business Day (and, except as provided under “—Payment of Additional Amounts,” without any interest or other payment in respect of any such delay) with the same force and effect as if made on such interest payment date or maturity date, as the case may be.
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Any amounts payable on any Notes that are not punctually paid on any payment date will cease to be payable to the person in whose name such Notes are registered on the relevant record date, and such defaulted payment will instead be payable to the person in whose name such Notes are registered on the special record date or other specified date determined in accordance with the Indenture.
Ranking
The Notes are senior unsecured obligations of Amgen. The Notes rank:
| • | equal in right of payment to all of our other existing and future senior unsecured indebtedness; | ||||||||||
| • | senior in right of payment to all of our existing and future subordinated indebtedness; and | ||||||||||
| • | effectively subordinated in right of payment to all of our subsidiaries’ obligations (including secured and unsecured obligations) and subordinated in right of payment to our secured obligations, to the extent of the assets securing such obligations. | ||||||||||
The Notes and the Indenture do not limit our ability to incur additional indebtedness. We may incur substantial additional amounts of indebtedness in the future.
Optional Redemption
The Notes may be redeemed prior to maturity at our option, at any time in whole or from time to time in part. If the Notes are redeemed before November 25, 2025 (three months prior to the maturity date of the Notes), the redemption price will equal the sum of (1) 100% of the principal amount being redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (2) the Make-Whole Amount, if any. If the Notes are redeemed on or after November 25, 2025 (three months prior to the maturity date of the Notes), the redemption price will equal 100% of the principal amount being redeemed, plus accrued and unpaid interest to, but not including, the redemption date.
If we give notice as provided in the Indenture and funds for the redemption of any Notes called for redemption sufficient to pay the redemption price have been deposited with the principal paying agent on or before 10:00 a.m., London time, on the redemption date, such Notes will cease to bear interest on the date fixed for redemption. Thereafter, the only right of the holders of such Notes will be to receive payment of the redemption price.
Upon surrender of a note that is redeemed in part, we shall execute and the Trustee shall authenticate for the holder a new note of the same series and the same maturity equal in principal amount to the unredeemed portion of the note surrendered.
The Notes are redeemable prior to maturity as described below under the headings “—Optional Redemption” and “—Redemption Upon Changes in Withholding Taxes.” The Notes do not have the benefit of any sinking funds. The Notes of each series are issued only in registered form without coupons attached in minimum denominations of €100,000 and any integral multiple of €1,000 in excess thereof. Each series of Notes are represented by one or more global securities deposited with, or on behalf of, a common depositary for Euroclear and Clearstream (the “global notes”).
Payments on the global notes are made through the principal paying agent (as defined herein under the heading “—Paying Agent and Registrar”). Payments on the Notes are made at the specified office or agency of the principal paying agent; provided that all such payments with respect to Notes represented by one or more global notes registered in the name of or held by a nominee of Euroclear or Clearstream, as applicable, will be by wire transfer of immediately available funds to the account specified by the holder or holders thereof.
In addition, at our option, if certificated notes are issued, we may make payments by check mailed to the holder’s registered address or by wire transfer to the account shown on the register for the certificated notes.
If certificated notes are issued, they will be issued only in minimum denominations of €100,000 principal amount and integral multiples of €1,000 in excess thereof upon receipt by the applicable registrar of instructions relating thereto and any certificates and other documentation required under the Indenture. It is expected that such instructions will be based upon directions received by Euroclear or Clearstream, as applicable, from the participant which owns the relevant book-entry interests. Certificated notes issued in exchange for book-entry interests will,
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except as provided in the Indenture, be subject to, and will have a legend with respect to the restrictions on transfer summarized below.
Subject to the restrictions on transfer referred to above, Notes issued as certificated notes may be transferred or exchanged, in whole or in part, in minimum denominations of €100,000 principal amount and integral multiples of €1,000 in excess thereof to persons who take delivery thereof in the form of certificated notes. In connection with any such transfer or exchange, the Indenture requires the transferring or exchanging holder to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee at Euroclear or Clearstream, where appropriate, to furnish certain certificates and opinions, and to pay any tax or other governmental charge in connection with such transfer or exchange. Any such transfer or exchange will otherwise be made without charge to the holder.
Notwithstanding the foregoing, we are not required to register the transfer or exchange of any Notes:
| • | for a period of 15 days prior to any date fixed for the redemption of the Notes; | ||||||||||
| • | for a period of 15 days immediately prior to the date fixed for selection of Notes to be redeemed in part; | ||||||||||
| • | for a period of 15 days prior to the record date with respect to any interest payment date; or | ||||||||||
| • | which the holder has tendered (and not withdrawn) for repurchase in connection with a change of control offer. | ||||||||||
Redemption Upon Changes in Withholding Taxes
If (a) as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States (or any political subdivision or taxing authority thereof or therein having power to tax) (a “Relevant Taxing Jurisdiction”), or any change in, or amendment to, the official position regarding the application or interpretation of such laws, regulations or rulings (including by virtue of a holding, judgment or order by a court of competent jurisdiction or a change in published administrative practice), which change or amendment is announced on or after the date of the applicable prospectus supplement, we become or will become obligated to pay additional amounts as described herein under the heading “—Payment of Additional Amounts” or (b) any act is taken by a Relevant Taxing Jurisdiction on or after the date of the applicable prospectus supplement, whether or not such act is taken with respect to us or any affiliate, that results in a substantial probability that we will or may be required to pay such additional amounts, then we may, at our option, redeem the Notes of any affected series, as a whole but not in part, upon not less than 15 days’ nor more than 60 days’ published notice in accordance with the applicable notice requirement, at 100% of their principal amount, together with interest accrued thereon to the date fixed for redemption; provided that we determine, in our business judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to us (which does not include substitution of the obligor under the Notes). No redemption pursuant to (a) or (b) above may be made unless we have received an opinion of independent counsel to the effect that as a result of such change or amendment we will, or that an act taken by a Relevant Taxing Jurisdiction has resulted in a substantial probability that we will, or may, be required to pay the additional amounts described herein under the heading “—Payment of Additional Amounts,” and we shall have delivered to the Trustee a certificate, signed by a duly authorized officer, stating that based on such opinion we are entitled to redeem the Notes pursuant to their terms.
Notice of Redemption
We will publish a notice of any redemption of any affected series of Notes described above in accordance with the applicable notice provisions. If fewer than all of the Notes are to be redeemed at any time, the principal paying agent will select the Notes to be redeemed in accordance with the rules of the principal securities exchange, if any, on which the Notes are listed at such time or, if the not Notes are not listed on a securities exchange, in accordance with the rules of Euroclear or Clearstream, or absent any such rules, pro rata, by lot; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a note not redeemed to less than €100,000. The principal paying agent shall not be liable for any selections made by it in accordance with this paragraph.
We will give notice of any optional redemption to the registered holders of Notes at least 15 but not more than 60 days before a redemption date. The notice shall identify the Notes to be redeemed and shall state:
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| • | the redemption date; | ||||||||||
| • | the redemption price; | ||||||||||
| • | the name and address of the paying agent; | ||||||||||
| • | if any Notes are being redeemed in part, the portion of the principal amount of such notes to be redeemed and that, after the redemption date and upon surrender of such Notes, a new note or notes in principal amount equal to the unredeemed portion of the original note shall be issued in the name of the holder of the Notes thereof upon cancellation of the original note; | ||||||||||
| • | that the notes called for redemption must be surrendered to the paying agent to collect the redemption price; | ||||||||||
| • | that interest on the Notes called for redemption ceases to accrue on and after the redemption date unless we default in the deposit of the redemption price; and | ||||||||||
| • | the CUSIP and/or ISIN number of the Notes. | ||||||||||
At our request, the Trustee shall give the notice of redemption in our name and at our expense.
Payment of Additional Amounts
All payments of principal and interest on the Notes will be made free and clear of and without withholding or deduction for or on account of any present or future tax, assessment or other governmental charge (collectively, “Taxes”) imposed by any Relevant Taxing Jurisdiction, unless the withholding of such Taxes is required by law or the official interpretation or administration thereof. We will, subject to the exceptions and limitations set forth below, pay such additional amounts as are necessary in order that the net payment of the principal of and interest on the applicable series of Notes to a holder who is not a U.S. person for U.S. federal income tax purposes, after deduction for any present or future Taxes of any Relevant Taxing Jurisdiction, imposed by withholding with respect to the payment, will not be less than the amount provided in such Notes to be then due and payable; provided, however, that the foregoing obligation to pay additional amounts shall not apply:
(1) to any Taxes that are imposed or withheld solely by reason of the holder or beneficial owner, or a fiduciary, settlor, beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
(b) having a current or former relationship with the United States, including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding company, a passive foreign investment company or a controlled foreign corporation with respect to the United States or a corporation that has accumulated earnings to avoid U.S. federal income tax;
(d) being or having been a “10-percent shareholder” of the obligor under the Notes within the meaning of section 871(h)(3) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision; or
(e) being or having been a bank receiving interest described in section 881(c)(3)(A) of the Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the note, or a portion thereof, or that is a fiduciary or partnership, but only to the extent that a beneficiary or settlor with respect to the fiduciary, a beneficial owner or member of the partnership would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
(3) to any Taxes that are imposed or withheld solely by reason of the failure to (a) comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with a Relevant Taxing Jurisdiction of the holder or beneficial owner of such note, if compliance is required by statute or by regulation of the Relevant Taxing Jurisdiction as a precondition to relief or exemption from such Taxes (including the submission of an applicable U.S. Internal Revenue Service (“IRS”) Form W-8 (with any
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required attachments)) or (b) comply with any informational gathering and reporting requirements or to take any similar action (including entering into any agreement with the IRS), in each case, that are required to obtain the maximum available exemption from withholding by a Relevant Taxing Jurisdiction that is available to payments received by or on behalf of the holder;
(4) to any Taxes that are imposed otherwise than by withholding from the payment;
(5) to any Taxes that are imposed or withheld solely by reason of a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer, wealth or personal property tax or a similar tax, assessment or governmental charge;
(7) to any Taxes required to be withheld by any paying agent from any payment of principal of or interest on any note, if such payment can be made without such withholding by any other paying agent;
(8) to any Taxes that are imposed or levied by reason of the presentation (where presentation is required in order to receive payment) of such notes for payment on a date more than 30 days after the date on which such payment became due and payable, except to the extent that the holder or beneficial owner thereof would have been entitled to additional amounts had the notes been presented for payment on any date during such 30 day period;
(9) to any Taxes that are imposed or withheld pursuant to Sections 1471 through 1474 of the Code, as of the issue date (or any amended or successor version of such sections), any U.S. Treasury Regulations promulgated thereunder, any official interpretations thereof, any similar law or regulation adopted pursuant to an intergovernmental agreement between a non-U.S. jurisdiction and the United States with respect to the foregoing or any agreements entered into pursuant to Section 1471(b)(1) of the Code; or
(10) in the case of any combination of any items (1) through (9).
The notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation applicable thereto. Except as specifically provided under this heading “—Payment of Additional Amounts,” we are not required to make any payment with respect to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.
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Change of Control Offer
If a change of control triggering event occurs, unless we have exercised our option to redeem the notes as described above, we will be required to make an offer (the “change of control offer”) to each holder of the notes to repurchase all or any part (equal to €100,000 or integral multiples of €1,000 in excess thereof) of that holder’s notes on the terms set forth in such notes. In the change of control offer, we will be required to offer payment in cash equal to 101 % of the aggregate principal amount of notes repurchased, plus accrued and unpaid interest, if any, on the notes repurchased to the date of repurchase (the “change of control payment”). Within 30 days following any change of control triggering event, a notice will be provided to holders of the notes describing the transaction that constitutes the change of control triggering event and offering to repurchase the notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is provided (the “change of control payment date”); provided, however, that in no event will the change of control payment date occur prior to the date 90 days following the first issue date of the notes.
On the change of control payment date, we will, to the extent lawful:
| • | accept for payment all notes or portions of notes properly tendered pursuant to the change of control offer; | ||||||||||
| • | by 10:00 a.m., London time, deposit with the principal paying agent an amount equal to the change of control payment in respect of all notes or portions of notes properly tendered; and | ||||||||||
| • | deliver or cause to be delivered to the Trustee the notes properly accepted together with an officer’s certificate stating the aggregate principal amount of notes or portions of notes being repurchased. | ||||||||||
We will not repurchase any notes if there has occurred and is continuing on the change of control payment date an event of default under the Indenture, other than a default in the payment of the change of control payment upon a change of control triggering event.
We will comply with the requirements of Rule 14e-1 under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a change of control triggering event. To the extent that the provisions of any such securities laws or regulations conflict with the change of control offer provisions of the notes, we will comply with those securities laws and regulations and will not be deemed to have breached our obligations under the change of control offer provisions of the notes by virtue of any such conflict.
For purposes of the change of control offer provisions of the notes, the following terms will be applicable:
“Beneficial owner” shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act or any successor provisions, except that a person will be deemed to have beneficial ownership of all shares that person has the right to acquire irrespective of whether that right is exercisable immediately or only after the passage of time.
“Change of control” means the occurrence of any of the following: (1) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person or group (other than our company or one of our subsidiaries) becomes the beneficial owner, directly or indirectly, of more than 50% of our voting stock or other voting stock into which our voting stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; provided, however, that a person shall not be deemed beneficial owner of, or to own beneficially, (A) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person’s affiliates until such tendered securities are accepted for purchase or exchange thereunder, or (B) any securities if such beneficial ownership (i) arises solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to the applicable rules and regulations under the Exchange Act, and (ii) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act; (2) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of our assets and the assets of our subsidiaries, taken as a whole, to one or more persons or groups (other than our company or one of our subsidiaries), provided that none of the circumstances in this clause (2) will be a change of control if the persons that beneficially own our voting stock immediately prior to the transaction own, directly or indirectly, shares with a majority of the total voting power of all outstanding voting securities of the surviving or transferee person that are entitled to vote generally in the election of that person’s board of directors, managers or trustees immediately after the transaction; (3) we consolidate with, or merge with or into any person, or any person consolidates with, or merges with or into, us, in any such event pursuant to a transaction in which any of our outstanding voting stock or the voting stock of such other person is converted into or exchanged for cash, securities
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or other property, other than such transaction where the shares of our voting stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the voting stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; or (4) the adoption of a plan relating to our liquidation or dissolution. Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control under clause (1) above if (i) we become a direct or indirect wholly-owned subsidiary of a holding company and (ii) (A) the direct or indirect holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of our voting stock immediately prior to that transaction or (B) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the voting stock of such holding company.
“Change of control triggering event” means the occurrence of both a change of control and a rating event.
“Fitch” means Fitch, Inc., and its successors.
“Group” has the meaning given by Section 13(d) and 14(d) of the Exchange Act or any successor provisions and includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision.
“Investment grade rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB—(or the equivalent) by S&P and BBB—(or the equivalent) by Fitch, and the equivalent investment grade credit rating from any additional rating agency or rating agencies selected by us.
“Moody’s” means Moody’s Investors Service, Inc., and its successors.
“Person” has the meaning given by Section 13(d) and 14(d) of the Exchange Act or any successor provisions.
“Rating agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by us (as certified by a resolution of our Board of Directors) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.
“Rating event” means the rating on the applicable series of notes is lowered by at least two of the three rating agencies and the notes are rated below an investment grade rating by at least two of the three rating agencies on any day during the period commencing 60 days prior to the first public notice of the occurrence of a change of control or our intention to effect a change of control and ending 60 days following consummation of such change of control (which period will be extended so long as the rating of the applicable series of notes is under publicly announced consideration for a possible downgrade by any of the rating agencies).
“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., and its successors.
“Voting stock” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.
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Certain Covenants
Limitation on Liens
We will not, nor will we permit any of our Subsidiaries to, create or incur any Lien on any of our or their respective Properties, whether now owned or hereafter acquired, or upon any income or profits therefrom, in order to secure any of our Indebtedness, without effectively providing that each series of notes shall be equally and ratably secured until such time as such Indebtedness is no longer secured by such Lien, except:
(1) Liens existing as of the first issue date of the notes;
(2) Liens granted after the first issue date of the notes on any of our or our Subsidiaries’ Properties securing our Indebtedness created in favor of the holders of the notes;
(3) Liens securing our Indebtedness which are incurred to extend, renew or refinance Indebtedness which is secured by Liens permitted to be incurred under the Indenture; provided that those Liens do not extend to or cover any of our or our Subsidiaries’ Property other than the Property securing the Indebtedness being refinanced and that the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness being refinanced;
(4) Liens created in substitution of or as replacements for any Liens permitted by the clauses directly above, provided that, based on a good faith determination of one of our officers, the Property encumbered under any such substitute or replacement Lien is substantially similar in nature to the Property encumbered by the otherwise permitted Lien which is being replaced; and
(5) Permitted Liens.
Notwithstanding the foregoing, we and any of our Subsidiaries may, without securing any series of notes, create or incur Liens which would otherwise be subject to the restrictions set forth in the preceding paragraph, if after giving effect thereto, Exempted Debt does not exceed the greater of (a) 35% of Consolidated Net Worth calculated as of the date of the creation or incurrence of the Lien or (b) 35% of Consolidated Net Worth calculated as of the first issue date of the notes.
Limitation on Sale and Lease-Back Transactions
We will not, nor will we permit any of our Subsidiaries to, enter into any sale and lease-back transaction for the sale and leasing back of any Property, whether now owned or hereafter acquired, of ours or any of our Subsidiaries, unless:
(1) such transaction was entered into prior to the first issue date of the notes;
(2) such transaction was for the sale and leasing back to us of any Property by one of our Subsidiaries;
(3) such transaction involves a lease for less than three years;
(4) we would be entitled to incur Indebtedness secured by a mortgage on the property to be leased in an amount equal to the Attributable Liens with respect to such sale and lease-back transaction without equally and ratably securing the notes pursuant to the first paragraph of “—Limitation on Liens” above; or
(5) we apply an amount equal to the fair value of the Property sold to the purchase of Property or to the retirement of our or any of our Subsidiaries’ long-term Indebtedness within 120 days of the effective date of any such sale and lease-back transaction. In lieu of applying such amount to such retirement, we may, or may cause any of our Subsidiaries to, deliver debt securities to the Trustee therefor for cancellation, such debt securities to be credited at the cost thereof to us.
Notwithstanding the foregoing, we and any of our Subsidiaries may enter into any sale lease-back transaction which would otherwise be subject to the foregoing restrictions if after giving effect thereto and at the time of determination, Exempted Debt does not exceed the greater of (a) 35% of Consolidated Net Worth calculated as of the closing date of the sale-leaseback transaction or (b) 35% of Consolidated Net Worth calculated as of the first issue date of the notes.
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Events of Default
Event of default means, with respect to each series of notes, any of the following:
| • | default in the payment of any interest on the notes of that series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of the payment is deposited by us with the Trustee or with the principal paying agent prior to the expiration of the 30-day period); | ||||||||||
| • | default in the payment of principal of the notes of that series at their maturity; | ||||||||||
| • | default in the performance or breach of any other covenant or warranty by us in the Indenture (other than defaults pursuant to the previous two bullet points above or pursuant to a covenant or warranty that has been included in the Indenture solely for the benefit of a series of debt securities other than that series of notes), which default continues uncured for a period of 90 days after we receive written notice from the Trustee or we and the Trustee receive written notice from the holders of not less than a majority in principal amount of the outstanding Notes of the affected series as provided in the Indenture; or | ||||||||||
| • | certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of our company. | ||||||||||
No event of default with respect to the Notes (except as to certain events of bankruptcy, insolvency or reorganization) necessarily constitutes an event of default with respect to any other series of debt securities. The occurrence of an event of default may constitute an event of default under our bank credit agreements in existence from time to time. In addition, the occurrence of certain events of default or an acceleration under the Indenture may constitute an event of default under certain of our other indebtedness outstanding from time to time.
We will provide the Trustee written notice of any default or event of default within 30 days of becoming aware of the occurrence of such default or event of default, which notice will describe in reasonable detail the status of such default or event of default and what action we are taking or propose to take in respect thereof.
If an event of default with respect to a series of Notes occurs and is continuing (other than an event of default regarding certain events of bankruptcy, insolvency or reorganization of our company), then the Trustee or the holders of not less than a majority in principal amount of the outstanding Notes of that series may, by a notice in writing to us (and to the Trustee if given by the holders), declare to be due and payable immediately the principal of, and accrued and unpaid interest, if any, on all Notes of that series. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal of and accrued and unpaid interest, if any, on all outstanding debt securities issued under the Indenture will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of outstanding debt securities, including the Notes. At any time after a declaration of acceleration with respect to a series of Notes has been made, and before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in principal amount of the outstanding Notes of that series may, by written notice to us and the Trustee, rescind and annul such acceleration if all events of default, other than the non-payment of accelerated principal and interest, if any, with respect to the Notes of that series, have been cured or waived as provided in the Indenture.
The Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of notes, unless the Trustee receives indemnity satisfactory to it against any cost, liability or expense which might be incurred by it in exercising such right or power. Subject to certain rights of the Trustee, the holders of a majority in principal amount of the outstanding Notes of the affected series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes of that series.
No holder of any Note of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or Trustee, or for any remedy under the Indenture unless, among other things:
| • | that holder has previously given to the Trustee written notice of a continuing event of default with respect to the Notes of that series; and | ||||||||||
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| • | the holders of at least a majority in principal amount of the outstanding Notes of that series have made written request, and offered reasonable indemnity or security, to the Trustee to institute the proceeding as Trustee, and the Trustee has not received from the holders of a majority in principal amount of the outstanding Notes of that series a direction inconsistent with that request and has failed to institute the proceeding within 60 days. | ||||||||||
Notwithstanding any other provision in the Indenture, the holder of any Note will have an absolute and unconditional right to receive payment of the principal of, premium and any interest on that Note on or after the due dates expressed in that Note and to institute suit for the enforcement of any such payment.
If any securities are outstanding under the Indenture, the Indenture requires us, within 120 days after the end of each fiscal year, to furnish to the Trustee a statement as to our compliance with the indenture. If a default or event of default occurs and is continuing with respect to notes of any series and if it is known to a responsible officer of the Trustee, the Trustee shall deliver to each holder of the Notes of that series notice of a default or event of default within 90 days after it occurs. The Indenture provides that the Trustee may withhold notice to the holders of the Notes of any default or event of default (except in the case of a default or event of default in payment of principal of or interest on any Note of that series) with respect to Notes of that series if it in good faith determines that withholding notice is in the interest of the holders of those Notes.
Modification and Waiver
We and the Trustee may modify and amend the Indenture or Notes of any series without the consent of any holder of Notes:
| • | to cure any ambiguity, defect or inconsistency; | ||||||||||
| • | to comply with the covenant described below under the heading “—Consolidation, Merger and Sale of Assets;” | ||||||||||
| • | to provide for uncertificated notes in addition to or in place of certificated notes; | ||||||||||
| • | to add guarantees with respect to Notes of any series or secure notes of any series; | ||||||||||
| • | to surrender any of our rights or powers under the Indenture; | ||||||||||
| • | to add covenants or events of default for the benefit of the holders of Notes of any series; | ||||||||||
| • | to comply with the applicable procedures of the applicable depositary; | ||||||||||
| • | to make any change that would not adversely affect the rights of any holder of Notes in any material respect; | ||||||||||
| • | to provide for the issuance of and establish the form and terms and conditions of additional Notes of any series as permitted by the Indenture; | ||||||||||
| • | to effect the appointment of a successor trustee with respect to the Notes and to add to or change any of the provisions of the Indenture to provide for or facilitate administration by more than one trustee; or | ||||||||||
| • | to comply with requirements of the U.S. Securities and Exchange Commission in order to effect or maintain the qualification of the Indenture under the U.S. Trust Indenture Act of 1939. | ||||||||||
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We may also modify and amend the Indenture with the consent of the holders of at least a majority in principal amount of the outstanding Notes of each series affected by the modifications or amendments. We may not make any modification or amendment without the consent of the holders of each affected Note then outstanding if that amendment will:
| • | reduce the amount of Notes whose holders must consent to an amendment, supplement or waiver; | ||||||||||
| • | reduce the rate of or extend the time for payment of interest (including any additional amounts) on the Notes; | ||||||||||
| • | reduce the principal of or premium on or change the fixed maturity of the Notes; | ||||||||||
| • | waive a default in the payment of the principal of, premium or interest on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes of that series and a waiver of the payment default that resulted from such acceleration); | ||||||||||
| • | make the principal of or interest on the Notes payable in currency other than that stated in the Notes; | ||||||||||
| • | make any change to certain provisions of the Indenture relating to, among other things, the right of holders of the Notes to receive payment of the principal of, premium and interest on the Notes and to institute suit for the enforcement of any such payment and to waivers or amendments; or | ||||||||||
| • | waive a redemption payment with respect to the Notes. | ||||||||||
Except for certain specified provisions, the holders of at least a majority in principal amount of the outstanding Notes of the affected series may, on behalf of the holders of all the Notes of that series, waive our compliance with provisions of the Indenture. The holders of a majority in principal amount of the outstanding Notes of the affected series may, on behalf of the holders of all the Notes of such series, waive any past default under the Indenture with respect to that series and its consequences, except a default in the payment of the principal of, premium or any interest on any Note of that series; provided, however, that the holders of a majority in principal amount of the outstanding Notes of the affected series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration.
No amendment to cure any ambiguity, defect or inconsistency in the Indenture made solely to conform the Indenture to the description of notes contained in the applicable prospectus supplement will be deemed to adversely affect the interests of the holders of the Notes.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to, any person, which we refer to as a “successor person,” unless:
| • | we are the surviving corporation or the successor person (if other than Amgen) is organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes, pursuant to a supplemental Indenture, our obligations on the notes and under the Indenture; and | ||||||||||
| • | immediately after giving effect to the transaction, no default or event of default shall have occurred and be continuing under the Indenture. | ||||||||||
Notwithstanding the foregoing, any of our Subsidiaries may consolidate with, merge into or transfer all or part of its properties and assets to us.
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Defeasance and Covenant Defeasance
Legal Defeasance
The Indenture provides that we may be discharged from any and all obligations in respect of the Notes (subject to certain exceptions). We will be so discharged upon the deposit with the Trustee, in trust, of money, U.S. government obligations and/or foreign government obligations that, through the payment of interest and principal in accordance with their terms, will provide money, U.S. government obligations or foreign government obligations in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants or investment bank to pay and discharge each installment of principal of, premium and interest on the Notes on the stated maturity of those payments in accordance with the terms of the Indenture and the Notes.
This discharge may occur only if, among other things, we have delivered to the Trustee an opinion of counsel stating that we have received from, or there has been published by, the IRS a ruling or, since the date of execution of the Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants
The Indenture provides that upon compliance with certain conditions:
| • | we may omit to comply with the covenant described under the heading “—Consolidation, Merger and Sale of Assets” and certain other covenants set forth in the Indenture, as well as any additional covenants set forth in the applicable prospectus supplement; and | ||||||||||
| • | any omission to comply with those covenants will not constitute a default or an event of default with respect to the Notes, which we refer to as a “covenant defeasance.” | ||||||||||
The conditions include:
| • | depositing with the Trustee money, U.S. government obligations and/or foreign government obligations that, through the payment of interest and principal in accordance with their terms, will provide money in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants or investment bank to pay and discharge each installment of principal of, premium and interest on the notes on the stated maturity of those payments in accordance with the terms of the Indenture and the Notes; and | ||||||||||
| • | delivering to the Trustee an opinion of counsel to the effect that the holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the deposit and related covenant defeasance and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the deposit and related covenant defeasance had not occurred. | ||||||||||
Covenant Defeasance and Events of Default
In the event we exercise our option to effect covenant defeasance with respect to any series of the Notes and the Notes of that series are declared due and payable because of the occurrence of any event of default, the amount of money, U.S. government obligations and/or foreign government obligations on deposit with the Trustee will be sufficient to pay amounts due on the Notes of that series at the time of their stated maturity but may not be sufficient to pay amounts due on the notes of that series at the time of the acceleration resulting from the event of default. In such a case, we would remain liable for those payments.
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Concerning the Trustee
The Bank of New York Mellon Trust Company, N.A. is Trustee under the Indenture.
Governing Law
The Indenture and the Notes, including any claim or controversy arising out of or relating to the Indenture or the Notes, are governed by the laws of the State of New York.
19
Exhibit 10.2
Form of Award Notice
[The information set forth in this Award Notice will be contained on the related pages on Merrill Lynch Benefits Website (or the website of any successor company to Merrill Lynch Bank & Trust Co., FSB). This Award Notice shall be replaced by the equivalent pages on such website. References to Award Notice in this Agreement shall then refer to the equivalent pages on such website.]
This notice of Award (the “Award Notice”) sets forth certain details relating to the grant by the Company to you of the Award identified below, pursuant to the Plan. The terms of this Award Notice are incorporated into the Stock Option Agreement (the “Agreement”) that accompanies this Award Notice and made part of the Agreement. Capitalized terms used in this Award Notice that are not otherwise defined in this Award Notice have the meanings given to such terms in the Agreement.
Employee:
Employee ID:
Address:
Award Type:
Grant ID:
Plan: Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, as amended and/or restated from time to time
Grant Date:
Grant Price: $________
Number of Shares
Covered by Option:
Type: Non-qualified Stock Option
Expiration Date: The [______ (__th)] anniversary of the Grant Date
Vesting Date: Means the vesting date indicated in the Vesting Schedule
Vesting Schedule: Means the schedule of vesting set forth under Vesting Details
Vesting Details: Means the presentation (tabular or otherwise) of the Vesting Date and the quantity of Shares vesting.
IMPORTANT NOTICE REGARDING ACCEPTANCE OF THE AWARD AND THE REQUIREMENT TO OPEN A BROKERAGE ACCOUNT1:
RESIDENTS OF THE U.S. AND PUERTO RICO: Please read this Award Notice, the Plan and the Agreement (collectively, the “Grant Documents”) carefully. If you, as a resident of the U.S. or Puerto Rico, do not wish to receive this Award and/or you do not consent and agree to the terms and conditions on which this Award is offered, as set forth in the Grant Documents, then you must reject the Award by contacting the Merrill Lynch call center at +1 (800) 97AMGEN (+1 (800) 972-6436) within the U.S., Puerto Rico and Canada or +1 (609) 818-8910 from all other countries (Merrill Lynch will accept the charges for your call) no later than the forty-fifth calendar day following the day on which this Award Notice is made available to you, in which case the Award will be cancelled. For the purpose of determining the forty-five calendar days, Day 1 will be the day immediately following the day on which this Award Notice is made available to you. Your failure to notify the Company of your rejection of the Award or your refusal of, or disagreement with, all terms and conditions of the Award, as set forth in the Grant Documents, within this specified period will constitute your acceptance of the Award and your agreement with all terms and conditions of the Award, as set forth in the Grant Documents. If you agree to the terms and conditions of your grant and you desire to accept it, then no further
1 This provision is only for use on the form of grant used for the U.S. and Puerto Rico.
action is needed on your part to accept the grant. However, you must still open a brokerage account as directed by the Company, by 1:00 pm Pacific Time on or before the date that is 11 months after the date of grant. This step is necessary to process transactions related to your equity grant. If you do not open a brokerage account by this deadline, your grant will be cancelled.
2
GRANT OF STOCK OPTION AGREEMENT
THE SPECIFIC TERMS OF YOUR STOCK OPTION ARE FOUND IN THE PAGES RELATING TO THE GRANT OF STOCK OPTIONS FOUND ON MERRILL LYNCH BENEFITS WEBSITE (OR THE WEBSITE OF ANY SUCCESSOR COMPANY TO MERRILL LYNCH BANK & TRUST CO., FSB) (THE “AWARD NOTICE”) WHICH ACCOMPANIES THIS DOCUMENT. THE TERMS OF THE AWARD NOTICE ARE INCORPORATED INTO THIS GRANT OF STOCK OPTIONS.
On the Grant Date, specified in the Award Notice, Amgen Inc., a Delaware corporation (the “Company”), has granted to you, the grantee named in the Award Notice, under the plan specified in the Award Notice (the “Plan”), an option (the “Option”) to purchase the number of shares of the $0.0001 par value common stock of the Company (the “Shares”) specified in the Award Notice, pursuant to the terms set forth in this Stock Option Agreement, any additional terms and conditions for your country set forth in the attached Appendix A and the Award Notice (collectively, the “Agreement”). This Option is not intended to qualify and will not be treated as an “incentive stock option” within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended (together with the regulations and other official guidance promulgated thereunder, the “Code”). Capitalized terms not defined herein shall have the meanings assigned to such terms in the Plan.
The terms and conditions of your Option are as follows:
I. Subject to the terms and conditions of the Plan and this Agreement, on each Vesting Date the Option shall vest with respect to the number of Shares indicated on the Vesting Schedule, provided that you have remained continuously and actively employed with the Company or an Affiliate through each applicable Vesting Date, unless [(i) your employment has terminated due to your Voluntary Termination (as defined in Section IV(A)(5)) or (ii)]*2 you experience a Qualified Termination (as defined in Section IV(B)(4)), or as otherwise determined by the Company in the exercise of its discretion as provided in Section IV(A)(7). This Option may only be exercised for whole shares of the Common Stock, and the Company shall be under no obligation to issue any fractional Shares to you. Subject to the limitations contained herein, this Option shall be exercisable with respect to each installment on or after the applicable Vesting Date. Notwithstanding anything herein to the contrary, the Vesting Schedule may be accelerated (by notice in writing) by the Company in its sole discretion at any time during the term of this Option. In addition, if not prohibited by local law, vesting may be suspended by the Company in its sole discretion during a leave of absence as provided from time to time according to Company policies and practices; provided, that, in no event shall any such suspension extend the term of this Option beyond the Expiration Date set forth on the Award Notice and in this Agreement.
II. (1) The per share exercise price of this Option is the Grant Price as defined in the Award Notice, being not less than the Fair Market Value of the Common Stock on the Grant Date of this Option.
(2) To the extent permitted by applicable statutes and regulations, payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has become exercisable by you by means of (i) cash or a check, (ii) any cashless exercise
2 Section IV(A)(5) of this Agreement is not applicable to awards identified by the Administrator as new hire, retention or promotion grants and the provisions of such section shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
1
procedure through the use of a brokerage arrangement approved by the Company, or (iii) any other form of legal consideration that may be acceptable to the Board or the Committee in their discretion.
(3) Notwithstanding anything in Section II(2), to the extent permitted by applicable statutes and regulations, if, at the time of exercise, the Company’s Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment of the exercise price may be made by delivery of already-owned Shares with a Fair Market Value equal to the exercise price of the Shares for which this Option is being exercised. The already-owned Shares must have been owned by you for the period required to avoid adverse accounting treatment and owned free and clear of any liens, claims, encumbrances or security interests. Payment may also be made by a combination of cash and already-owned Shares.
Notwithstanding the foregoing, the Company reserves the right to restrict the methods of payment of the exercise price if necessary or advisable to comply with applicable law or regulation, as determined by the Company in its sole discretion.
III. Notwithstanding anything to the contrary contain herein, the Company shall not take any actions that would violate the Securities Act, the Exchange Act, the Code, or any other securities or tax or other applicable law or regulation, or the rules of any Securities Exchange. The Company, in its sole discretion, may impose any timing or other restrictions with respect to the exercise of this Option arising from compliance with any securities or tax laws or other rules or regulations. Notwithstanding anything to the contrary contained herein, this Option may not be exercised and no Shares underlying the Option will be issued unless such Shares are then registered under the Securities Act, or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act, and that the issuance satisfies all other applicable legal requirements. If the Option cannot be exercised and expires during this period, you will forfeit the Option and no Shares or value will be transferred to you.
IV. (A) The term of this Option commences on the Grant Date and, unless sooner terminated as set forth below or in the Plan, terminates on the [_______ (__th)] anniversary of the Grant Date (the “Expiration Date”). This Option shall terminate prior to the Expiration Date as follows: three (3) months after the termination of your employment with the Company or an Affiliate (as defined in the Plan) for any reason or for no reason, including if your employment is terminated by the Company or an Affiliate without Cause (as defined below), or in the event of any other termination of your employment caused directly or indirectly by the Company or an Affiliate, unless:
(1) such termination of your employment is due to your Permanent and Total Disability (as defined below), in which case (i) the Option shall terminate on the earlier of the Expiration Date or five (5) years after termination of your employment and (ii) the vesting of the Option shall be accelerated in full and the Option shall be fully exercisable, subject to your execution and non-revocation of a general release and waiver in a form provided by the Company (for the purpose of resolving any potential or actual disputes arising from your employment and the termination of your employment with the Company) (a “Release”) as of the day immediately preceding such termination of your employment with respect to the Option. Notwithstanding the foregoing, if the Option was granted in the calendar year in which such termination occurs, (i) the Option shall instead be accelerated to vest only with respect to a number of Shares equal to (A) the number of Shares subject to the Option multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12), subject to your execution and
2
non-revocation of a Release, and (ii) any portion of the Option (if any) that remains unvested following the acceleration provided for in clause (i) shall automatically expire and terminate on the date of the termination of your active employment due to your Permanent and Total Disability without consideration therefor;
(2) such termination of your employment is due to your death, in which case (i) the Option shall terminate on the earlier of the Expiration Date or five (5) years after your death and (ii) the vesting of the Option shall be accelerated to vest in full and the Option shall be fully exercisable as of the day immediately preceding your death with respect to the Option. Notwithstanding the foregoing, if the Option was granted in the calendar year in which your death occurs (i) the Option shall instead be accelerated to vest only with respect to a number of Shares equal to (A) the number of Shares subject to the Option multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12), and (ii) any portion of the Option (if any) that remains unvested following the acceleration provided for in clause (i) shall automatically expire and terminate on the date of termination of your active employment due to your death without consideration therefor;
(3) during any part of such three (3) month period, this Option is not exercisable solely because of the condition set forth in Section III above, in which event this Option shall not terminate until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your employment;
(4) exercise of this Option within three (3) months after termination of your employment with the Company or with an Affiliate would result in liability under Section 16(b) of the Exchange Act, in which case this Option will terminate on the earliest of: (a) the tenth (10th) day after the last date upon which exercise would result in such liability; (b) six (6) months and ten (10) days after the termination of your employment with the Company or an Affiliate; or (c) the Expiration Date;
(5) [such termination of your employment is due to your voluntary termination (and such voluntary termination is not the result of Permanent and Total Disability (as defined below)) after you are at least sixty five (65) years of age, or after you are at least fifty-five (55) years of age and have been an employee of the Company and/or an Affiliate for at least ten (10) years in the aggregate as determined by the Company in its sole discretion according to Company policies and practices as in effect from time to time (“Voluntary Termination”), in which case (i) this Option shall terminate on the earlier of the Expiration Date or five (5) years after termination of your employment and (ii) the unvested portions of this Option will become exercisable pursuant to the Vesting Schedule without regard to your Voluntary Termination of your employment, subject to your execution and non-revocation of a Release. Notwithstanding the foregoing, if the Option was granted in the calendar year in which your Voluntary Termination occurs, (i) the Option will continue to vest and become exercisable pursuant to the Vesting Schedule only with respect to (A) a number of Shares equal to the number of Shares subject to the Option multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12), and (ii) any portion of the Option (if any) that remains unvested following the acceleration provided for in clause (i) shall automatically expire and terminate on the date of the termination of your active employment due to your Voluntary Termination without consideration therefor. Notwithstanding the foregoing, to the event your Voluntary Termination occurs on or after the date of a Change of Control, then, to the extent permitted by applicable law, the vesting of the Option granted under this Agreement shall be accelerated to vest as of the
3
day immediately prior to the date of your Voluntary Termination. Notwithstanding the definition of Voluntary Termination set forth above, if the Company receives an opinion of counsel that there has been a legal judgment and/or legal development in your jurisdiction that would likely result in the favorable treatment upon Voluntary Termination described above being deemed unlawful and/or discriminatory, then the Committee will not apply the favorable treatment described above;][Reserved]* 3
(6) such termination of your employment is due to a Qualified Termination, in which case, the Option shall terminate on the earlier of (a) the date that is three (3) months following the date of such Qualified Termination or (b) the Expiration Date, and, to the extent permitted by applicable law, the vesting of the Option shall be accelerated and the Option shall be fully exercisable as of the day immediately prior to the Qualified Termination; or
(7) the Company determines, in its sole discretion at any time during the term of this Option, in writing, to otherwise extend the period of time during which this Option will vest and may be exercised after termination of your employment; provided, that, in no event shall any such extension extend the term of this Option beyond the Expiration Date set forth on the Award Notice and in this Agreement.
However, in any and all circumstances and except to the extent the Vesting Schedule has been accelerated by the Company in its sole discretion during the term of this Option or as a result of your Permanent and Total Disability or death as provided in Sections IV(A)(1) or IV(A)(2) above, respectively, [as a result of your Voluntary Termination as provided in Section IV(A)(5) above,]* as a result of a Qualified Termination as provided in Section IV(A)(6) above or as otherwise determined by the Company in the exercise of its discretion as provided in Section IV(A)(7) above, this Option may be exercised following termination of your employment only as to that number of Shares as to which it was exercisable on the date of termination of your employment under the provisions of Section I of this Agreement.
(B) For purposes of this Option:
(1) “termination of your employment” shall mean the last date you are either an active employee of the Company or an Affiliate or actively engaged as a Director to the Company or an Affiliate; in the event of termination of your employment (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to receive options and vest under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period (e.g., active employment would not include any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). Your right, if any, to exercise the Option after termination of employment will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law. The Administrator shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence);
3 Section IV(A)(5) of this Agreement is not applicable to awards identified by the Administrator as new hire, retention or promotion grants and the provisions of such section shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
4
(2) “Cause” shall mean (i) your conviction of a felony (or similar crime under applicable law, as determined by the Company), or (ii) your engaging in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out your duties, resulting, in either case, in material economic harm to the Company or any Affiliate, unless you believed in good faith that such conduct was in, or not contrary to, the best interests of the Company or any Affiliate. For purposes of clause (ii) above, no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith;
(3) “Permanent and Total Disability” shall have the meaning ascribed to such term under Section 22(e)(3) of the Code and with such permanent and total disability being certified prior to termination of your employment by (a) the U.S. Social Security Administration, (b) the comparable governmental authority applicable to an Affiliate, (c) such other body having the relevant decision-making power applicable to an Affiliate, or (d) an independent medical advisor appointed by the Company in its sole discretion, as applicable, in any such case;
(4) “Qualified Termination” shall mean
(a) if you are an employee who participates in the Change of Control Plan (as defined below), your termination of employment within two (2) years following a Change of Control (i) by the Company other than for Cause, Disability (as defined below) or as a result of your death, or (ii) by you for Good Reason (as defined in the Change of Control Plan); or
(b) if you are an employee who does not participate in the Change of Control Plan or the Change of Control Plan is no longer in effect, your termination of employment within two (2) years following a Change of Control by the Company other than for Cause, Disability (as defined below) or as a result of your death;
(5) “Change of Control” shall mean the occurrence of any of the following:
(a) the acquisition (other than from the Company) by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this purpose, the Company or any of its Affiliates, or any employee benefit plan of the Company or any of its Affiliates which acquires beneficial ownership of voting securities of the Company), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either the then outstanding Shares or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or
(b) the consummation by the Company of a reorganization, merger, consolidation, (in each case, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities) or a liquidation or dissolution of the Company or of the sale of all or substantially all of the assets of the Company.
Notwithstanding anything herein or in any Award Agreement to the contrary, if a Change of Control constitutes a payment event with respect to any Award that is subject to United States income tax and which provides for a deferral of compensation that is subject to Section 409A of the Code, the transaction or event described in subsection (a) or (b), (c) above must also constitute a “change in control event,” as defined in U.S. Treasury Regulation §1.409A-3(i)(5), in order to constitute a Change of Control for purposes of payment of such Award.
5
(6) “Change of Control Plan” shall mean the Company’s change of control and severance plan, including the Amgen Inc. Change of Control Severance Plan, as amended and restated, effective as of December 9, 2010 (and any subsequent amendments thereto), or any equivalent plan governing the provision of benefits to eligible employees upon the occurrence of a Change of Control (including resulting from a termination of employment that occurs within a specified time period following a Change of Control), as in effect immediately prior to a Change of Control; and
(7) “Disability” shall mean your “disability” as determined in accordance with the Company’s long-term disability plan as in effect immediately prior to a Change of Control.
V. (A) To the extent specified above, this Option may be exercised by delivering a notice of exercise in person, by mail, via electronic mail or facsimile or by other authorized method designated by the Company, together with the exercise price to the Company Stock Administrator, or to such other person as the Company Stock Administrator may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to Section 7.2(b) of the Plan.
(B) Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax Obligations”), you acknowledge that the ultimate liability for all Tax Obligations is and remains your responsibility and may exceed the amount, if any, actually withheld by the Company and/or your Employer. You further acknowledge that the Company and/or your Employer: (a) make no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Option grant or the underlying Shares, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax Obligations or achieve any particular tax result. Furthermore, if you become subject to tax in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former employer, as applicable) may be required to withhold or account for Tax Obligations in more than one jurisdiction.
(C) Prior to any relevant taxable or tax withholding event, as applicable, you shall pay or make adequate arrangements satisfactory to the Company and/or your Employer to satisfy all Tax Obligations. In this regard, you authorize the Company and/or your Employer, or their respective agents, at their discretion, to satisfy all applicable Tax Obligations by one or a combination of the following:
(1) withholding from your wages or other cash compensation paid to you by the Company and/or your Employer;
(2) withholding from proceeds of the sale of Shares acquired upon exercise of the Option either through your voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); or
(3) withholding in Shares issuable, or cash payable, upon exercise of the Option, provided that, if such Shares are withheld, the Company and your Employer shall only withhold an amount of Shares with a fair market value not to exceed the Tax Obligations as determined in the discretion of the Company or your Employer, as applicable.
6
Depending on the withholding method, the Company may withhold or account for Tax Obligations by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. If the Tax Obligations are satisfied by withholding in Shares, for tax purposes you are deemed to have been issued the full number of Shares subject to the exercised Option, notwithstanding that a number of the Shares is held back and not actually issued to you solely for the purpose of paying the Tax Obligations due as a result of any aspect of your participation in the Plan.
(D) Finally, you shall pay to the Company or your Employer any amount of Tax Obligations that the Company or your Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be or were not satisfied by the means previously described. You agree to take any further actions and execute any additional documents as may be necessary to effectuate the provisions of this Section V. Notwithstanding anything to the contrary contained herein, the Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax Obligations.
VI. This Option is not transferable, except by will or the laws of descent and distribution, and is exercisable during your life only by you except if you have named a trust created for the benefit of you, your spouse, or members of your immediate family (a “Trust”) as beneficiary of this Option, this Option may be exercised by the Trust after your death.
VII. Any notices provided for in this Option or the Plan shall be given in writing or electronically and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail or equivalent foreign postal service, postage prepaid, addressed to you at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company Stock Administrator. Such notices may be given using any automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, as approved by the Company.
VIII. This Option is subject to all the provisions of the Plan and its provisions are hereby made a part of this Option, including without limitation the provisions of Articles 6 and 7 of the Plan relating to Options, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Option and those of the Plan, the provisions of the Plan shall control.
IX. In order for the Company to facilitate your participation in the Plan, the Company and your Employer must collect and use personal data about you. In accordance with applicable laws, reasonable security measures will be implemented and maintained to protect the security of your personal data; however, you understand that absolute security cannot be guaranteed.
You understand that the Company and your Employer may hold certain personal information about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor, for the purposes of implementing, administering and managing the Plan (“personal data”).
7
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received upon exercise of this Option may be deposited. You understand that such authorized recipients of your personal data may be located in countries that do not provide the same level of data privacy laws and protections as the country in which your personal data originated. Transfers of personal data among Company and its group entities follow applicable laws and our Binding Corporate Rules (BCRs). For more information on Company’s BCRs, please visit http://www.amgen.com/bcr/. You acknowledge that the collection, use and transfer of your personal data is necessary to facilitate to your participation in the Plan, as well as to grant you Options or other equity awards and administer or maintain such awards.
You may correct or update your personal data previously provided to Company, by contacting your local human resources representative. Subject to applicable law, you may have additional rights, including the right to object and/or request destruction of your personal data. To exercise these rights, where applicable, please contact your local human resources representative.
X. The terms of this Option shall be governed by the laws of the State of Delaware without giving effect to principles of conflicts of laws. For purposes of litigating any dispute that arises hereunder, the parties hereby submit to and consent to the jurisdiction of the State of Delaware, and agree that such litigation shall be conducted in the courts of the State of Delaware, or the federal courts for the United States for the federal district located in the State of Delaware, and no other courts, where this Option is made and/or to be performed.
XI. Notwithstanding any provision of this Option to the contrary, if you are employed by the Company or an Affiliate in any of the countries identified in the attached Appendix A (which constitutes a part of this Agreement), are subject to the laws of any foreign jurisdiction, or relocate to one of the countries included in the attached Appendix A, the Option granted hereunder shall be subject to any additional terms and conditions for your country set forth in Appendix A and the following additional terms and conditions:
a. the terms and conditions of this Option, including Appendix A, are deemed modified to the extent necessary or advisable to comply with applicable foreign laws or facilitate the administration to the Plan;
b. if applicable, the effectiveness of this Option is conditioned upon its compliance with any applicable foreign laws, regulations, rules or local governmental regulatory exemption and subject to receipt of any required foreign regulatory approvals; and
c.the Company may take any other action before or after the date of this Option that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals.
XII. (A) In accepting this Option, you acknowledge, understand and agree that:
8
(1) the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;
(2) the grant of this Option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future awards of options, or benefits in lieu of options even if options have been awarded in the past;
(3) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;
(4) your participation in the Plan is voluntary;
(5) the grant of Options, the underlying Shares, and the income from and value of same, are not intended to replace any pension rights or compensation;
(6) neither the grant of options nor any provision of this Option, the Plan or the policies adopted pursuant to the Plan confer upon you any right with respect to employment or continuation of current employment and shall not interfere with the ability of your Employer to terminate your employment or service relationship (if any) at any time;
(7) in the event that you are not an employee of the Company or any Affiliate, the Option shall not be interpreted to form an employment contract or relationship with the Company or any Affiliate;
(8) the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty;
(9) if the underlying Shares do not increase in value, this Option will have no value; if you exercise this Option and obtain Shares, the value of those Shares acquired upon exercise may increase or decrease in value, even below the Grant Price per Share;
(10) in consideration of the grant of this Option, no claim or entitlement to compensation or damages arises from forfeiture of options resulting from termination of your employment by the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and you irrevocably release the Company and your Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim;
(11) unless otherwise agreed with the Company, the Options, the underlying Shares, and the income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of an Affiliate of the Company;
(12) except as otherwise provided in this Agreement or the Plan, the Options and the benefits evidenced by this Agreement do not create any entitlement to have the Options or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and
(13) the following provisions apply only if you are providing services outside the United States:
9
(i) for employment law purposes outside the United States, the Option, underlying Shares, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose, including but not limited to for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, holiday pay, long-service awards, pension or retirement benefits or similar mandatory payments; and
(ii) neither the Company, your Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Option or of any amounts due to you pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise of the Option.
(B) The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
XIII. If one or more of the provisions of this Option shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Option to be construed so as to foster the intent of this Option and the Plan.
XIV. By electing to accept this Agreement, you acknowledge that you are sufficiently proficient in English, or have consulted with an advisor who is sufficiently proficient in English, so as to allow you to understand the terms and conditions of this Agreement. Furthermore, if you have received this Option or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
XV. This Option is not intended to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, but rather is intended to be exempt from the application of Code Section 409A. To the extent that this Option is nevertheless deemed to be subject to Code Section 409A for any reason, this Option shall be interpreted in accordance with Code Section 409A and U.S. Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Grant Date. Notwithstanding any provision herein to the contrary, in the event that following the Grant Date, the Committee (as defined in the Plan) determines that this Option may be or become subject to Code Section 409A, the Committee may adopt such amendments to the Plan and/or this Option or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Plan and/or this Option from the application of Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to this Option, or (b) comply with the requirements of Code Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Committee to adopt any such amendment, policy or procedure or take any such other action.
XVI. By electing to accept this Option, you acknowledge receipt of this Option and hereby confirm your understanding that the terms set forth in this Option constitute, subject to the terms
10
of the Plan, which terms shall control in the event of any conflict between the Plan and this Option, the entire agreement and understanding of the parties with respect to the matters contained herein and supersede any and all prior agreements, arrangements and understandings, both oral and written, between the parties concerning the subject matter of this Option. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan (including this Agreement) by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
XVII. The Company reserves the right to impose other requirements on your participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
XVIII. This Option, the Shares issuable under this Option, and all compensation payable with respect to it shall be subject to clawback, recoupment and/or recovery by the Company pursuant to any and all of the Company’s policies with respect to the clawback, recoupment or recovery of compensation in effect as of the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including, without limitation, the Company’s Policy on Recovery of Erroneously Awarded Compensation (effective October 2, 2023) and Executive Officer Equity Recoupment Policy (effective December 31, 2020), as they shall be in effect and may be amended from time to time, to the maximum extent permitted by applicable law.
XIX. You acknowledge that a waiver by the Company of breach of any provision of this Option shall not operate or be construed as a waiver of any other provision of this Option, or of any subsequent breach by you or any other grantee.
Very truly yours,
AMGEN INC.
By______________________________
Duly authorized on behalf
of the Board of Directors
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APPENDIX A
ADDITIONAL TERMS AND CONDITIONS OF THE
AMENDED AND RESTATED
AMGEN INC. 2009 EQUITY INCENTIVE PLAN,
AS AMENDED AND/OR RESTATED FROM TIME TO TIME
GRANT OF STOCK OPTION
(BY COUNTRY)
Certain capitalized terms used but not defined in this Appendix A shall have the meanings set forth in the Plan and/or the Agreement to which this Appendix is attached.
TERMS AND CONDITIONS
This Appendix includes additional terms and conditions that govern any Options granted under the Plan if, under applicable law, you are a resident of, are deemed to be a resident of or are working in one of the countries listed below. Furthermore, the additional terms and conditions that govern any Options granted hereunder may apply to you if you transfer employment and/or residency to one of the countries listed below and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to you.
NOTIFICATIONS
This Appendix also includes notifications relating to exchange control and other issues of which you should be aware with respect to your participation in the Plan. The information is based on the exchange control, securities and other laws in effect in the countries to which this Appendix refers as of November 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the notifications herein as the only source of information relating to the consequences of your participation in the Plan because the information may be outdated when you exercise the Options and acquire Shares under the Plan, or when you subsequently sell Shares acquired under the Plan.
In addition, the notifications are general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of any particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently residing and/or working or are considered a resident of another country for local law purposes, the information contained herein may not be applicable to you or you may be subject to the provisions of one or more jurisdictions.
ALL NON-U.S. JURISDICTIONS
TERMS AND CONDITIONS
Method of Exercise. The following provision replaces Section II(3):
To the extent permitted by applicable statutes and regulations, payment of the exercise price per Share is due in full in cash or check upon exercise of all or any part of this Option which has become exercisable by you. Due to legal restrictions outside the U.S., you are not permitted to pay the exercise price by delivery of already-owned Shares of a value equal to the exercise price of the Shares for which this Option is being exercised. Furthermore, payment may not be made by a combination of cash and already-owned Common Stock.
APPENDIX A-1
Tax Withholding. The following provision supplements Section V(C) of the Agreement:
In the event the Company withholds or accounts for Tax Obligations by considering maximum applicable rates in your jurisdiction(s), in the event of over-withholding, you may receive a refund of any over-withheld amount in cash and will not be entitled to the equivalent amount in Shares, or if not refunded, you may seek a refund from the local tax authorities. In the event of under-withholding, you may be required to pay any additional Tax Obligations directly to the applicable tax authority or to the Company and/or your Employer.
NOTIFICATIONS
Insider Trading Restrictions/Market Abuse Laws. You may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., Options) or rights linked to the value of Shares during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you place before you possessed inside information. Furthermore you could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You are responsible for ensuring your compliance with any applicable restrictions and you should speak with your personal legal advisor on this matter.
Foreign Asset/Account, Tax Reporting Information. Your country of residence may have certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received, or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside of your country. You may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to your country within a certain time after receipt. You are responsible for ensuring your compliance with such regulations, and you should speak with your personal legal advisor on this matter.
ALL EUROPEAN ECONOMIC AREA (“EEA”) / EUROPEAN UNION (“EU”) JURISDICTIONS, UNITED KINGDOM AND SWITZERLAND
TERMS AND CONDITIONS
Data Privacy Notice. This provision replaces Section IX of the Agreement:
Please refer to the Fair Processing Notice previously provided by your local human resources representative, which notice governs the collection, use and transfer of your personal data necessary for the Company to facilitate your participation in the Plan. If you have any questions or concerns regarding the Fair Processing Notice, including questions about your rights afforded thereunder, you should contact your local human resources representative or send an email to hrconnect@amgen.com.
APPENDIX A-2
For purposes of implementing, administering and managing the Plan, Company and your Employer may hold certain personal data about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor (“personal data”).
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received upon exercise of this Option may be deposited.
ARGENTINA
TERMS AND CONDITIONS
Method of Exercise. Due to legal restrictions in Argentina, you may be required to pay the exercise price for any Shares subject to the Option granted hereunder by a cashless sell-all exercise, such that all Shares will be sold immediately upon exercise and the cash proceeds of sale, less the exercise price, any Tax Obligations and broker’s fees or commissions, will be remitted to you. The Company reserves the right to provide additional methods of exercise depending on local developments.
Labor Law Acknowledgement. The following provision supplements Section XII of the Agreement:
In accepting this Option, you acknowledge, understand and agree that the grant of the Option is made by the Company (not your Employer) in its sole discretion and that the value of the Option or any Shares acquired under the Plan shall not constitute salary or wages for any purpose under Argentine labor law including, but not limited to, the calculation of (i) any labor benefits including, without limitation, vacation pay, thirteenth salary, compensation in lieu of notice, annual bonus, disability, and leave of absence payments, etc., or (ii) any termination or severance indemnities or similar payments.
NOTIFICATIONS
Securities Law Information. Neither the Option nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina.
Exchange Control Information. Provided you are not required to purchase foreign currency and remit funds out of Argentina to acquire Shares under the Plan, local exchange control restrictions would not apply. However, if so required, you personally are responsible for complying with any and all Argentine currency exchange regulations, approvals and reporting requirements. Exchange control requirements in Argentina are subject to change; you should consult with your personal advisor regarding any obligations you have under the Plan.
APPENDIX A-3
Foreign Asset/Account Reporting Information. If you are an Argentine resident, you are required to report certain information regarding any Shares you hold as of December 31 each year to the Argentine tax authorities on your annual tax return.
AUSTRALIA
NOTIFICATIONS
Securities Law Information. If you acquire Shares under the Plan and offer the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. You should consult with your own legal advisor before making any such offer in Australia.
Tax Information. Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) applies to the Options granted under the Plan, such that the Options are intended to be subject to deferred taxation.
Exchange Control Information. If you are an Australian resident, exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on your behalf. If there is no Australian bank involved in the transfer, you will be required to file the report.
AUSTRIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you are an Austrian resident and you hold Shares acquired under the Plapn outside of Austria, you may be subject to reporting obligations to the Austrian National Bank.
Exchange Control Information. A separate reporting requirement applies when you sell Shares acquired under the Plan or receive a cash dividend paid on such Shares. In that case, there may be exchange control obligations if the cash proceeds are held outside of Austria. If the transaction volume of all cash accounts abroad meets or exceeds a specified threshold, the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, on the prescribed form (Meldungen SI-Forderungen und/oder SI-Verpflichtungen).
BELGIUM
NOTIFICATIONS
Taxation of the Option. Your tax consequences will vary depending on when you accept the Option. If you accept the Option in writing within 60 days of the offer date, you will be subject to taxation on the 60th day after the offer date. If you accept the Option more than 60 days after the offer date, you will be subject to taxation at exercise. Please refer to the additional materials that will be delivered to you for a more detailed description of the tax consequences of accepting the Option. You should consult your personal tax advisor prior to accepting the Option.
Tax Reporting; Foreign Asset/Account Reporting Information. If you are a Belgian resident, you are required to report any taxable income attributable to the Option granted hereunder on your annual tax return. You are also required to report any securities (e.g., Shares acquired under the Plan) held and bank accounts (including brokerage accounts) opened and maintained outside of Belgium on your annual tax return. The first time you report the foreign security and/
APPENDIX A-4
or bank account on your annual income tax return you will have to provide the National Bank of Belgium Central Contact Point with the account details of any such foreign accounts (including the account number, bank name and country in which such account was opened) in a separate form. This report, as well as information on how to complete it, can be found on the website of the National Bank of Belgium, www.nbb.be, under the Kredietcentrales / Centrales des crédits caption.
Stock Exchange Tax Information. A stock exchange tax applies to transactions executed by a Belgian resident through a non-Belgian financial intermediary, such as a U.S. broker. The stock exchange tax likely will apply when the Option is exercised and when Shares acquired under the Plan are sold. It is your responsibility to comply with this tax obligation and you should consult your personal tax advisor for additional details on your obligations with respect to the stock exchange tax.
Annual Securities Accounts Tax Information. An annual securities accounts tax may be payable if the total value of securities held in a Belgian or foreign securities account (e.g., Shares acquired under the Plan) exceeds a certain threshold on four reference dates within the relevant reporting period (i.e., December 31, March 31, June 30 and September 30). In such case, the tax will be due on the value of the qualifying securities held in such account. It is your responsibility to comply with this obligation and you should consult with your personal tax or financial advisor for additional details.
BRAZIL
TERMS AND CONDITIONS
Compliance with Law. By accepting the Option, you acknowledge that you agree to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the exercise of the Option, the sale of Shares acquired under the Plan and the payment of dividends on such Shares.
Nature of Grant. This provision supplements Section XII of the Agreement:
In accepting this Option, you acknowledge (i) that you are making an investment decision, (ii) that the Options will be exercisable by you only if the vesting conditions are met and any necessary services are rendered by you during the vesting period set forth in the Vesting Schedule, and (iii) that the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.
NOTIFICATIONS
Exchange Control Information. If you are resident or domiciled in Brazil, you will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights on December 31 of each year exceeds US$1,000,000. If such amount exceeds US$100,000,000, the referenced declaration must be submitted quarterly, in the month following the end of each quarter. Assets and rights that must be reported include the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) other investments, such as real estate. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil. Individuals holding assets and rights outside of Brazil valued at less than US$1,000,000 are not required to submit a declaration.
APPENDIX A-5
CANADA
TERMS AND CONDITIONS
Termination of Employment. Section IV(B)(1) of the Agreement is amended to read as follows:
(1) “termination of your employment” shall mean the last date you are either an active employee of the Company or an Affiliate or actively engaged as Director to the Company or an Affiliate; in the event of involuntary termination of your employment (regardless of the reason for such termination and whether or not later found to be invalid or unlawful, including for breaching employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to receive the Option and vest under the Plan, if any, will terminate effective as of the date that is the earlier of: (1) the date you receive written notice of termination of employment from the Company or your Employer, or (2) the date you are no longer actively employed by the Company or your Employer regardless of any period during which notice, pay in lieu of notice or related payments or damages are provided or required to be provided under local law. Your right, if any, to acquire Shares pursuant to the Option after termination of employment will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law. You will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which your right to vest terminates, nor will you be entitled to any compensation for lost vesting. Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued vesting during a statutory notice period, your right to vest in the Options, if any, will terminate effective as of the last day of your minimum statutory notice period, but you will not earn or be entitled to pro-rated vesting if the vesting date falls after the end of your statutory notice period, nor will you be entitled to any compensation for lost vesting;
The following provision will apply to you if you are a resident of Quebec:
French Language Documents. A French translation of this document and certain other documents related to this Award will be made available to Participant as soon as reasonably practicable. Participant understands that, from time to time, additional information related to the Award may be provided in English and such information may not be immediately available in French. However, upon request, the Company will provide a translation of such information into French as soon as reasonably practicable. Notwithstanding anything to the contrary in the Agreement, and unless Participant indicates otherwise, the French translation of this document and certain other documents related to the Award will govern Participant’s participation in the Plan.
Data Privacy Notice. This provision supplements Section IX of the Agreement:
You hereby authorize the Company and the Company’s representative to discuss with and obtain all relevant information from all personnel (professional or not) involved in the administration of the Plan. You further authorize the Company, your Employer and Merrill Lynch Bank & Trust Co., FSB (or any other stock plan service provider) to disclose and discuss your participation in the Plan with their advisors. You also authorize the Company and your Employer to record such information and keep it in your file.
NOTIFICATIONS
Securities Law Information. You are permitted to sell Shares acquired through the Plan through the designated broker appointed under the Plan, if any, provided that the resale of such
APPENDIX A-6
Shares takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (e.g., the Nasdaq Global Select Market).
Foreign Asset/Account Reporting Information. Specified foreign property, including Shares, Options and other rights to receive Shares of a non-Canadian company held by a Canadian resident employee generally must be reported annually on a Form T1135 (Foreign Income Verification Statement) if the total cost of the employee’s specified foreign property exceeds C$100,000 at any time during the year. Thus, such Options must be reported – generally at nil cost – if the C$100,000 cost threshold is exceeded because other specified foreign property is held by the employee. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily would equal the fair market value of the Shares at the time of acquisition, but if the employee owns other shares of the same company, this ACB may have to be averaged with the ACB of the other shares.
CHINA
TERMS AND CONDITIONS
The following terms apply only to nationals of the People’s Republic of China (the “PRC”) residing in the PRC:
Method of Exercise. Due to legal restrictions in the PRC, you will be required to pay the exercise price for any Shares subject to the Option granted hereunder by a cashless sell-all exercise, such that all Shares will be sold immediately upon exercise and the cash proceeds of sale, less the exercise price, any Tax Obligations and broker’s fees or commissions, will be remitted to you. The Company reserves the right to provide additional methods of exercise depending on local developments.
Termination of Employment. To comply with requirements imposed by the State Administration of Foreign Exchange, to the extent that, under Section IV of the Agreement, you may exercise any Option after termination of your employment, you will be permitted to exercise such Option for the shorter of the period set forth in Section IV of the Agreement and six (6) months from the date of termination of your employment; any unexercised Option shall immediately lapse six (6) months following the termination of your employment.
The Company reserves the right to impose such further restrictions or conditions as may be necessary to comply with changes in applicable local laws in the PRC.
Please note that the above provisions will apply to all Options granted to you under the Plan, as well as to any Options granted to you in the past under the Plan.
Exchange Control Requirements. You understand and agree that, pursuant to PRC exchange control requirements, you will be required to repatriate the cash proceeds from the sale of the Shares issued upon the exercise of the Option to China. You further understand that, under applicable laws, such repatriation of your cash proceeds will need to be effectuated through a special exchange control account established by the Company or any Affiliate, including your Employer, and you hereby consent and agree that any proceeds from the sale of the Shares may be transferred to such special account prior to being delivered to you. You also understand that the Company will deliver the proceeds to you as soon as possible, but that there may be delays in distributing the funds to you due to exchange control requirements in China. Proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to you in U.S. dollars, you will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are paid to you in local currency, the Company is under no obligation to secure any particular currency conversion rate
APPENDIX A-7
and the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You agree to bear any currency fluctuation risk between the date the Option is exercised and the time that (i) the Tax Obligations are converted to local currency and remitted to the tax authorities, and (ii) net proceeds are converted to local currency and distributed to you. You acknowledge that neither the Company nor any Affiliate will be held liable for any delay in delivering the proceeds to you. You agree to sign any agreements, forms and/or consents that may be requested by the Company or the Company’s designated broker to effectuate any of the remittances, transfers, conversions or other processes affecting the proceeds. You further agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.
COLOMBIA
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section XII of the Agreement:
You acknowledge that pursuant to Article 15 of Law 50/1990 (Article 128 of the Colombian Labor Code), the Plan and related benefits do not constitute a component of “salary” for any purpose. Therefore, they are considered to be of an extraordinary nature and will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amounts, subject to the limitations provided in Law 1393/2010.
NOTIFICATIONS
Securities Law Information. The Shares are not and will not be registered with the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and therefore the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.
Exchange Control Information. Investment in assets located abroad (such as Shares acquired under the Plan) does not require prior approval from the Central Bank (Banco de la República). Nonetheless, such investments are subject to registration before the Central Bank as foreign investments held abroad, regardless of value. In addition, you must file an annual informative return with the local tax authority detailing assets you hold abroad, which must include the Shares acquired at exercise (every year as long as you keep them). This obligation is only applicable if the assets held abroad exceed the amount of 2,000 Tax Units (approx. US$22.000)
All payments for your investment originating in Colombia (and the liquidation of such investments) must be transferred through the Colombian foreign exchange market (e.g., local banks), which includes the obligation to correctly complete and file the appropriate foreign exchange form (declaración de cambio).
Foreign Asset/Account Reporting Notice. An annual information return may need to be filed with the Colombian Tax Office detailing any assets held abroad (including Shares acquired under the Plan). If the individual value of any of these assets exceeds a certain threshold, each asset must be described (e.g., its nature and its value) and the jurisdiction in which it is located must be disclosed. It is your responsibility to comply with this tax reporting requirement.
APPENDIX A-8
CROATIA
NOTIFICATIONS
Exchange Control Information. Croatian residents may be required to report any foreign investments (including Shares acquired under the Plan) to the Croatian National Bank for statistical purposes and obtain prior approval from the Croatian National Bank for bank accounts opened abroad. You should be aware that exchange control regulations in Croatia are subject to frequent change and you are solely responsible for ensuring your continued compliance with current Croatian exchange control laws.
CZECH REPUBLIC
NOTIFICATIONS
Exchange Control Information. If you are a resident of the Czech Republic, you may be required to notify the Czech National Bank (“CNB”) of the acquisition of Shares under the Plan or maintenance of a foreign account if (i) you maintains foreign direct investments with a value of 2,500,000 Kč or more in the aggregate, (ii) you maintain a certain threshold of foreign financial assets, or (iii) you are specifically requested to do so by the CNB.
DENMARK
TERMS AND CONDITIONS
Danish Stock Option Act. In accepting this Option, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable to you and required to comply with the Stock Option Act, as amended with effect from January 1, 2019.
NOTIFICATIONS
Exchange Control Information. The requirement to report certain information to the Danish Tax Administration via Form V or K was eliminated effective January 1, 2019. However, you still must report the foreign bank/brokerage accounts and their deposits, and Shares held in a foreign bank or brokerage account in your tax return under the section on foreign affairs and income.
EGYPT
NOTIFICATIONS
Exchange Control Information. If you transfer funds into or out of Egypt in connection with the exercise of the Option or the receipt of sale proceeds, you may be required to transfer the funds through a registered bank in Egypt.
FINLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. There are no specific reporting requirements with respect to foreign assets/accounts. However, please note that you must check your pre-completed tax return to confirm that the ownership of Shares and other securities (foreign or
APPENDIX A-9
domestic) are correctly reported. If you find any errors or omissions, you must make the necessary corrections electronically or by sending specific paper forms to the local tax authorities.
FRANCE
TERMS AND CONDITIONS
Language Consent. By accepting the grant, you confirm having read and understood the Plan and Agreement which were provided in the English language. You accept the terms of these documents accordingly.
Consentement Relatif à la Langue Utilisée. En acceptant l’attribution, vous confirmez avoir lu et compris le Plan et le Contrat, qui ont été communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. French residents and non-residents must declare to the Customs Authorities the cash and securities they import or export without the use of a financial institution when the value of such cash or securities exceeds €10,000. French residents also must report all foreign bank and brokerage accounts on an annual basis (including accounts opened or closed during the tax year) on Form N° 3916, together with the income tax return. Failure to comply could trigger significant penalties.
GERMANY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If your acquisition of Shares under the Plan leads to a qualified participation at any point during the calendar year, you will need to report the acquisition when you file your tax return for the relevant year. A qualified participation is attained only in the unlikely event (i) you own at least 1% of the Company and the value of the Shares acquired exceeds €150,000 or (ii) you hold Shares exceeding 10% of the Company’s total Common Stock.
Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (Bundesbank). In case of payments in connection with securities (including proceeds realized upon the sale of Shares or the receipt of dividends), the report must be made by the 5th day of the month following the month in which the payment was received and must be filed electronically. The form of report (Allgemeines Meldeportal Statistik) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. In addition, you may be required to report the acquisition or sale of Shares to the Bundesbank if the value of the Shares acquired or sold exceeds €12,500. You are responsible for satisfying any applicable reporting obligation.
GREECE
NOTIFICATIONS
Foreign Asset/Account Reporting Information. The reporting of foreign assets (including Shares and other investments) is your own obligation and takes place through your annual tax return.
APPENDIX A-10
Exchange Control Information. If you exercise the Option through a cash exercise, withdraw funds from a bank in Greece and remit those funds out of Greece (in an amount exceeding a specified threshold), you may be required to submit a written application to the bank.
If you exercise the Option by way of a cashless method of exercise as described in Section II(2)(ii) of the Agreement, this application will not be required because no funds will be remitted out of Greece.
HONG KONG
TERMS AND CONDITIONS
Sale of Shares. Shares received at exercise are accepted as a personal investment. In the event that Shares are issued in respect of the Options within six (6) months of the Grant Date, you agree that you will not offer to the public or otherwise dispose of the Shares prior to the six (6)-month anniversary of the Grant Date.
NOTIFICATIONS
SECURITIES WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You should exercise caution in relation to the offer. If you are in doubt about any of the contents of the Agreement, including this Appendix, or the Plan, you should obtain independent professional advice. The Option and any Shares issued in respect of the Option do not constitute a public offering of securities under Hong Kong law and are available only to members of the Board and Employees. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The Option and any documentation related thereto are intended solely for the personal use of each member of the Board and/or Employee and may not be distributed to any other person.
HUNGARY
There are no country-specific provisions.
ICELAND
TERMS AND CONDITIONS
Method of Exercise. Due to legal restrictions in Iceland, you will be required to pay the exercise price for any Shares subject to the Option granted hereunder by a cashless sell-all exercise, such that all Shares will be sold immediately upon exercise and the cash proceeds of sale, less the exercise price, any Tax Obligations and broker’s fees or commissions, will be remitted to you. The Company reserves the right to provide additional methods of exercise depending on local developments.
NOTIFICATIONS
Exchange Control Information. Approval by the Central Bank of Iceland is no longer required to participate in the Plan, regardless of the value of the Shares acquired under the Plan. Despite the recent relaxation of the exchange control requirements, you should consult with your personal advisor to ensure compliance with applicable exchange control regulations in Iceland as
APPENDIX A-11
such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in Iceland.
INDIA
TERMS AND CONDITIONS
Method of Exercise. Due to legal restrictions in India, you will not be permitted to pay the exercise price for Shares subject to the Option granted hereunder by a cashless “sell-to-cover” procedure, under which method a number of Shares with a value sufficient to cover the exercise price, brokerage fees and any applicable Tax Obligations would be sold upon exercise and you would receive only the remaining Shares subject to the exercised Option. The Company reserves the right to permit this procedure for payment of the exercise price in the future, depending on the development of local law.
NOTIFICATIONS
Exchange Control Information. If you remit funds from India to pay the exercise price, you may be subject to Tax Collection At Source (“TCS”) if your annual remittances out of India exceed a certain amount (currently INR 700,000). You may be required to provide a declaration to the bank remitting the funds to determine if the TCS limit has been reached. If deemed necessary to comply with applicable laws, the Company may require you to pay for the shares purchased on exercise, and any Tax Obligations through a cashless "sell-all" exercise or net exercise method. The Company reserves the right to prescribe alternative methods of payment depending on the development of local laws.
You must repatriate any funds received in connection with the Option (e.g., proceeds from the Shares and the receipt of dividends) within such time as prescribed under applicable Indian exchange control laws, which may be amended from time to time. You should obtain a foreign inward remittance certificate (“FIRC”) from the bank in which you deposit the foreign currency and maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation. It your responsibility to comply with these requirements. Neither the Company nor the Employer will be liable for any fines or penalties resulting from your failure to comply with any applicable laws. You may be required to provide information regarding funds received from participation in the Plan to the Company and/or the Employer to enable them to comply with their filing requirements under exchange control laws in India.
Foreign Asset/Account Reporting Information. You are required to declare foreign bank accounts and any foreign financial assets (including Shares held outside of India) in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor in this regard.
IRELAND
TERMS AND CONDITIONS
Nature of Grant. This provision supplements Section XII of the Agreement:
In accepting this Option, you acknowledge that the benefits received under the Plan will not be taken into account for any redundancy or unfair dismissal claim.
APPENDIX A-12
ITALY
TERMS AND CONDITIONS
Method of Exercise. Due to legal restrictions in Italy, you will be required to pay the exercise price for any Shares subject to the Option granted hereunder by a cashless sell-all exercise, such that all Shares will be sold immediately upon exercise and the cash proceeds of sale, less the exercise price, any Tax Obligations and broker’s fees or commissions, will be remitted to you. The Company reserves the right to provide additional methods of exercise depending on local developments.
Nature of Grant. In accepting this Option, you acknowledge that (1) you have received a copy of the Plan, the Agreement and this Appendix; (2) you have reviewed the applicable documents in their entirety and fully understand the contents thereof; and (3) you accept all provisions of the Plan, the Agreement and this Appendix.
For the Option granted, you further acknowledge that you have read and specifically and explicitly approve, without limitation, the following Sections of the Option Agreement: Section I, Section IV, Section V, Section X, Section XII, Section XIII, Section XIV, Section XVII and the Data Privacy Notice for All European Economic Area (“EEA”) / European Union (“EU”) Jurisdictions, United Kingdom and Switzerland in this Appendix.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Foreign Financial Assets Tax. The fair market value of any Shares held outside of Italy is subject to a foreign assets tax at a flat rate. The fair market value is considered to be the value of the Shares on the Nasdaq Global Select Market on December 31 of the applicable year in which you held the Shares (or when the Shares are acquired during the course of the year, the tax is levied in proportion to the actual days of holding over the calendar year). No tax payment duties arise if the amount of the foreign financial assets tax calculated on all financial assets held abroad does not exceed a certain threshold. You should consult with your personal tax advisor about the foreign financial assets tax.
JAPAN
NOTIFICATIONS
Exchange Control Information. If you acquire Shares valued at more than ¥100,000,000 in a single transaction, you must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the Shares.
In addition, if you pay more than ¥30,000,000 in a single transaction for the purchase of Shares when you exercise the Option, you must file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements vary depending on whether or not the relevant payment is made through a bank in Japan.
APPENDIX A-13
A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the total amount that you pay upon a one-time transaction for exercising the Option and purchasing Shares exceeds ¥100,000,000, then you must file both a Payment Report and a Securities Acquisition Report.
Foreign Asset/Account Reporting Information. You will be required to report to the Japanese tax authorities details of any assets held outside of Japan as of December 31st (including any Shares acquired under the Plan) to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15 each year. You should consult with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include in the report details of any outstanding Options, Shares or cash that you hold.
KOREA (SOUTH)
TERMS AND CONDITIONS
Method of Exercise. Due to legal restrictions in Korea, notwithstanding any provision of the Plan or the Agreement to the contrary, you will not be permitted to exercise the Option using a cashless exercise method involving a non-Korean broker, such that all or a portion of the Shares are sold immediately upon exercise and used to pay the exercise price (and any Tax Obligations and broker’s fees or commissions). The Company reserves the right to permit this method of exercise depending on local developments.
NOTIFICATIONS
Domestic Broker Requirement. Korean residents are not permitted to sell foreign securities (including Shares) through non-Korean brokers or deposit funds resulting from the sale of Shares in an account with an overseas financial institution. If you wish to sell Shares acquired under the Plan, you may be required to transfer the Shares to a domestic investment broker in Korea and to affect the sale through such broker. You are solely responsible for engaging the domestic broker in Korea, and non-compliance with the requirement to sell Shares through a domestic broker can result in significant penalties. You should consult with a personal advisor regarding any regulatory obligations in connection with your participation in the Plan.
Exchange Control Information. If you remit funds out of Korea to pay the exercise price, the remittance of funds may need to be confirmed by a foreign exchange bank in Korea. You should submit the following supporting documents evidencing the nature of the remittance to the bank together with the confirmation application: (i) the Agreement; (ii) the Plan; and (iii) your certificate of employment. This confirmation is an automatic procedure (i.e., the bank does not need to approve the remittance and the process should not take more than a single day). This confirmation is not necessary if you pay the exercise price through any form of payment whereby some or all of the Shares purchased upon exercise of this Option are withheld or sold to pay the exercise price, because in this case there is no remittance of funds out of Korea.
Foreign Asset/Account Reporting Information. You are required to declare all foreign financial accounts (e.g. non-Korean bank accounts, brokerage accounts holding Shares, etc.) to the Korean tax authority and file a report regarding such accounts if the monthly balance of such accounts exceeds a certain threshold. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor to ensure compliance with this requirement.
APPENDIX A-14
LITHUANIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you (i) hold certain job positions established by the law or (ii) donate to political parties or political campaigners, you must file an Annual Asset Return of the Individual (Family) in Form No. FR0001 with respect to assets held outside of Lithuania (e.g., Shares). If you open an account in a foreign financial institution and annual turnover in the account exceeds EUR 15,000, you must file a foreign account report.
MEXICO
TERMS AND CONDITIONS
Acknowledgement of the Agreement. In accepting the Option granted hereunder, you acknowledge that you have received a copy of the Plan, have reviewed the Plan and the Option Agreement, including this Appendix, in their entirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix. You further acknowledge that you have read and specifically and expressly approve the terms and conditions of Section XII of the Agreement, in which the following is clearly described and established:
(1) Your participation in the Plan does not constitute an acquired right.
(2) The Plan and your participation in the Plan are offered by Amgen Inc. on a wholly discretionary basis.
(3) Your participation in the Plan is voluntary.
(4) Amgen Inc. and its Affiliates are not responsible for any decrease in the value of the Option granted and/or Shares issued under the Plan.
Labor Law Acknowledgement and Policy Statement. In accepting the Option granted hereunder, you expressly recognize that Amgen Inc., with registered offices at One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., is solely responsible for the administration of the Plan and that your participation in the Plan and acquisition of Shares do not constitute an employment relationship between you and Amgen Inc. since you are participating in the Plan on a wholly commercial basis and your sole employer is Amgen Mexico S.A. de C.V. (“Amgen-Mexico”). Based on the foregoing, you expressly recognize that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and your Employer, Amgen-Mexico, and do not form part of the employment conditions and/or benefits provided by Amgen-Mexico and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
You further understand that your participation in the Plan is as a result of a unilateral and discretionary decision of Amgen Inc.; therefore, Amgen Inc. reserves the absolute right to amend and/or discontinue your participation in the Plan at any time without any liability to you.
Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against Amgen Inc. for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and you therefore grant a full and broad release to Amgen Inc., its Affiliates, stockholders, officers, agents or legal representatives with respect to any claim that may arise.
APPENDIX A-15
Spanish Translation
Reconocimiento del Otorgamiento. Al aceptar cualquier Opción bajo el presente documento, usted reconoce que ha recibido una copia del Plan, que ha revisado el mismo en su totalidad, así como también el Acuerdo de Opción, incluyendo este Apéndice, además que comprende y está de acuerdo con todas las disposiciones tanto del Plan y del Opción, incluyendo este Apéndice. Asimismo, usted reconoce que ha leído y manifiesta específicamente y expresamente la conformidad con los términos y condiciones establecidos en la Sección XII del Acuerdo de Opción, en los que se establece y describe claramente que:
(1) Su participación en el Plan de ninguna manera constituye un derecho adquirido.
(2) El Plan y su participación en el mismo son ofrecidos por Amgen Inc. de forma completamente discrecional.
(3) Su participación en el Plan es voluntaria.
(4) Amgen Inc. y sus Afiliados no son responsables de ninguna disminución en el valor de la opción otorgada y/o de las Acciones Comunes emitidas mediante el Plan.
Reconocimiento de la Ley Laboral y Declaración de Política. Al aceptar cualquier Opción bajo el presente, usted reconoce expresamente que Amgen Inc., con oficinas registradas localizadas en One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., es la única responsable de la administración del Plan y que su participación en el mismo y la adquisición de Acciones Comunes no constituyen de ninguna manera una relación laboral entre usted y Amgen Inc., debido a que su participación en el Plan es únicamente una relación comercial y que su único empleador es Amgen Mexico S.A. de C.V. (“Amgen-México”). Derivado de lo anterior, usted reconoce expresamente que el Plan y los beneficios a su favor que pudieran derivar de la participación en el mismo, no establecen ningún derecho entre usted y su empleador, Amgen – México, y no forman parte de las condiciones laborales y/o los beneficios otorgados por Amgen – México, y cualquier modificación del Plan o la terminación del mismo no constituirá un cambio o desmejora de los términos y condiciones de su trabajo.
Asimismo, usted entiende que su participación en el Plan es resultado de la decisión unilateral y discrecional de Amgen Inc., por lo tanto, Amgen Inc. se reserva el derecho absoluto de modificar y/o descontinuar su participación en el Plan en cualquier momento y sin ninguna responsabilidad para usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de Amgen Inc., por cualquier compensación o daños y perjuicios, en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y en consecuencia usted exime amplia y completamente a Amgen Inc. de toda responsabilidad, como así también a sus Afiliadas, accionistas, directores, agentes o representantes legales con respecto a cualquier demanda que pudiera surgir.
NOTIFICATIONS
Securities Law Information. The Options and the Shares offered under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Options may not be publicly distributed in Mexico. These materials are addressed to you only because of your existing relationship with the Company and your Employer and these materials should not be reproduced
APPENDIX A-16
or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of Amgen-Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
NETHERLANDS
NOTIFICATIONS
Securities Law Information.
NORWAY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Norwegian residents may be subject to foreign asset reporting as part of their ordinary tax return. Norwegian banks, financial institutions, limited companies etc. must report certain information to the Tax Administration. Such information may then be pre-completed in a Norwegian resident’s tax return. However, if the resident has traded, or is the owner of, financial instruments (e.g., Shares) not pre-completed in the tax return, the Norwegian resident must enter this information in Form RF-1159, which is an appendix to the tax return.
Options will be considered assets and are, therefore, subject to wealth tax. An exemption from wealth tax may be available for non-transferrable awards. However, because the wealth tax regulations and the practice of the tax authorities are not well developed, Norwegian residents should provide the tax authorities with information concerning the Options in the annual tax return even if the Norwegian resident maintains that no wealth tax is payable.
Exchange Control Information. In general, Norwegian residents should not be subject to any foreign exchange requirements in connection with their acquisition or sale of Shares under the Plan, except normal reporting requirements to the Norwegian Currency Registry. If any transfer of funds into or out of Norway is made through a Norwegian bank, the bank will make the registration.
POLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Polish residents holding foreign securities (including Shares) and maintaining accounts abroad must file reports with the National Bank of Poland if the aggregate value of cash and securities held in such foreign accounts exceeds a certain threshold. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter and must be filed on special forms available on the website of the National Bank of Poland.
Exchange Control Information. In addition, Polish residents are required to transfer funds through a bank account in Poland if the transferred amount in any single transaction exceeds a
APPENDIX A-17
specified threshold (currently €15,000 (or PLN 15,000 if such transfer of funds is associated with the business activity of a consultant)). You must store all documents connected with any foreign exchange transactions you engage in for a period of five (5) years from the end of the year when such transactions were made. Penalties may apply for failure to comply with exchange control requirements.
PORTUGAL
TERMS AND CONDITIONS
Consent to Receive Information in English. You hereby expressly declare that you have full knowledge of the English language and have read, understood and fully accepted and agreed with the terms and conditions established in the Plan and Agreement.
Conhecimento da Lingua. Por meio do presente, eu declaro expressamente que tem pleno conhecimento da língua inglesa e que li, compreendi e livremente aceitei e concordei com os termos e condições estabelecidas no Plano e no Acordo.
NOTIFICATIONS
Exchange Control Information. If you receive Shares upon exercise of the Option, the acquisition of the Shares should be reported to the Banco de Portugal for statistical purposes. If the Shares are deposited with a commercial bank or financial intermediary in Portugal, such bank or financial intermediary will submit the report on your behalf. If the Shares are not deposited with a commercial bank or financial intermediary in Portugal, you are responsible for submitting the report to the Banco de Portugal.
ROMANIA
NOTIFICATIONS
Exchange Control Information. Certain transfers of funds may need to be reported to the National Office for Prevention and Control of Money Laundering on specific forms by the relevant bank or financial institution. If you deposit proceeds from the sale of Shares or the receipt of dividends in a bank account in Romania, you may be required to provide the Romanian bank assisting with the transaction with appropriate documentation explaining the source of the income. You should consult with a legal advisor to determine whether you will be required to submit such documentation to the Romanian bank.
RUSSIA
TERMS AND CONDITIONS
You understand that the exchange control rules and regulations in Russia, and the legal restrictions impacting your participation in the Plan, are subject to frequent change. You should consult with your personal legal advisor to determine the applicability of any requirements or restrictions applicable to any Shares or cash received in connection with the Plan.
APPENDIX A-18
SINGAPORE
TERMS AND CONDITIONS
Restriction on Sale and Transferability. You hereby agree that any Shares acquired pursuant to the Option will not be offered for sale in Singapore prior to the six (6)-month anniversary of the Grant Date, unless such sale or offer is made pursuant to one or more exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the Securities and Futures Act (Chap. 289, 2006 Ed.) (“SFA”), or pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.
NOTIFICATIONS
Securities Law Information. The grant of the Option is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SFA, on which basis it is exempt from the prospectus and registration requirements under the SFA, and is not made with a view to the Option being subsequently offered for sale to any other party. The Plan has not been, and will not be, lodged or registered as a prospectus with the Monetary Authority of Singapore.
Director Notification Requirement. Directors (including alternate, substitute, associate and shadow directors) of a Singapore Affiliate are subject to certain notification requirements under the Singapore Companies Act, regardless of whether they are resident or employed in Singapore. Directors of a Singapore Affiliate must notify the Singapore Affiliate in writing of an interest (e.g., Options, Shares, etc.) in the Company or any related company within two (2) business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.
SLOVAK REPUBLIC
There are no country-specific provisions.
SLOVENIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Slovenian residents may be required to report the opening of bank and/or brokerage accounts to tax authorities within eight (8) days of opening such account. You should consult with your personal tax advisor to determine whether this requirement will be applicable to any accounts opened in connection with your participation in the Plan (e.g., your brokerage account with the Company’s designated broker).
SPAIN
TERMS AND CONDITIONS
Nature of Grant. The following provision supplements Section XII of the Agreement:
In accepting this Option, you consent to participation in the Plan and acknowledge that you have received a copy of the Plan.
You understand that the Company has unilaterally, gratuitously and in its sole discretion decided to grant the Option under the Plan to individuals who may be members of the Board or Employees of the Company or its Affiliates throughout the world. The decision is a limited decision, which is entered into upon the express assumption and condition that the Option
APPENDIX A-19
granted will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis, other than as expressly set forth in the Agreement, including this Appendix. Consequently, you understand that the Option granted hereunder is given on the assumption and condition that it shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. Further, you understand and freely accept that there is no guarantee that any benefit whatsoever shall arise from any gratuitous and discretionary grant of the Option since the future value of the Option and the underlying Shares is unknown and unpredictable. In addition, you understand that the Option granted hereunder would not be made but for the assumptions and conditions referred to above; thus, you understand, acknowledge and freely accept that, should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of an Option or right to an Option shall be null and void.
Further, the vesting of the Option is expressly conditioned on your continued and active rendering of service, such that if your employment terminates for any reason whatsoever, the Option may cease vesting immediately, in whole or in part, effective on the date of your termination of employment (unless otherwise specifically provided in Section IV of the Agreement). This will be the case, for example, even if (1) you are considered to be unfairly dismissed without good cause (i.e., subject to a “despido improcedente”); (2) you are dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) you terminate service due to a change of work location, duties or any other employment or contractual condition; (4) you terminate service due to a unilateral breach of contract by the Company or an Affiliate; or (5) your employment terminates for any other reason whatsoever. Consequently, upon termination of your employment for any of the above reasons, you may automatically lose any rights to Options that were not vested on the date of your termination of employment, as described in the Plan and the Agreement.
You acknowledge that you have read and specifically accept the conditions referred to in Section IV of the Agreement.
NOTIFICATIONS
Securities Law Information. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory. The Agreement (including this Appendix) has not been nor will it be registered with the Comisión Nacional del Mercado de Valores, and does not constitute a public offering prospectus.
Exchange Control Information. If you acquire Shares under the Plan, you must declare the acquisition to the Direccion General de Comercio e Inversiones (the “DGCI”). If you acquire the Shares through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGCI for you; otherwise, you will be required to make the declaration by filing a D-6 form. You must declare ownership of any Shares with the DGCI each January while the Shares are owned and must also report, in January, any sale of Shares that occurred in the previous year for which the report is being made, unless the sale proceeds exceed the applicable threshold, in which case the report is due within one (1) month of the sale.
Foreign Asset/Account Reporting Information. You are required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000.
APPENDIX A-20
To the extent that you hold Shares and/or have bank accounts outside of Spain with a value in excess of €50,000 (for each type of asset) as of December 31 each year, you will be required to report information on such assets in your tax return (tax form 720) for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than €20,000 or if you sell or otherwise dispose of any previously-reported Shares or accounts. If the value of such Shares and/or accounts as of December 31 does not exceed €50,000, a summarized form of declaration may be presented.
SWEDEN
TERMS AND CONDITIONS
Authorization to Withhold. This provision supplements Section V of the Agreement:
Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax Obligations as set forth in the Agreement, in accepting the Options, you authorize the Company to withhold Shares or to sell Shares otherwise issuable to you upon exercise to satisfy Tax Obligations, regardless of whether the Company and/or Employer have an obligation to withhold such Tax Obligations, provided that such withholding would not, in the Company’s determination, result in adverse accounting consequences to the Company.
SWITZERLAND
NOTIFICATIONS
Securities Law Information. Neither this document nor any other materials relating to the Option (i) constitutes a prospectus according to articles 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), (ii) may be publicly distributed or otherwise made publicly available in Switzerland to any person other than an employee of the Company or one of its Subsidiaries or (iii) has been or will be filed with, approved or supervised by any Swiss reviewing body according to article 51 of FinSA or any Swiss regulatory authority, including the Swiss Financial Market Supervisory Authority.
TAIWAN
NOTIFICATIONS
Exchange Control Information. You may acquire and remit foreign currency (including proceeds from the sale of Shares or the receipt of dividends) up to US$5,000,000 per year without justification. If the transaction amount is TWD500,000 or more in a single transaction, you must submit a Foreign Exchange Transaction Form. If the transaction amount is US$500,000 or more in a single transaction, you must also provide supporting documentation to the satisfaction of the remitting bank.
THAILAND
NOTIFICATIONS
Exchange Control Information. If you receive funds in connection with the Plan (e.g., dividends or sale proceeds) with a value equal to or greater than US$1,000,000 per transaction, you are required to immediately repatriate such funds to Thailand. Any foreign currency repatriated to Thailand must be converted to Thai Baht or deposited into a foreign currency deposit account opened with any commercial bank in Thailand acting as the authorized agent
APPENDIX A-21
within 360 days from the date the funds are repatriated to Thailand. You are also required to inform the authorized agent of the details of the foreign currency transaction, including your identification information and the purpose of the transaction. The Employee is responsible for ensuring compliance with all exchange control laws in Thailand.
If you do not comply with the above obligations, you may be subject to penalties assessed by the Bank of Thailand. Because exchange control regulations change frequently and without notice, you should consult your legal advisor before selling any Shares (or receiving any other funds in connection with the Plan) to ensure compliance with current regulations. It is your responsibility to comply with exchange control laws in Thailand, and neither the Company nor your Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
TÜRKIYE
NOTIFICATIONS
Securities Law Information. The sale of Shares acquired under the Plan is not permitted within Türkiye. The sale of Shares acquired under the Plan must occur outside of Türkiye. The Shares are currently traded on the Nasdaq Global Select Market in the U.S. under the ticker symbol “AMGN” and Shares may be sold on this exchange.
Exchange Control Information. You may be required to engage a Turkish financial intermediary to assist with the cash exercise of an Option or the sale of Shares acquired under the Plan. To the extent a Turkish financial intermediary is required in connection with the Option exercise or the sale of any Shares acquired upon exercise of the Option, you are solely responsible for engaging such Turkish financial intermediary. You should consult your personal legal advisor prior to the exercise of Options or any sale of Shares to ensure compliance with the current requirements.
UNITED ARAB EMIRATES
NOTIFICATIONS
Securities Law Information. Options under the Plan are granted only to select Board members and Employees of the Company and its Affiliates and are for the purpose of providing equity incentives. The Plan and the Agreement are intended for distribution only to such Board members and Employees and must not be delivered to, or relied on by, any other person. You should conduct your own due diligence on the Options offered pursuant to this Agreement. If you do not understand the contents of the Plan and/or the Agreement, you should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. Further, the Ministry of the Economy and the Dubai Department of Economic Development have not approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.
APPENDIX A-22
UNITED KINGDOM
TERMS AND CONDITIONS
Tax Withholding. This provision supplements Section V of the Agreement:
Without limitation to Section V of the Agreement, you agree that you are liable for all Tax Obligations and hereby covenant to pay all such Tax Obligations as and when requested by the Company or your Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified the Company and your Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on your behalf.
Notwithstanding the foregoing, if you are an executive officer or director within the meaning of Section 13(k) of the Exchange Act, as amended from time to time, you understand that you may not be able to indemnify the Company or your Employer for the amount of income tax not collected from or paid by you, as it may be considered a loan. In the event that you are an executive officer or director and income tax is not collected from you within ninety (90) days after the end of the tax year in which the Taxable Event occurs, the amount of any uncollected income tax may constitute an additional benefit to you on which additional income tax and national insurance contributions (“NICs”) may be payable. You acknowledge that you are responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying your Employer for the amount of any NICs due on this additional benefit, which the Company or your Employer may obtain from you by any of the means set forth in Section V of the Agreement.
If the maximum applicable withholding rate is used, any over-withheld amount may be credited to you by the Company or your Employer (with no entitlement to the Common Stock equivalent) or if not so credited, you may seek a refund from the local tax authorities.
Joint Election. If you are a resident of the United Kingdom between the Grant Date and the vesting of the Option, as a condition of the Option granted hereunder, you agree to accept any liability for secondary Class 1 National Insurance Contributions (the “Employer NICs”), which may be payable by the Company or your Employer with respect to the exercise of the Option and issuance of Shares subject to the Option, the assignment or release of the Option for consideration, or the receipt of any other benefit in connection with the Option.
Without limitation to the foregoing, you agree to make an election (the “Election”), in the form specified and/or approved for such election by HMRC, that the liability for your Employer NICs payments on any such gains shall be transferred to you to the fullest extent permitted by law. You further agree to execute such other elections as may be required between you and any successor to the Company and/or your Employer. You hereby authorize the Company and your Employer to withhold such Employer NICs by any of the means set forth in Section V of the Agreement.
Failure by you to enter into an Election, withdrawal of approval of the Election by HMRC or a joint revocation of the Election by you and the Company or your Employer, as applicable, shall be grounds for the forfeiture and cancellation of the Option, without any liability to the Company or your Employer.
APPENDIX A-23
UNITED STATES
TERMS AND CONDITIONS
Nature of Grant. The following provision replaces Section IV(B)(1) of the Agreement:
(1) “termination of your employment” shall mean the last date you are either an active employee of the Company or an Affiliate or actively engaged as a Director of the Company or an Affiliate; in the event of termination of your employment (whether or not in breach of local labor laws), your right to exercise the Option and vest under the Plan, if any, will terminate effective as of the date that you are no longer actively employed; provided, however, that such right will be extended by any notice period mandated by law (e.g. the Worker Adjustment and Retraining Notification Act (“WARN Act”) notice period or similar periods pursuant to local law) and any paid administrative leave (as applicable), unless the Company shall provide you with written notice otherwise before the commencement of such notice period or leave. Your right, if any, to exercise the Option after termination of employment will be measured by the date of termination of your active employment; provided, however, that such right will be extended by any notice period mandated by law (e.g. the Worker Adjustment and Retraining Notification Act (“WARN Act”) notice period or similar periods pursuant to local law) and any paid administrative leave, unless the Company shall provide you with written notice otherwise before the commencement of such notice period or leave. Notwithstanding anything to the contrary herein, in no event shall the term of this Option extend beyond the Expiration Date set forth on the Award Notice and in this Agreement.
APPENDIX A-24
Exhibit 10.3
Form of Award Notice
[The information set forth in this Award Notice will be contained on the related pages on Merrill Lynch Benefits Website (or the website of any successor company to Merrill Lynch Bank & Trust Co., FSB). This Award Notice shall be replaced by the equivalent pages on such website. References to Award Notice in this Agreement shall then refer to the equivalent pages on such website.]
This notice of Award (the “Award Notice”) sets forth certain details relating to the grant by the Company to you of the Award identified below, pursuant to the Plan. The terms of this Award Notice are incorporated into the Restricted Stock Unit Agreement (the “Agreement”) that accompanies this Award Notice and made part of the Agreement. Capitalized terms used in this Award Notice that are not otherwise defined in this Award Notice have the meanings given to such terms in the Agreement.
Employee:
Employee ID:
Address:
Award Type:
Grant ID:
Plan: Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, as amended and/or restated from time to time
Grant Date:
Grant Price: $________
Number of Shares:
Number of Units
Vesting Date: Means the vesting date indicated in the Vesting Schedule
Vesting Schedule: Means the schedule of vesting set forth under Vesting Details
Vesting Details: Means the presentation (tabular or otherwise) of the Vesting Date and the quantity of Shares vesting
IMPORTANT NOTICE REGARDING ACCEPTANCE OF THE AWARD AND THE REQUIREMENT TO OPEN A BROKERAGE ACCOUNT 1:
RESIDENTS OF THE U.S. AND PUERTO RICO: Please read this Award Notice, the Plan and the Agreement (collectively, the “Grant Documents”) carefully. If you, as a resident of the U.S. or Puerto Rico, do not wish to receive this Award and/or you do not consent and agree to the terms and conditions on which this Award is offered, as set forth in the Grant Documents, then you must reject the Award by contacting the Merrill Lynch call center at +1 (800) 97AMGEN (+1 (800) 972-6436) within the U.S., Puerto Rico and Canada or +1 (609) 818-8910 from all other countries (Merrill Lynch will accept the charges for your call) no later than the forty-fifth calendar day following the day on which this Award Notice is made available to you, in which case the Award will be cancelled. For the purpose of determining the forty-five calendar days, Day 1 will be the day immediately following the day on which this Award Notice is made available to you. Your failure to notify the Company of your rejection of the Award or your refusal of, or disagreement with, all terms and conditions of the Award, as set forth in the Grant Documents, within this specified period will constitute your acceptance of the Award and your agreement with all terms and conditions of the Award, as set forth in the Grant Documents. If you agree to the terms and conditions of your grant and you desire to accept it, then no further action is needed on your part to accept the grant. However, you must still open a brokerage account as directed by the Company, by 1:00 pm Pacific Time on or before the date that is 11
1 This provision is only for use on the form of grant used for the U.S. and Puerto Rico.
1
months after the date of grant. This step is necessary to process transactions related to your equity grant. If you do not open a brokerage account by this deadline, your grant will be cancelled.
2
RESTRICTED STOCK UNIT AGREEMENT
THE SPECIFIC TERMS OF YOUR GRANT OF RESTRICTED STOCK UNITS ARE FOUND IN THE PAGES RELATING TO THE GRANT OF RESTRICTED STOCK UNITS FOUND ON MERRILL LYNCH BENEFITS WEBSITE (OR THE WEBSITE OF ANY SUCCESSOR COMPANY TO MERRILL LYNCH BANK & TRUST CO., FSB) (THE “AWARD NOTICE”) WHICH ACCOMPANIES THIS DOCUMENT. THE TERMS OF THE AWARD NOTICE ARE INCORPORATED INTO THIS RESTRICTED STOCK UNIT AGREEMENT.
On the Grant Date specified in the Award Notice, Amgen Inc., a Delaware corporation (the “Company”), has granted to you, the grantee named in the Award Notice, an award under the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, as amended and/or restated from time to time (the “Plan”), for the Number of Units with respect to the number of shares of the $0.0001 par value common stock of the Company (the “Shares”) specified in the Award Notice, on the terms and conditions set forth in this Restricted Stock Unit Agreement, any additional terms and conditions for your country set forth in the attached Appendix A and the Award Notice (collectively, the “Agreement”). The Units shall constitute Restricted Stock Units under Section 9.5 of the Plan, which is incorporated herein by reference. Capitalized terms not defined herein shall have the meanings assigned to such terms in the Plan.
I.Vesting Schedule and Termination of Units.
a.General. Subject to the terms and conditions of this Agreement, on each Vesting Date, the Number of Units indicated on the Vesting Schedule shall vest, provided that you have remained continuously and actively employed with the Company or an Affiliate (as defined in the Plan) through each applicable Vesting Date, unless (i) [your employment has terminated due to your Voluntary Termination (as defined in paragraph (d) of this Section I below) ]*2, [(ii)] you experience a Qualified Termination (as defined below), or (iii)[(ii)] as otherwise determined by the Company in the exercise of its discretion as provided in paragraph (f) of this Section I. The Units represent an unfunded, unsecured promise by the Company to deliver Shares. Only whole Shares shall be issued upon vesting of the Units, and the Company shall be under no obligation to issue any fractional Shares to you. If your employment with the Company or an Affiliate is terminated for any reason or for no reason, including if your active employment is terminated by the Company or an Affiliate without Cause (as defined below), or in the event of any other termination of your active employment caused directly or indirectly by the Company or an Affiliate, except as otherwise provided in paragraphs (b), (c), [(d), ]*(1) (e) or (f) of this Section I below, your unvested Units shall automatically expire and terminate on the date of termination of your active employment. Notwithstanding anything herein to the contrary, the Vesting Schedule may be accelerated (by notice in writing) by the Company in its sole discretion at any time that the Units remain outstanding and unvested (in whole or in part). In addition, if not prohibited by local law, vesting may be suspended by the Company in its sole discretion during a leave of absence as provided from time to time according to Company policies and practices.
2 Paragraph (d) of Section I of this Agreement is not applicable to awards identified by the Administrator as new hire, retention, special or promotion grants and the provisions of such paragraph shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
1
b.Permanent and Total Disability. Notwithstanding the provisions in paragraph (a) above, if your employment with the Company or an Affiliate terminates due to your Permanent and Total Disability (as defined below), then the vesting of Units granted under this Agreement shall be accelerated, subject to your execution and non-revocation of a general release and waiver in a form provided by the Company (for the purpose of resolving any potential or actual disputes arising from your employment and the termination of your employment with the Company) (a “Release”), to vest in full as of the day immediately preceding such termination of your employment with respect to all Units granted hereunder. Notwithstanding the foregoing, if the Units were granted in the calendar year in which such termination occurs, (i) the Units shall instead be accelerated to vest only with respect to a number of Units equal to (A) the number of Units subject to this Agreement multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12), subject to your execution and non-revocation of a Release, and (ii) any Units that remain unvested following the acceleration provided for in clause (i) shall automatically expire and terminate on the date of the termination of your active employment due to your Permanent and Total Disability without consideration therefor.
c.Death. Notwithstanding the provisions in paragraph (a) above, if your employment with the Company or an Affiliate terminates due to your death, then the vesting of Units granted under this Agreement shall be accelerated to vest in full as of the day immediately preceding your death. Notwithstanding the foregoing, if the Units were granted in the calendar year in which your death occurs, (i) the Units shall instead be accelerated to vest only with respect to a number of Units equal to (A) the number of Units subject to this Agreement multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your death occurs, and the denominator of which is twelve (12), and (ii) any Units that remain unvested following the acceleration provided for in clause (i) shall automatically expire and terminate on the date of the termination of your active employment due to your death without consideration therefor.
d.[Voluntary Termination (Retirement). Notwithstanding the provisions in paragraph (a) above, if you terminate your employment with the Company or an Affiliate due to your voluntary termination (and such voluntary termination is not the result of Permanent and Total Disability (as defined below)) after you are at least sixty-five (65) years of age, or after you are at least fifty-five (55) years of age and have been an employee of the Company and/or an Affiliate for at least ten (10) years in the aggregate as determined by the Company in its sole discretion according to Company policies and practices as in effect from time to time (“Voluntary Termination”), then the Units will continue to vest following your Voluntary Termination pursuant to the Vesting Schedule without regard to the termination of employment prior to the Vesting Date, subject to your execution and non-revocation of a Release. Notwithstanding the foregoing, if the Units were granted in the calendar year in which the Voluntary Termination occurs, (i) the Units will continue to vest pursuant to the Vesting Schedule provided in the Award Notice, provided, that each tranche of Units scheduled to vest upon each remaining Vesting Date in the Vesting Schedule will vest only with respect to (A) the number of Units in such tranche multiplied by (B) a fraction, the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar in which your termination occurs and the denominator of which is twelve
2
(12), and (ii) any Units in excess of the number of Units which are eligible to vest pursuant to clause (i) shall automatically expire and terminate on the date of termination of your active employment due to your Voluntary Termination without consideration therefor; provided, further, however, that in the event of your death following your Voluntary Termination, any Units that remain outstanding as of the date of your death will become vested (and the Vesting Date with respect to such Units will occur) as of the day immediately preceding your death. Notwithstanding the foregoing, to the event your Voluntary Termination occurs on or after the date of a Change of Control, then, to the extent permitted by applicable law, the vesting of Units granted under this Agreement shall be accelerated to vest as of the day immediately prior to the date of your Voluntary Termination. Notwithstanding the definition of Voluntary Termination set forth above, if the Company receives an opinion of counsel that there has been a legal judgment and/or legal development in your jurisdiction that would likely result in the favorable treatment upon Voluntary Termination described above being deemed unlawful and/or discriminatory, then the Committee will not apply the favorable treatment described above.][Reserved]*3
e.Qualified Termination after a Change of Control. Notwithstanding the provisions in paragraph (a) above, in the event of your Qualified Termination (as defined below), then, to the extent permitted by applicable law, the vesting of Units granted under this Agreement shall be accelerated to vest as of the day immediately prior to the date of your Qualified Termination.
f.Continued Vesting. Notwithstanding the provisions in paragraph (a) above, the Company may in its sole discretion at any time during the term of this Agreement, in writing, otherwise provide that the Units will vest pursuant to the Vesting Schedule without regard to the termination of employment prior to the Vesting Date, subject to any terms and conditions that the Company may determine.
For purposes of this Agreement:
(i) “termination of your active employment” shall mean the last date that you are either an active employee of the Company or an Affiliate or actively engaged as a Director of the Company or an Affiliate; in the event of termination of your employment (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are working or the terms of your employment agreement, if any), your right to receive Units and vest under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and will not be extended by any notice period (e.g., active employment would not include any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). The Company shall have exclusive discretion to determine when you are no longer actively providing services for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence);
(ii) “Cause” shall mean (i) your conviction of a felony (or similar crime under applicable law, as determined by the Company), or (ii) your engaging in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out your duties, resulting, in either case, in material economic harm to the Company or any Affiliate, unless you believed in good faith that
3 Paragraph(d) of Section I of this Agreement is not applicable to awards identified by the Administrator as new hire, retention, special or promotion grants and the provisions of such paragraph shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
3
such conduct was in, or not contrary to, the best interests of the Company or any Affiliate. For purposes of clause (ii) above, no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith;
(iii) “Permanent and Total Disability” shall have the meaning ascribed to such term under Section 22(e)(3) of the Code and with such permanent and total disability being certified prior to termination of your employment by (i) the U.S. Social Security Administration, (ii) the comparable governmental authority applicable to an Affiliate, (iii) such other body having the relevant decision-making power applicable to an Affiliate, or (iv) an independent medical advisor appointed by the Company in its sole discretion, as applicable, in any such case;
(iv) “Qualified Termination” shall mean
(a) if you are an employee who participates in the Change of Control Plan (as defined below), your termination of employment within two (2) years following a Change of Control (i) by the Company other than for Cause, Disability, or as a result of your death or (ii) by you for Good Reason (as defined in the Change of Control Plan); or
(b) if you are an employee who does not participate in the Change of Control Plan or the Change of Control Plan is no longer in effect, your termination of employment within two (2) years following a Change of Control by the Company other than for Cause, Disability, or as a result of your death;
(v) “Change of Control” shall mean the occurrence of any of the following:
(A) the acquisition (other than from the Company) by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this purpose, the Company or any of its Affiliates, or any employee benefit plan of the Company or any of its Affiliates which acquires beneficial ownership of voting securities of the Company), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either the then-outstanding Shares or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors; or
(B) the consummation by the Company of a reorganization, merger, consolidation, (in each case, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then-outstanding voting securities) or a liquidation or dissolution of the Company or of the sale of all or substantially all of the assets of the Company.
Notwithstanding anything herein or in the Agreement to the contrary, if a Change of Control constitutes a payment event with respect to any Unit that is subject to United States income tax and which provides for a deferral of compensation that is subject to Section 409A of the Code, the transaction or event described in subsection (A) or (B) above must also constitute a “change in control event,” as defined in U.S. Treasury Regulation § 1.409A-3(i)(5), in order to constitute a Change of Control for purposes of payment of such Unit.
(vi) “Change of Control Plan” shall mean the Company’s change of control and severance plan, including the Amgen Inc. Change of Control Severance Plan, as amended and restated, effective as of December 9, 2010 (and any subsequent amendments thereto), or equivalent plan governing the provision of benefits to eligible employees upon the occurrence of
4
a Change of Control (including resulting from a termination of employment that occurs within a specified time period following a Change of Control), as in effect immediately prior to a Change of Control; and
(vii) “Disability” shall mean your “disability” as determined in accordance with the Company’s long-term disability plan as in effect immediately prior to a Change of Control.
II.Form and Timing of Settlement. Subject to satisfaction of Tax Obligations or similar obligations as provided for in Section III, any vested Units shall be settled by the Company delivering to you a number of Shares equal to the number of such vested Units or in a lump sum in cash with a value equal to the Fair Market Value of the number of Shares subject to the vested Units as of the applicable Vesting Date (without interest thereon), or in a combination of Shares and cash, as determined by the Administrator at any time prior to settlement and in its discretion, as soon as practicable, and in any event within 90 days after the applicable Vesting Date, which for purposes of this Section II, includes the date of any accelerated vesting, if any (the “Settlement Period”). [(For the avoidance of doubt, in the event that any Units continue to vest following a Voluntary Termination in accordance with Section 1(d) above, the Vesting Date(s) for purposes of settlement pursuant to this Section II shall be the regularly scheduled Vesting Dates following such termination.)]*4 Notwithstanding anything to the contrary in the foregoing, in the event that (i) the vesting and settlement of Units is conditioned on your execution, non-revocation and delivery of a release and (ii) the Settlement Period commences in one calendar year and ends in the next calendar year, the Units will be settled in the second calendar year. Shares issued in respect of a Unit shall be deemed to be issued in consideration of past services actually rendered by you to the Company or an Affiliate or for its benefit for which you have not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value thereof.
III.Tax Withholding; Issuance of Shares. Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax Obligations”), you acknowledge that the ultimate liability for all Tax Obligations is and remains your responsibility and may exceed the amount, if any, actually withheld by the Company and/or your Employer. You further acknowledge that the Company and/or your Employer (i) make no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Units or the underlying Shares, including the grant of the Units, the vesting of Units, the conversion of the Units into Shares or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any Dividends (as defined in Section IV, below) or Dividend Equivalents, and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate your liability for Tax Obligations or achieve any particular tax result. Furthermore, if you become subject to tax in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former employer, as applicable) may be required to withhold or account for Tax Obligations in more than one jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you shall pay, or make adequate arrangements satisfactory to the Company or to your Employer (in their sole discretion) to satisfy all Tax Obligations. In this regard, you authorize the Company and/or your
4 Paragraph (d) of Section I of this Agreement is not applicable to awards identified by the Administrator as new hire, retention, special or promotion grants and the provisions of such paragraph shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
5
Employer or their respective agents, at their discretion, to satisfy all applicable Tax Obligations by one or a combination of the following:
(a) withholding from your wages or other cash compensation paid to you by the Company and/or your Employer; or
(b) withholding from proceeds of the sale of Shares acquired upon vesting or payment of the Units either through your voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); or
(c) withholding in Shares issuable, or cash payable, upon vesting or payment of the Units, provided that, if such Shares are withheld, the Company and your Employer shall only withhold an amount of Shares with a fair market value not to exceed the Tax Obligations as determined in the discretion of the Company or your Employer, as applicable.
Depending on the withholding method, the Company may withhold or account for Tax Obligations by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. If the Tax Obligations are satisfied by withholding in Shares, for tax purposes you are deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares is held back and not actually issued to you solely for the purpose of paying the Tax Obligations due as a result of any aspect of your participation in the Plan (any Shares withheld by the Company hereunder shall not be deemed to have been issued by the Company for any purpose under the Plan and shall remain available for issuance thereunder).
Finally, you shall pay to the Company or your Employer any amount of Tax Obligations that the Company or your Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be or were not satisfied by the means previously described. You agree to take any further actions and execute any additional documents as may be necessary to effectuate the provisions of this Section III. Notwithstanding Section II above, the Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax Obligations.
IV.Dividend Equivalents
(a) Crediting and Payment of Dividend Equivalents. Subject to this Section IV, Dividend Equivalents shall be credited on each Unit granted to you under this Agreement in the manner set forth in the remainder of this Section IV. With respect to each Unit covered by the Award, if the Company declares one or more dividends or distributions (each, a “Dividend”) on its Common Stock with a record date which occurs during the period commencing on the Grant Date through and including the day immediately preceding the day the share of Common Stock subject to such Unit is issued to you, whether in the form of cash, Common Stock or other property, then on the date such Dividend is paid to the Company’s stockholders you shall be credited with an amount equal to the amount or fair market value of such Dividend which would have been payable to you if you held a share of Common Stock as of the record date for such Dividend, unless the applicable Unit has been forfeited between the record date and payment date for such Dividend. Any such Dividend Equivalents shall be credited and deemed reinvested in the Common Stock as of the applicable Dividend payment date. Dividend Equivalents shall be payable in full shares of Common Stock, unless the Administrator determines, at any time prior to payment and in its discretion, that they shall be payable in cash. Dividend Equivalents payable with respect to fractional shares of Common Stock shall be paid in cash.
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(b) Treatment of Dividend Equivalents. Except as otherwise expressly provided in this Section IV, any Dividend Equivalents credited to you shall be subject to all of the provisions of this Agreement which apply to the Unit with respect to which they have been credited and shall be payable, if at all, at the time and to the extent that the underlying Unit becomes payable. Dividend Equivalents shall not be payable on any Units that do not vest, or are forfeited, pursuant to the terms of this Agreement. Dividend Equivalent rights and any amounts that may become distributable in respect thereof shall be treated separately from the Units and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Grant Date, “Section 409A”).
V.Transferability. No benefit payable under, or interest in, this Agreement, the Units, or the Shares that are scheduled to be issued to you hereunder shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, your or your beneficiary’s debts, contracts, liabilities or torts; provided, however, nothing in this Section V shall prevent transfer (i) by will or (ii) by applicable laws of descent and distribution.
VI.Notices. Any notices provided for in this Agreement or the Plan shall be given in writing or electronically and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail or equivalent foreign postal service, postage prepaid, addressed to you at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company Stock Administrator. Such notices may be given using any automated system for the documentation, granting or settlement of Awards, such as a system using an internet website or interactive voice response, as approved by the Company.
VII.Plan. This Agreement is subject to all the provisions of the Plan, which provisions are hereby made a part of this Agreement, including without limitation the provisions of Section 9.5 of the Plan relating to Restricted Stock Units, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of the Plan shall control.
VIII.Governing Law and Venue. The terms of this Agreement shall be governed by the laws of the State of Delaware without giving effect to principles of conflicts of laws. For purposes of litigating any dispute that arises hereunder, the parties hereby submit to and consent to the jurisdiction of the State of Delaware, and agree that such litigation shall be conducted in the courts of the State of Delaware, or the federal courts for the United States for the federal district located in the State of Delaware, and no other courts, where this Agreement is made and/or to be performed.
IX.Code Section 409A. The time and form of payment of the Units is intended to comply with the requirements of Section 409A and this Agreement shall be interpreted in accordance with Section 409A. Accordingly, no acceleration or deferral of any payment shall be permitted if it would cause the payment of the Units to violate Section 409A. In addition, notwithstanding any provision herein to the contrary, in the event that following the Grant Date, the Committee (as defined in the Plan) determines that it may be necessary or appropriate to do so, the Committee may adopt such amendments to the Plan and/or this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a)
7
exempt the Plan and/or the Units from the application of Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to this Award, or (b) comply with the requirements of Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Committee to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A, the right to receive payment of Units at each Vesting Date shall be treated as a right to receive separate and distinct payments. No payment hereunder shall be made to you during the six (6)-month period following your “separation from service” (within the meaning of Section 409A) to the extent that the Company determines that paying such amount at the time set forth herein would be a prohibited distribution under Section 409A(a)(2)(B)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then within thirty (30) days following the end of such six (6)-month period (or, if earlier, your death), the Company shall pay to you (or to your estate) the cumulative amounts that would have otherwise been payable to you during such period, without interest.
X.Acknowledgement. By electing to accept this Agreement, you acknowledge receipt of this Agreement and hereby confirm your understanding that the terms set forth in this Agreement constitute, subject to the terms of the Plan, which terms shall control in the event of any conflict between the Plan and this Agreement, the entire agreement and understanding of the parties with respect to the matters contained herein and supersede any and all prior agreements, arrangements and understandings, both oral and written, between the parties concerning the subject matter of this Agreement. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan (including this Agreement) by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
XI.Acknowledgement of Nature of Plan and Units. In accepting this Agreement, you acknowledge, understand and agree that:
(a) the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;
(b) the grant of the Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future awards of Units, or benefits in lieu of Units even if Units have been awarded in the past;
(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;
(d) your participation in the Plan is voluntary;
(e) the grant of Units, the Shares subject to the Units, and the income from and value of same, are not intended to replace any pension rights or compensation;
(f) neither the grant of Units nor any provision of this Agreement, the Plan or the policies adopted pursuant to the Plan confer upon you any right with respect to employment or continuation of current employment and shall not interfere with the ability of your Employer to terminate your employment or service relationship (if any) at any time;
(g) in the event that you are not an employee of the Company or any Affiliate, the Units shall not be interpreted to form an employment contract or relationship with the Company or any Affiliate;
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(h) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
(i) in consideration of the grant of Units hereunder, no claim or entitlement to compensation or damages arises from termination of Units, and no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from termination of your employment by the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and you irrevocably release the Company and your Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim;
(j) unless otherwise agreed with the Company, the Units, the Shares subject to the Units, and the income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of an Affiliate of the Company;
(k) except as otherwise provided in this Agreement or the Plan, the Units and the benefits evidenced by this Agreement do not create any entitlement to have the Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company;
(l) the following provisions apply only if you are providing services outside the United States:
(i) for employment law purposes outside the United States, the Units, Shares subject to the Units, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose, including but not limited to for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, holiday pay, long-service awards, pension or retirement benefits or similar mandatory payments; and
(ii) neither the Company, your Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Units or of any amounts due to you pursuant to the settlement of the Units or the subsequent sale of any Shares acquired upon settlement.
XII.No Advice Regarding Award. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
XIII.Compliance with Laws. Notwithstanding any provision of this Agreement to the contrary, if you are employed by the Company or an Affiliate in any of the countries identified in the attached Appendix A (which constitutes a part of this Agreement), are subject to the laws of any foreign jurisdiction, or relocate to one of the countries included in the attached Appendix A, the Units granted hereunder shall be subject to any additional terms and conditions for your country set forth in Appendix A and to the following additional terms and conditions:
9
a. the terms and conditions of this Agreement, including Appendix A, are deemed modified to the extent necessary or advisable to comply with applicable foreign laws or facilitate the administration of the Plan;
b. if applicable, the effectiveness of your award of Units is conditioned upon its compliance with any applicable foreign laws, regulations, rules or local governmental regulatory exemption and subject to receipt of any required foreign regulatory approvals;
c. to the extent necessary to comply with applicable foreign laws, the payment of any earned Units shall be made in cash or Common Stock, at the Company’s election; and
d. the Company may take any other action, before or after an award of Units is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals.
Notwithstanding anything to the contrary contained herein, the Company shall not take any actions hereunder that would violate the Securities Act, the Exchange Act, the Code, or any other securities or tax or other applicable law or regulation, or the rules of any Securities Exchange. Notwithstanding anything to the contrary contained herein, the Shares issuable upon vesting of the Unit shall not be issued unless such Shares are then registered under the Securities Act, or, if such Shares are not then so registered, the Company has determined that such vesting and issuance would be exempt from the registration requirements of the Securities Act, and that the issuance satisfied all other applicable legal requirements.
XIV.Data Privacy. In order for the Company to facilitate your participation in the Plan, the Company and your Employer must collect and use personal data about you. In accordance with applicable laws, reasonable security measures will be implemented and maintained to protect the security of your personal data; however, you understand that absolute security cannot be guaranteed.
You understand that the Company and your Employer may hold certain personal information about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor, for the purposes of implementing, administering and managing the Plan (“personal data”).
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received in settlement of the Units may be deposited. You understand that such authorized recipients of your personal data may be located in countries that do not provide the same level of data privacy laws and protections as the country in which your personal data originated. Transfers of personal data among Company and its group entities follow applicable laws and our Binding Corporate Rules (BCRs). For more information on Company’s BCRs, please visit http://www.amgen.com/bcr/. You acknowledge that the collection, use and transfer of your personal
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data is necessary to facilitate to your participation in the Plan, as well as to grant you Units or other equity awards and administer or maintain such awards.
You may correct or update your personal data previously provided to Company, by contacting your local human resources representative. Subject to applicable law, you may have additional rights, including the right to object and/or request destruction of your personal data. To exercise these rights, where applicable, please contact your local human resources representative.
XV.Severability. If one or more of the provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed so as to foster the intent of this Agreement and the Plan.
XVI.Language. By electing to accept this Agreement, you acknowledge that you are sufficiently proficient in English, or have consulted with an advisor who is sufficiently proficient in English, so as to allow you to understand the terms and conditions of this Agreement. Further, if you have received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
XVII.Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
XVIII.Compensation Subject to Recovery. The Units subject to and Shares issuable under this Award and all compensation payable with respect to them shall be subject to clawback, recoupment and/or recovery by the Company pursuant to any and all of the Company’s policies with respect to the clawback, recoupment or recovery of compensation in effect as of the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including, without limitation, the Company’s Policy on Recovery of Erroneously Awarded Compensation (effective October 2, 2023) and Executive Officer Equity Recoupment Policy (effective December 31, 2020), as they shall be in effect and may be amended from time to time, to the maximum extent permitted by applicable law.
XIX.Waiver. You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other grantee.
XX.Headings. This Agreement’s section headings are for convenience only and shall not constitute a part of this Agreement or affect this Agreement’s meaning.
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Very truly yours,
AMGEN INC.
By:_____________________
Name:
Name:
Title:
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APPENDIX A
ADDITIONAL TERMS AND CONDITIONS OF THE
AMENDED AND RESTATED
AMGEN INC. 2009 EQUITY INCENTIVE PLAN,
AS AMENDED AND/OR RESTATED FROM TIME TO TIME
GRANT OF RESTRICTED STOCK UNITS
(BY COUNTRY)
Certain capitalized terms used but not defined in this Appendix A shall have the meanings set forth in the Plan and/or the Agreement to which this Appendix is attached.
TERMS AND CONDITIONS
This Appendix includes additional terms and conditions that govern any Units granted under the Plan if, under applicable law, you are a resident of, are deemed to be a resident of or are working in one of the countries listed below. Furthermore, the additional terms and conditions that govern any Units granted hereunder may apply to you if you transfer employment and/or residency to one of the countries listed below and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to you.
NOTIFICATIONS
This Appendix also includes notifications relating to exchange control and other issues of which you should be aware with respect to your participation in the Plan. The information is based on the exchange control, securities and other laws in effect in the countries to which this Appendix refers as of November 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the notifications herein as the only source of information relating to the consequences of your participation in the Plan because the information may be outdated when you vest in the Units and acquire Shares under the Plan, or when you subsequently sell Shares acquired under the Plan.
In addition, the notifications are general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of any particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently residing and/or working or are considered a resident of another country for local law purposes, the information contained herein may not be applicable to you or you may be subject to the provisions of one or more jurisdictions.
APPENDIX A-1
ALL NON-U.S. JURISDICTIONS
TERMS AND CONDITIONS
Tax Withholding; Issuance of Shares. The following provision supplements Section III of the Agreement:
In the event the Company withholds or accounts for Tax Obligations by considering maximum applicable rates in your jurisdiction(s), in the event of over-withholding, you may receive a refund of any over-withheld amount in cash and will not be entitled to the equivalent amount in Shares, or if not refunded, you may seek a refund from the local tax authorities. In the event of under-withholding, you may be required to pay any additional Tax Obligations directly to the applicable tax authority or to the Company and/or your Employer.
NOTIFICATIONS
Insider Trading Restrictions/Market Abuse Laws. You may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., Units) or rights linked to the value of Shares (e.g., Dividend Equivalents) during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you place before you possessed inside information. Furthermore you could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You are responsible for ensuring your compliance with any applicable restrictions and you should speak with your personal legal advisor on this matter.
Foreign Asset/Account, Tax Reporting Information. Your country of residence may have certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any Dividends or Dividend Equivalents received, or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside of your country. You may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to your country within a certain time after receipt. You are responsible for ensuring your compliance with such regulations, and you should speak with your personal legal advisor on this matter.
APPENDIX A-2
ALL EUROPEAN ECONOMIC AREA (“EEA”) / EUROPEAN UNION (“EU”) JURISDICTIONS, UNITED KINGDOM AND SWITZERLAND
TERMS AND CONDITIONS
Data Privacy Notice. This provision replaces Section XIV of the Agreement:
Please refer to the Fair Processing Notice previously provided by your local human resources representative, which notice governs the collection, use and transfer of your personal data necessary for the Company to facilitate your participation in the Plan. If you have any questions or concerns regarding the Fair Processing Notice, including questions about your rights afforded thereunder, you should contact your local human resources representative or send an email to hrconnect@amgen.com.
For purposes of implementing, administering and managing the Plan, Company and your Employer may hold certain personal data about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor (“personal data”).
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received in settlement of the Units may be deposited.
ARGENTINA
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section XI of the Agreement:
In accepting this Agreement, you acknowledge, understand and agree that the grant of the Units is made by the Company (not your Employer) in its sole discretion and that the value of the Units or any Shares acquired under the Plan shall not constitute salary or wages for any purpose under Argentine labor law including, but not limited to, the calculation of (i) any labor benefits including, without limitation, vacation pay, thirteenth salary, compensation in lieu of notice, annual bonus, disability, and leave of absence payments, etc., or (ii) any termination or severance indemnities or similar payments.
NOTIFICATIONS
Securities Law Information. Neither the Units nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina.
Exchange Control Information. Exchange control regulations in Argentina are subject to frequent change. You should consult with your personal legal advisor regarding any exchange
APPENDIX A-3
control obligations that you may have prior to receiving proceeds from Dividend Equivalents, the sale of Shares or dividends. You must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with your participation in the Plan.
Foreign Asset/Account Reporting Information. If you are an Argentine resident, you are required to report certain information regarding any Shares you hold as of December 31 each year to the Argentine tax authorities on your annual tax return.
AUSTRALIA
NOTIFICATIONS
Australia Offer Document. This grant of Units is being made under Division 1A, Part 7.12 of the Corporations Act 2001 (Cth).
Please note that if you offer Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. You should obtain legal advice on your disclosure obligations prior to making any such offer.
Tax Information. Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) applies to the Units granted under the Plan, such that the Units are intended to be subject to deferred taxation.
Exchange Control Information. If you are an Australian resident, exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on your behalf. If there is no Australian bank involved in the transfer, you will be required to file the report.
AUSTRIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you are an Austrian resident and you hold Shares acquired under the Plan outside of Austria, you may be subject to reporting obligations to the Austrian National Bank.
Exchange Control Information. A separate reporting requirement applies when you sell Shares acquired under the Plan, receive a cash Dividend paid on such Shares or Dividend Equivalents paid in cash. In that case, there may be exchange control obligations if the cash proceeds are held outside of Austria. If the transaction volume of all cash accounts abroad meets or exceeds a specified threshold, the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, on the prescribed form (Meldungen SI-Forderungen und/oder SI-Verpflichtungen).
BELGIUM
NOTIFICATIONS
Tax Reporting; Foreign Asset/Account Reporting Information. If you are a Belgian resident, you are required to report any taxable income attributable to the Units granted hereunder on your annual tax return. You are also required to report any securities (e.g., Shares acquired under the Plan) held and bank accounts (including brokerage accounts) opened and maintained outside of Belgium on your annual tax return. The first time you report the foreign security and/or bank
APPENDIX A-4
account on your annual income tax return you will have to provide the National Bank of Belgium Central Contact Point with the account details of any such foreign accounts (including the account number, bank name and country in which such account was opened) in a separate form. This report, as well as information on how to complete it, can be found on the website of the National Bank of Belgium, www.nbb.be, under the Kredietcentrales / Centrales des crédits caption.
Stock Exchange Tax Information. A stock exchange tax applies to transactions executed by a Belgian resident through a non-Belgian financial intermediary, such as a U.S. broker. The stock exchange tax likely will apply when Shares acquired under the Plan are sold. It is your responsibility to comply with this tax obligation and you should consult your personal tax advisor for additional details on your obligations with respect to the stock exchange tax.
Annual Securities Accounts Tax Information. An annual securities accounts tax may be payable if the total value of securities held in a Belgian or foreign securities account (e.g., Shares acquired under the Plan) exceeds a certain threshold on four reference dates within the relevant reporting period (i.e., December 31, March 31, June 30 and September 30). In such case, the tax will be due on the value of the qualifying securities held in such account. It is your responsibility to comply with this obligation and you should consult with your personal tax or financial advisor for additional details.
BRAZIL
TERMS AND CONDITIONS
Compliance with Law. By accepting the Units, you acknowledge that you agree to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the vesting of the Units, the sale of Shares acquired under the Plan, the payment of Dividends on such Shares and the receipt of any Dividend Equivalents paid in cash.
Acknowledgement of Nature of Plan and Units. This provision supplements Section XI of the Agreement:
In accepting this Agreement, you acknowledge (i) that you are making an investment decision, (ii) that the Shares will be issued to you only if the vesting conditions are met and any necessary services are rendered by you during the vesting period set forth in the Vesting Schedule, and (iii) that the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.
NOTIFICATIONS
Exchange Control Information. If you are resident or domiciled in Brazil, you will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights on December 31 of each year exceeds US$1,000,000. If such amount exceeds US$100,000,000, the referenced declaration must be submitted quarterly, in the month following the end of each quarter. Assets and rights that must be reported include the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) other investments, such as real estate. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil. Individuals holding assets and rights outside of Brazil valued at less than US$1,000,000 are not required to submit a declaration.
APPENDIX A-5
BULGARIA
Foreign Asset/Account Reporting Information. You will be required to file statistical forms with the Bulgarian National Bank annually regarding your receivables in bank accounts abroad as well as securities held abroad (e.g., Shares acquired under the Plan) if the total sum of all such receivables and securities equals or exceeds a certain threshold as of the previous calendar year-end. The reports are due by March 31. You should contact your bank in Bulgaria for additional information regarding these requirements.
CANADA
TERMS AND CONDITIONS
Termination of Employment. Section I(i) of the Agreement is amended to read as follows:
(i)“termination of your active employment” shall mean the last date that you are either an active employee of the Company or an Affiliate or actively engaged as a Director of the Company or an Affiliate; in the event of involuntary termination of your employment (regardless of the reason for such termination and whether or not later found to be invalid or unlawful, including for breaching employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to receive any Units and vest under the Plan, if any, will terminate effective as of the date that is the earlier of: (1) the date you receive written notice of termination of employment from the Company or your Employer, or (2) the date you are no longer actively employed by the Company or your Employer regardless of any period during which notice, pay in lieu of notice or related payments or damages are provided or required to be provided under local law. Your right, if any, to acquire Shares pursuant to the Units after termination of employment will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law. You will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which your right to vest terminates, nor will you be entitled to any compensation for lost vesting. Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued vesting during a statutory notice period, your right to vest in the Units, if any, will terminate effective as of the last day of your minimum statutory notice period, but you will not earn or be entitled to pro-rated vesting if the vesting date falls after the end of your statutory notice period, nor will you be entitled to any compensation for lost vesting;
Form of Settlement – Units Payable Only in Shares. Notwithstanding any discretion in Section 9.5 of the Plan or anything to the contrary in the Agreement, the Units do not provide any right for you, as a resident of Canada, to receive a cash payment and shall be paid in Shares only.
The following provision will apply to you if you are a resident of Quebec:
French Language Documents. A French translation of this document and certain other documents related to this Award will be made available to Participant as soon as reasonably practicable. Participant understands that, from time to time, additional information related to the Award may be provided in English and such information may not be immediately available in French. However, upon request, the Company will provide a translation of such information into French as soon as reasonably practicable. Notwithstanding anything to the contrary in the Agreement, and unless Participant indicates otherwise, the French translation of this document
APPENDIX A-6
and certain other documents related to the Award will govern Participant’s participation in the Plan.
Data Privacy Notice. This provision supplements Section XIV of the Agreement:
You hereby authorize the Company and the Company’s representative to discuss with and obtain all relevant information from all personnel (professional or not) involved in the administration of the Plan. You further authorize the Company, your Employer and Merrill Lynch Bank & Trust Co., FSB (or any other stock plan service provider) to disclose and discuss your participation in the Plan with their advisors. You also authorize the Company and your Employer to record such information and keep it in your file.
NOTIFICATIONS
Securities Law Information. You are permitted to sell Shares acquired through the Plan through the designated broker appointed under the Plan, if any, provided that the resale of such Shares takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (e.g., the Nasdaq Global Select Market).
Foreign Asset/Account Reporting Information. Specified foreign property, including Shares, stock options and other rights to receive Shares (e.g., Units) of a non-Canadian company held by a Canadian resident employee generally must be reported annually on a Form T1135 (Foreign Income Verification Statement) if the total cost of the employee’s specified foreign property exceeds C$100,000 at any time during the year. Thus, such stock options and Units must be reported – generally at nil cost – if the C$100,000 cost threshold is exceeded because other specified foreign property is held by the employee. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily would equal the fair market value of the Shares at the time of acquisition, but if the employee owns other shares of the same company, this ACB may have to be averaged with the ACB of the other shares.
CHINA
TERMS AND CONDITIONS
The following terms apply only to individuals who are subject to exchange control restrictions in the People’s Republic of China (the “PRC”), as determined by the Company in its sole discretion:
Vesting of the Units. [Notwithstanding anything to the contrary in Section I(d) of the Agreement, if your employment with the Company or an Affiliate terminates due to your Voluntary Termination, as defined in Section I(d), then the vesting of Units granted under this Agreement shall be accelerated to vest as of the day immediately preceding such Voluntary Termination with respect to all Units granted hereunder.]*5
Sale Requirement. Notwithstanding anything to the contrary in the Agreement, due to exchange control laws in the PRC, you agree that the Company reserves the right to require the immediate sale of any Shares issued upon settlement of the Units. You understand and agree that any such immediate sale of Shares will occur as soon as is practical following settlement of the Units. Alternatively, if the Shares are not immediately sold upon settlement of the Units, the Company will require the sale of any Shares you may then hold within six (6) months (or such
5 Paragraph (d) of Section I of the Agreement is not applicable to awards identified by the Administrator as new hire, retention, special or promotion grants and the provisions of such paragraph shall be reserved and references thereto identified by an asterisk (*) shall be omitted from the agreements evidencing such grants.
APPENDIX A-7
other period as may be required under applicable legal or exchange control requirements) following the termination of your employment with the Company including its Affiliates.
You agree that the Company is authorized to instruct Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company to assist with the sale of the Shares on your behalf pursuant to this authorization, and you expressly authorize such broker to complete the sale of such Shares. You also agree to sign any agreements, forms and/or consents that may be reasonably requested by the Company (or the Company’s designated broker) to effectuate the sale of the Shares (including, without limitation, as to the transfers of the proceeds and other exchange control matters noted below) and to otherwise cooperate with the Company with respect to such matters, provided that you shall not be permitted to exercise any influence over how, when or whether the sales occur. Upon the sale of the Shares, you will receive the cash proceeds from the sale, less any applicable Tax Obligations, brokerage fees or commissions, in accordance with applicable exchange control laws and regulations.
You acknowledge that Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company is under no obligation to arrange for the sale of the Shares at any particular price. Due to fluctuations in the Share price and/or applicable exchange rates between the settlement date and (if later) the date on which the Shares are sold, the amount of proceeds ultimately distributed to you may be more or less than the market value of the Shares on the settlement date (which is the amount relevant to determining your liability for Tax Obligations). You understand and agree that the Company is not responsible for the amount of any loss that you may incur and that the Company assumes no liability for any fluctuations in the Share price and/or any applicable exchange rate.
Designated Broker Account. If Shares issued upon the settlement of the Units are not immediately sold, you acknowledge that you are required to maintain the Shares in an account with Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company until the Shares are sold through such Company-designated broker.
Exchange Control Requirements. You understand and agree that, pursuant to local exchange control requirements, you will be required to repatriate the cash proceeds from the sale of the Shares issued to you upon settlement of the Units and from the receipt of any Dividends or Dividend Equivalents to China. You further understand that, under applicable laws, such repatriation of your cash proceeds will need to be effectuated through a special exchange control account established by the Company or any Affiliate, including your Employer, and you hereby consent and agree that any proceeds may be transferred to such special account prior to being delivered to you. You also understand that the Company will deliver the proceeds to you as soon as possible, but that there may be delays in distributing the funds to you due to exchange control requirements in China. Proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to you in U.S. dollars, you will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are paid to you in local currency, the Company is under no obligation to secure any particular currency conversion rate and the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You further agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.
COLOMBIA
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section XI of the Agreement:
APPENDIX A-8
You acknowledge that pursuant to Article 15 of Law 50/1990 (Article 128 of the Colombian Labor Code), the Plan and related benefits do not constitute a component of “salary” for any purpose. Therefore, they are considered to be of an extraordinary nature and will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amounts, subject to the limitations provided in Law 1393/2010.
NOTIFICATIONS
Securities Law Information. The Shares are not and will not be registered with the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and therefore the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.
Exchange Control Information. Investment in assets located abroad (such as Shares acquired under the Plan) does not require prior approval from the Central Bank (Banco de la República). Nonetheless, such investments are subject to registration before the Central Bank as foreign investments held abroad, regardless of value. In addition, you must file an annual informative return with the local tax authority detailing assets you hold abroad, which must include the Shares acquired at vesting (every year as long as you keep them). This obligation is only applicable if the assets held abroad exceed the amount of 2,000 Tax Units (approx. US$22.000).
Any payments for your investment originating in Colombia (and the liquidation of such investments) must be transferred through the Colombian foreign exchange market (e.g., local banks), which includes the obligation to correctly complete and file the appropriate foreign exchange form (declaración de cambio).
Foreign Asset/Account Reporting Notice. An annual information return may need to be filed with the Colombian Tax Office detailing any assets held abroad (including Shares acquired under the Plan). If the individual value of any of these assets exceeds a certain threshold, each asset must be described (e.g., its nature and its value) and the jurisdiction in which it is located must be disclosed. It is your responsibility to comply with this tax reporting requirement.
CROATIA
NOTIFICATIONS
Exchange Control Information. Croatian residents may be required to report any foreign investments (including Shares acquired under the Plan) to the Croatian National Bank for statistical purposes and obtain prior approval from the Croatian National Bank for bank accounts opened abroad. You should be aware that exchange control regulations in Croatia are subject to frequent change and you are solely responsible for ensuring your continued compliance with current Croatian exchange control laws.
CZECH REPUBLIC
NOTIFICATIONS
Exchange Control Information. If you are a resident of the Czech Republic, you may be required to notify the Czech National Bank (“CNB”) of the acquisition of Shares under the Plan or maintenance of a foreign account if (i) you maintains foreign direct investments with a value of 2,500,000 Kč or more in the aggregate, (ii) you maintain a certain threshold of foreign financial assets, or (iii) you are specifically requested to do so by the CNB.
APPENDIX A-9
DENMARK
TERMS AND CONDITIONS
Danish Stock Option Act. In accepting the Units, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable to you and required to comply with the Stock Option Act, as amended with effect from January 1, 2019.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. The requirement to report certain information to the Danish Tax Administration via Form V or K was eliminated effective January 1, 2019. However, you still must report the foreign bank/brokerage accounts and their deposits, and Shares held in a foreign bank or brokerage account in your tax return under the section on foreign affairs and income.
EGYPT
NOTIFICATIONS
Exchange Control Information. If you transfer funds into Egypt in connection with the Units, you are required to transfer the funds through a registered bank in Egypt.
FINLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. There are no specific reporting requirements with respect to foreign assets/accounts. However, please note that you must check your pre-completed tax return to confirm that the ownership of Shares and other securities (foreign or domestic) are correctly reported. If you find any errors or omissions, you must make the necessary corrections electronically or by sending specific paper forms to the local tax authorities.
FRANCE
TERMS AND CONDITIONS
Language Consent. By accepting the grant, you confirm having read and understood the Plan and Agreement which were provided in the English language. You accept the terms of these documents accordingly.
Consentement Relatif à la Langue Utilisée. En acceptant l’attribution, vous confirmez avoir lu et compris le Plan et le Contrat, qui ont été communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. French residents and non-residents must declare to the Customs Authorities the cash and securities they import or export without the use of a financial institution when the value of such cash or securities exceeds €10,000. French residents also must report all foreign bank and brokerage accounts on an annual basis (including
APPENDIX A-10
accounts opened or closed during the tax year) on Form N° 3916, together with the income tax return. Failure to comply could trigger significant penalties.
GERMANY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If your acquisition of Shares under the Plan leads to a qualified participation at any point during the calendar year, you will need to report the acquisition when you file your tax return for the relevant year. A qualified participation is attained only in the unlikely event (i) you own at least 1% of the Company and the value of the Shares acquired exceeds €150,000 or (ii) you hold Shares exceeding 10% of the Company’s total Common Stock.
Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (Bundesbank). In case of payments in connection with securities (including proceeds realized upon the sale of Shares or the receipt of Dividends or Dividend Equivalents), the report must be made by the 5th day of the month following the month in which the payment was received and must be filed electronically. The form of report (Allgemeines Meldeportal Statistik) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. In addition, you may be required to report the acquisition or sale of Shares to the Bundesbank if the value of the Shares acquired or sold exceeds €12,500. You are responsible for satisfying any applicable reporting obligation.
GREECE
NOTIFICATIONS
Foreign Asset/Account Reporting Information. The reporting of foreign assets (including Shares and other investments) is your own obligation and takes place through your annual tax return.
HONG KONG
TERMS AND CONDITIONS
Form of Settlement – Units Payable Only in Shares. Notwithstanding any discretion in Section 9.5 of the Plan or anything to the contrary in the Agreement, the Units do not provide any right for you to receive a cash payment and shall be paid in Shares only.
Sale of Shares. Shares received at vesting are accepted as a personal investment. In the event that Shares are issued in respect of the Units within six (6) months of the Grant Date, you agree that you will not offer to the public or otherwise dispose of the Shares prior to the six (6)-month anniversary of the Grant Date.
NOTIFICATIONS
SECURITIES WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You should exercise caution in relation to the offer. If you are in doubt about any of the contents of the Agreement, including this Appendix, or the Plan, you should obtain independent professional advice. The Units and any Shares issued in respect of the Units do not constitute a public offering of securities under Hong Kong law and are available only to members of the Board and Employees. The Agreement, including this
APPENDIX A-11
Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The Units and any documentation related thereto are intended solely for the personal use of each member of the Board and/or Employee and may not be distributed to any other person.
HUNGARY
There are no country-specific provisions.
ICELAND
NOTIFICATIONS
Exchange Control Information. Approval by the Central Bank of Iceland is no longer required to participate in the Plan, regardless of the value of the Shares acquired under the Plan. Despite the recent relaxation of the exchange control requirements, you should consult with your personal advisor to ensure compliance with applicable exchange control regulations in Iceland as such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in Iceland.
INDIA
NOTIFICATIONS
Exchange Control Information. You understand that you must repatriate any cash Dividends paid on Shares acquired under the Plan to India or any Dividend Equivalents paid in cash, as well as any proceeds from the sale of Shares acquired under the Plan within such time as may be required under applicable Indian exchange control laws, which may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency, and you must maintain the FIRC as proof of repatriation of funds in the event that the Reserve Bank of India or your Employer requests proof of repatriation. It is your responsibility to comply with these requirements. Neither the Company nor the Employer will be liable for any fines or penalties resulting from your failure to comply with any applicable laws. You may be required to provide information regarding funds received from participation in the Plan to the Company and/or the Employer to enable them to comply with their filing requirements under exchange control laws in India.
Foreign Asset/Account Reporting Information. You are required to declare foreign bank accounts and any foreign financial assets (including Shares held outside of India) in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor in this regard.
IRELAND
TERMS AND CONDITIONS
Acknowledgement of Nature of Plan and Units. This provision supplements Section XI of the Agreement:
In accepting this Agreement, you understand and agree that the benefits received under the Plan will not be taken into account for any redundancy or unfair dismissal claim.
APPENDIX A-12
ITALY
TERMS AND CONDITIONS
Acknowledgement of Nature of Agreement. In accepting this Agreement, you acknowledge that (1) you have received a copy of the Plan, the Agreement and this Appendix; (2) you have reviewed the applicable documents in their entirety and fully understand the contents thereof; and (3) you accept all provisions of the Plan, the Agreement and this Appendix.
For any Units granted, you further acknowledge that you have read and specifically and explicitly approve, without limitation, the following sections of the Agreement: Section I; Section II; Section III; Section VIII; Section X; Section XI; Section XVI; Section XVII; and the Data Privacy Notice for All European Economic Area (“EEA”) / European Union (“EU”) Jurisdictions, United Kingdom and Switzerland in this Appendix.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Foreign Financial Assets Tax. The fair market value of any Shares held outside of Italy is subject to a foreign assets tax at a flat rate. The fair market value is considered to be the value of the Shares on the Nasdaq Global Select Market on December 31 of the applicable year in which you held the Shares (or when the Shares are acquired during the course of the year, the tax is levied in proportion to the actual days of holding over the calendar year). No tax payment duties arise if the amount of the foreign financial assets tax calculated on all financial assets held abroad does not exceed a certain threshold. You should consult with your personal tax advisor about the foreign financial assets tax.
JAPAN
NOTIFICATIONS
Foreign Asset/Account Reporting Information. You will be required to report to the Japanese tax authorities details of any assets held outside of Japan as of December 31st (including any Shares acquired under the Plan) to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15 each year. You should consult with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include in the report details of any Shares or cash that you hold.
KOREA
NOTIFICATIONS
Domestic Broker Requirement. Korean residents are not permitted to sell foreign securities (including Shares) through non-Korean brokers or deposit funds resulting from the sale of Shares in an account with an overseas financial institution. If you wish to sell Shares acquired under the Plan, you may be required to transfer the Shares to a domestic investment broker in Korea and to effect the sale through such broker. You are solely responsible for engaging the domestic broker
APPENDIX A-13
in Korea, and non-compliance with the requirement to sell Shares through a domestic broker can result in significant penalties. You should consult with a personal advisor regarding any regulatory obligations in connection with your participation in the Plan.
Foreign Asset/Account Reporting Information. You are required to declare all foreign financial accounts (e.g. non-Korean bank accounts, brokerage accounts holding Shares, etc.) to the Korean tax authority and file a report regarding such accounts if the monthly balance of such accounts exceeds a certain threshold. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor to ensure compliance with this requirement.
LITHUANIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you (i) hold certain job positions established by the law or (ii) donate to political parties or political campaigners, you must file an Annual Asset Return of the Individual (Family) in Form No. FR0001 with respect to assets held outside of Lithuania (e.g., Shares). If you open an account in a foreign financial institution and annual turnover in the account exceeds EUR 15,000, you must file a foreign account report.
MEXICO
TERMS AND CONDITIONS
Acknowledgement of the Agreement. In accepting the Award granted hereunder, you acknowledge that you have received a copy of the Plan, have reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix. You further acknowledge that you have read and specifically and expressly approve the terms and conditions of Section XI of the Agreement, in which the following is clearly described and established:
(1) Your participation in the Plan does not constitute an acquired right.
(2) The Plan and your participation in the Plan are offered by Amgen Inc. on a wholly discretionary basis.
(3) Your participation in the Plan is voluntary.
(4) Amgen Inc. and its Affiliates are not responsible for any decrease in the value of the Units granted and/or Shares issued under the Plan.
Labor Law Acknowledgement and Policy Statement. In accepting any Award granted hereunder, you expressly recognize that Amgen Inc., with registered offices at One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., is solely responsible for the administration of the Plan and that your participation in the Plan and acquisition of Shares do not constitute an employment relationship between you and Amgen Inc. since you are participating in the Plan on a wholly commercial basis and your sole employer is Amgen Mexico S.A. de C.V. (“Amgen-Mexico”). Based on the foregoing, you expressly recognize that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and your Employer, Amgen-Mexico, and do not form part of the employment conditions and/or benefits provided by Amgen-Mexico and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
APPENDIX A-14
You further understand that your participation in the Plan is as a result of a unilateral and discretionary decision of Amgen Inc.; therefore, Amgen Inc. reserves the absolute right to amend and/or discontinue your participation in the Plan at any time without any liability to you.
Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against Amgen Inc. for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and you therefore grant a full and broad release to Amgen Inc., its Affiliates, stockholders, officers, agents or legal representatives with respect to any claim that may arise.
Spanish Translation
Reconocimiento del Otorgamiento. Al aceptar cualquier Otorgamiento bajo el presente documento, usted reconoce que ha recibido una copia del Plan, que ha revisado el mismo en su totalidad, así como también el Acuerdo de Opción, el Acuerdo, incluyendo este Apéndice, además que comprende y está de acuerdo con todas las disposiciones tanto del Plan y del Otorgamiento, incluyendo este Apéndice. Asimismo, usted reconoce que ha leído y manifiesta específicamente y expresamente la conformidad con los términos y condiciones establecidos en la Sección XI del Acuerdo, en los que se establece y describe claramente que:
(1) Su participación en el Plan de ninguna manera constituye un derecho adquirido.
(2) El Plan y su participación en el mismo son ofrecidos por Amgen Inc. de forma completamente discrecional.
(3) Su participación en el Plan es voluntaria.
(4) Amgen Inc. y sus Afiliados no son responsables de ninguna disminución en el valor de Unidades o de las Acciones Comunes emitidas mediante el Plan.
Reconocimiento de la Ley Laboral y Declaración de Política. Al aceptar cualquier Otorgamiento de Acciones bajo el presente, usted reconoce expresamente que Amgen Inc., con oficinas registradas localizadas en One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., es la única responsable de la administración del Plan y que su participación en el mismo y la adquisición de Acciones Comunes no constituyen de ninguna manera una relación laboral entre usted y Amgen Inc., debido a que su participación en el Plan es únicamente una relación comercial y que su único empleador es Amgen Mexico S.A. de C.V. (“Amgen-México”). Derivado de lo anterior, usted reconoce expresamente que el Plan y los beneficios a su favor que pudieran derivar de la participación en el mismo, no establecen ningún derecho entre usted y su empleador, Amgen – México, y no forman parte de las condiciones laborales y/o los beneficios otorgados por Amgen – México, y cualquier modificación del Plan o la terminación del mismo no constituirá un cambio o desmejora de los términos y condiciones de su trabajo.
Asimismo, usted entiende que su participación en el Plan es resultado de la decisión unilateral y discrecional de Amgen Inc., por lo tanto, Amgen Inc. se reserva el derecho absoluto de modificar y/o descontinuar su participación en el Plan en cualquier momento y sin ninguna responsabilidad para usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de Amgen Inc., por cualquier compensación o daños y perjuicios, en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y en consecuencia usted exime amplia y completamente a Amgen Inc. de toda responsabilidad, como así también a sus Afiliadas, accionistas, directores, agentes o representantes legales con respecto a cualquier demanda que pudiera surgir.
APPENDIX A-15
NOTIFICATIONS
Securities Law Information. The Units and the Shares offered under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Units may not be publicly distributed in Mexico. These materials are addressed to you only because of your existing relationship with the Company and your Employer and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of Amgen-Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
NETHERLANDS
NOTIFICATIONS
Securities Law Information.
NORWAY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Norwegian residents may be subject to foreign asset reporting as part of their ordinary tax return. Norwegian banks, financial institutions, limited companies etc. must report certain information to the Tax Administration. Such information may then be pre-completed in a Norwegian resident’s tax return. However, if the resident has traded, or is the owner of, financial instruments (e.g., Shares) not pre-completed in the tax return, the Norwegian resident must enter this information in Form RF-1159, which is an appendix to the tax return.
Exchange Control Information. In general, Norwegian residents should not be subject to any foreign exchange requirements in connection with their acquisition or sale of Shares under the Plan, except normal reporting requirements to the Norwegian Currency Registry. If any transfer of funds into or out of Norway is made through a Norwegian bank, the bank will make the registration.
POLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Polish residents holding foreign securities (including Shares) and maintaining accounts abroad must file reports with the National Bank of Poland if the aggregate value of cash and securities held in such foreign accounts exceeds a certain threshold. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter and must be filed on special forms available on the website of the National Bank of Poland.
APPENDIX A-16
Exchange Control Information. In addition, Polish residents are required to transfer funds through a bank account in Poland if the transferred amount in any single transaction exceeds a specified threshold (currently €15,000 (or PLN 15,000 if such transfer of funds is associated with the business activity of a consultant)). You must store all documents connected with any foreign exchange transactions you engage in for a period of five (5) years from the end of the year when such transactions were made. Penalties may apply for failure to comply with exchange control requirements.
PORTUGAL
TERMS AND CONDITIONS
Consent to Receive Information in English. You hereby expressly declare that you have full knowledge of the English language and have read, understood and fully accepted and agreed with the terms and conditions established in the Plan and Agreement.
Conhecimento da Lingua. Por meio do presente, eu declaro expressamente que tem pleno conhecimento da língua inglesa e que li, compreendi e livremente aceitei e concordei com os termos e condições estabelecidas no Plano e no Acordo.
ROMANIA
NOTIFICATIONS
Exchange Control Information. Certain transfers of funds may need to be reported to the National Office for Prevention and Control of Money Laundering on specific forms by the relevant bank or financial institution. If you deposit proceeds from the sale of Shares or the receipt of Dividends or Dividend Equivalents in a bank account in Romania, you may be required to provide the Romanian bank assisting with the transaction with appropriate documentation explaining the source of the income. You should consult with a legal advisor to determine whether you will be required to submit such documentation to the Romanian bank.
RUSSIA
TERMS AND CONDITIONS
You understand that the exchange control rules and regulations in Russia, legal restrictions impacting your participation in the Plan, are subject to frequent change. You should consult with your personal legal advisor to determine the applicability of any requirements or restrictions applicable to any Shares or cash received in connection with the Plan.
SINGAPORE
TERMS AND CONDITIONS
Restriction on Sale and Transferability. You hereby agree that any Shares acquired pursuant to the Units will not be offered for sale in Singapore prior to the six (6)-month anniversary of the Grant Date, unless such sale or offer is made pursuant to one or more exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the Securities and Futures Act (Chap. 289, 2006 Ed.) (“SFA”), or pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.
NOTIFICATIONS
APPENDIX A-17
Securities Law Information. The grant of the Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SFA, on which basis it is exempt from the prospectus and registration requirements under the SFA, and is not made with a view to the Units being subsequently offered for sale to any other party. The Plan has not been, and will not be, lodged or registered as a prospectus with the Monetary Authority of Singapore.
Director Notification Requirement. Directors (including alternate, substitute, associate and shadow directors) of a Singapore Affiliate are subject to certain notification requirements under the Singapore Companies Act, regardless of whether they are resident or employed in Singapore. Directors of a Singapore Affiliate must notify the Singapore Affiliate in writing of an interest (e.g., Units, Shares, etc.) in the Company or any related company within two (2) business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.
SLOVAK REPUBLIC
There are no country-specific provisions.
SLOVENIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Slovenian residents may be required to report the opening of bank and/or brokerage accounts to tax authorities within eight (8) days of opening such account. You should consult with your personal tax advisor to determine whether this requirement will be applicable to any accounts opened in connection with your participation in the Plan (e.g., your brokerage account with the Company’s designated broker).
SPAIN
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section XI of the Agreement:
By accepting the Units granted hereunder, you consent to participation in the Plan and acknowledge that you have received a copy of the Plan.
You understand that the Company has unilaterally, gratuitously and in its sole discretion decided to grant any Units under the Plan to individuals who may be members of the Board or Employees of the Company or its Affiliates throughout the world. The decision is a limited decision, which is entered into upon the express assumption and condition that any Units granted will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis, other than as expressly set forth in the Agreement, including this Appendix. Consequently, you understand that the Units granted hereunder are given on the assumption and condition that they shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. Further, you understand and freely accept that there is no guarantee that any benefit whatsoever shall arise from any gratuitous and discretionary grant of Units since the future value of the Units and the underlying Shares is unknown and unpredictable. In addition, you understand that any Units granted hereunder would not be made but for the assumptions and conditions referred to above; thus, you understand, acknowledge and freely accept that, should any or all of the assumptions be mistaken or should
APPENDIX A-18
any of the conditions not be met for any reason, then any grant of Units or right to Units shall be null and void.
Further, the vesting of the Units is expressly conditioned on your continued and active rendering of service, such that if your employment terminates for any reason whatsoever, the Units may cease vesting immediately, in whole or in part, effective on the date of your termination of employment (unless otherwise specifically provided in Section I of the Agreement). This will be the case, for example, even if (1) you are considered to be unfairly dismissed without good cause (i.e., subject to a “despido improcedente”); (2) you are dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) you terminate service due to a change of work location, duties or any other employment or contractual condition; (4) you terminate service due to a unilateral breach of contract by the Company or an Affiliate; or (5) your employment terminates for any other reason whatsoever. Consequently, upon termination of your employment for any of the above reasons, you may automatically lose any rights to Units that were not vested on the date of your termination of employment, as described in the Plan and the Agreement.
You acknowledge that you have read and specifically accept the conditions referred to in Section I of the Agreement.
NOTIFICATIONS
Securities Law Information. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory. The Agreement (including this Appendix) has not been nor will it be registered with the Comisión Nacional del Mercado de Valores, and does not constitute a public offering prospectus.
Exchange Control Information. If you acquire Shares under the Plan, you must declare the acquisition to the Direccion General de Comercio e Inversiones (the “DGCI”). If you acquire the Shares through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGCI for you; otherwise, you will be required to make the declaration by filing a D-6 form. You must declare ownership of any Shares with the DGCI each January while the Shares are owned and must also report, in January, any sale of Shares that occurred in the previous year for which the report is being made, unless the sale proceeds exceed the applicable threshold, in which case the report is due within one (1) month of the sale.
Foreign Asset/Account Reporting Information. You are required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000.
To the extent that you hold Shares and/or have bank accounts outside of Spain with a value in excess of €50,000 (for each type of asset) as of December 31 each year, you will be required to report information on such assets in your tax return (tax form 720) for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than €20,000 or if you sell or otherwise dispose of previously-reported Shares or accounts. If the value of such Shares and/or accounts as of December 31 does not exceed €50,000, a summarized form of declaration may be presented.
SWEDEN
TERMS AND CONDITIONS
APPENDIX A-19
Authorization to Withhold. This provision supplements Section III of the Agreement:
Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax Obligations as set forth in the Agreement, in accepting the Units, you authorize the Company to withhold Shares or to sell Shares otherwise issuable to you upon vesting or settlement to satisfy Tax Obligations, regardless of whether the Company and/or Employer have an obligation to withhold such Tax Obligations, provided that such withholding would not, in the Company’s determination, result in adverse accounting consequences to the Company.
SWITZERLAND
NOTIFICATIONS
Securities Law Information. Neither this document nor any other materials relating to the Awards (i) constitutes a prospectus according to articles 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), (ii) may be publicly distributed or otherwise made publicly available in Switzerland to any person other than an employee of the Company or one of its Subsidiaries or (iii) has been or will be filed with, approved or supervised by any Swiss reviewing body according to article 51 of FinSA or any Swiss regulatory authority, including the Swiss Financial Market Supervisory Authority.
TAIWAN
NOTIFICATIONS
Exchange Control Information. You may acquire and remit foreign currency (including proceeds from the sale of Shares or the receipt of Dividends or Dividend Equivalents) up to US$5,000,000 per year without justification. If the transaction amount is TWD500,000 or more in a single transaction, you must submit a Foreign Exchange Transaction Form. If the transaction amount is US$500,000 or more in a single transaction, you must also provide supporting documentation to the satisfaction of the remitting bank.
THAILAND
NOTIFICATIONS
Exchange Control Information. If proceeds from the sale of Shares or the receipt of any Dividends or Dividend Equivalents exceed US$1,000,000, you must (i) immediately repatriate such funds to Thailand and (ii) report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form. In addition, within three hundred and sixty (360) days of repatriation, you must either convert any funds repatriated to Thailand to Thai Baht or deposit the funds in a foreign exchange account with a Thai commercial bank. Any such commercial bank must be duly authorized by the Bank of Thailand to engage in the purchase, exchange and withdrawal of foreign currency. The Employee is responsible for ensuring compliance with all exchange control laws in Thailand.
TÜRKIYE
NOTIFICATIONS
Securities Law Information. The sale of Shares acquired under the Plan is not permitted within Türkiye. The sale of Shares acquired under the Plan must occur outside of Türkiye. The Shares
APPENDIX A-20
are currently traded on the Nasdaq Global Select Market in the U.S. under the ticker symbol “AMGN” and Shares may be sold on this exchange.
Exchange Control Information. You may be required to engage a Turkish financial intermediary to assist with the sale of Shares acquired under the Plan. To the extent a Turkish financial intermediary is required in connection with the sale of any Shares acquired under the Plan, you are solely responsible for engaging such Turkish financial intermediary. You should consult your personal legal advisor prior to the sale of Shares to ensure compliance with the current requirements.
UNITED ARAB EMIRATES
NOTIFICATIONS
Securities Law Information. Units under the Plan are granted only to select Board members and Employees of the Company and its Affiliates and are for the purpose of providing equity incentives. The Plan and the Agreement are intended for distribution only to such Board members and Employees and must not be delivered to, or relied on by, any other person. You should conduct your own due diligence on the Units offered pursuant to this Agreement. If you do not understand the contents of the Plan and/or the Agreement, you should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. Further, the Ministry of the Economy and the Dubai Department of Economic Development have not approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.
UNITED KINGDOM
TERMS AND CONDITIONS
Tax Withholding. This provision supplements Section III of the Agreement:
Without limitation to Section III of the Agreement, you agree that you are liable for all Tax Obligations and hereby covenant to pay all such Tax Obligations as and when requested by the Company or your Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified the Company and your Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on your behalf.
Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act, as amended from time to time), you understand that you may not be able to indemnify the Company or your Employer for the amount of income tax not collected from or paid by you, as it may be considered a loan. In the event that you are an executive officer or director and income tax is not collected from you within ninety (90) days after the end of the tax year in which the Taxable Event occurs, the amount of any uncollected income tax may constitute an additional benefit to you on which additional income tax and national insurance contributions (“NICs”) may be payable. You acknowledge that you are responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying your Employer for the amount of any NICs due on this additional benefit, which the Company or your Employer may obtain from you by any of the means set forth in Section III of the Agreement.
APPENDIX A-21
If the maximum applicable withholding rate is used, any over-withheld amount may be credited to you by the Company or your Employer (with no entitlement to the Common Stock equivalent) or if not so credited, you may seek a refund from the local tax authorities.
Joint Election. If you are a resident of the United Kingdom between the Grant Date and the vesting of the Units, as a condition of the Units granted hereunder, you agree to accept any liability for secondary Class 1 National Insurance Contributions (the “Employer NICs”), which may be payable by the Company or your Employer with respect to the Units and/or payment of the Units and issuance of Shares pursuant to the Units, the assignment or release of the Units for consideration, or the receipt of any other benefit in connection with the Units.
Without limitation to the foregoing, you agree to make an election (the “Election”), in the form specified and/or approved for such election by HMRC, that the liability for your Employer NICs payments on any such gains shall be transferred to you to the fullest extent permitted by law. You further agree to execute such other elections as may be required between you and any successor to the Company and/or your Employer. You hereby authorize the Company and your Employer to withhold such Employer NICs by any of the means set forth in Section III of the Agreement.
Failure by you to enter into an Election, withdrawal of approval of the Election by HMRC or a joint revocation of the Election by you and the Company or your Employer, as applicable, shall be grounds for the forfeiture and cancellation of the Units, without any liability to the Company or your Employer.
UNITED STATES
TERMS AND CONDITIONS
Termination of Employment. The following provision replaces Section I(i) of the Agreement:
(i) “termination of your active employment” shall mean the last date that you are either an active employee of the Company or an Affiliate or actively engaged as a Director of the Company or an Affiliate; in the event of termination of your employment (whether or not in breach of local labor laws), your right to receive Units and vest under the Plan, if any, will terminate effective as of the date that you are no longer actively employed; provided, however, that such right will be extended by any notice period mandated by law (e.g., the Worker Adjustment and Retraining Notification Act (“WARN Act”) notice period or similar periods pursuant to local law) and any paid administrative leave (as applicable), unless the Company shall provide you with written notice otherwise before the commencement of such notice period or leave; provided further, that notwithstanding the effect of any such extension, in no event will the Units be paid later than the 90th day following your termination of employment;
APPENDIX A-22
Exhibit 10.5
Form of Award Notice
[The information set forth in this Award Notice will be contained on the related pages on Merrill Lynch Benefits Website (or the website of any successor company to Merrill Lynch Bank & Trust Co., FSB). This Award Notice shall be replaced by the equivalent pages on such website. References to Award Notice in this Agreement shall then refer to the equivalent pages on such website.]
This notice of Award (the “Award Notice”) sets forth certain details relating to the grant by the Company to you of the Award identified below, pursuant to the Plan. The terms of this Award Notice are incorporated into the Performance Unit Agreement (the “Agreement”) that accompanies this Award Notice and made part of the Agreement. Capitalized terms used in this Award Notice that are not otherwise defined in this Award Notice have the meanings given to such terms in the Agreement.
Employee:
Employee ID:
Address:
Award Type:
Grant ID:
Plan: Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, as amended and/or restated from time to time
Program Amgen Inc. 2009 Performance Award Program, as amended and/or restated from time to time
Grant Date:
Number of Shares:
Number of
Performance Units:
Performance Period: The Performance Period beginning on and ending on .
Resolutions: The Resolutions of the Compensation and Management Development Committee of the Board of Directors of Amgen Inc. establishing the performance goals and Performance Period applicable to this Award.
Vesting Date: Means the vesting date indicated in the Vesting Schedule
Vesting Schedule: Means the schedule of vesting set forth under Vesting Details
Vesting Details: Means the presentation (tabular or otherwise) of the Vesting Date and the quantity of Shares vesting.
IMPORTANT NOTICE REGARDING ACCEPTANCE OF THE AWARD AND THE REQUIREMENT TO OPEN A BROKERAGE ACCOUNT 1:
RESIDENTS OF THE U.S. AND PUERTO RICO: Please read this Award Notice, the Plan and the Agreement (collectively, the “Grant Documents”) carefully. If you, as a resident of the U.S. or Puerto Rico, do not wish to receive this Award and/or you do not consent and agree to the terms and conditions on which this Award is offered, as set forth in the Grant Documents, then you must reject the Award by contacting the Merrill Lynch call center at +1 (800) 97AMGEN (+1 (800) 972-6436) within the U.S., Puerto Rico and Canada or +1 (609) 818-8910 from all other countries (Merrill Lynch will accept the charges for your call) no later than the forty-fifth calendar day following the day on which this Award Notice is made available to you, in which case the Award will be cancelled. For the purpose of determining the forty-five
1 This provision is only for use on the form of grant used for the U.S. and Puerto Rico.
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calendar days, Day 1 will be the day immediately following the day on which this Award Notice is made available to you. Your failure to notify the Company of your rejection of the Award or your refusal of, or disagreement with, all terms and conditions of the Award, as set forth in the Grant Documents, within this specified period will constitute your acceptance of the Award and your agreement with all terms and conditions of the Award, as set forth in the Grant Documents. If you agree to the terms and conditions of your grant and you desire to accept it, then no further action is needed on your part to accept the grant. However, you must still open a brokerage account as directed by the Company, by 1:00 pm Pacific Time on or before the date that is 11 months after the date of grant. This step is necessary to process transactions related to your equity grant. If you do not open a brokerage account by this deadline, your grant will be cancelled.
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PERFORMANCE UNIT AGREEMENT
THE SPECIFIC TERMS OF YOUR GRANT OF PERFORMANCE UNITS ARE FOUND IN THE PAGES RELATING TO THE GRANT OF PERFORMANCE UNITS FOUND ON MERRILL LYNCH BENEFITS WEBSITE (OR THE WEBSITE OF ANY SUCCESSOR COMPANY TO MERRILL LYNCH BANK & TRUST CO., FSB) (THE “AWARD NOTICE”) WHICH ACCOMPANIES THIS DOCUMENT. THE TERMS OF THE AWARD NOTICE ARE INCORPORATED INTO THIS PERFORMANCE UNIT AGREEMENT.
On the Grant Date specified in the Award Notice, Amgen Inc., a Delaware corporation (the “Company”), has granted to you, the grantee named in the Award Notice, an award under the Amgen Inc. Amended and Restated 2009 Equity Incentive Plan, as amended and/or restated from time to time (the “Plan”), for the Number of Performance Units (the “Performance Units”) specified in the Award Notice on the terms and conditions set forth in this Performance Unit Agreement, the Award Notice (and any applicable additional terms and conditions for your country set forth in the attached Appendix A (as described in greater detail in Section XIV below)) (collectively, this “Agreement”), the Plan, the Amgen Inc. 2009 Performance Award Program, as amended and/or restated from time to time (the “Program”) and the Resolutions (as defined in the Award Notice). Capitalized terms not defined herein shall have the meanings assigned to such terms in the Program.
I.Performance Period. The Performance Period shall have the meaning set forth in the Award Notice.
II.Value of Performance Units. The value of each Performance Unit is equal to a share of Common Stock.
III.Performance Goals. An amount of the Performance Units up to the maximum amount specified in the Resolutions shall be earned, depending on the extent to which the Company achieves the performance goals established by the Committee pursuant to the Resolutions. The Performance Units earned shall be calculated in accordance with the Resolutions and the Program.
IV.Form and Timing of Settlement.
(a)General. Subject to Section XIII and the satisfaction of applicable Tax Obligations and similar obligations as provided in Section V, and except as set forth in the Program, any Performance Units earned pursuant to Section III above shall be settled by the Company delivering to you a number of Shares equal to the number of Shares covered by the earned Performance Units or in a lump sum in cash with a value equal to the Fair Market Value of the number of Shares subject to the earned Performance Units as of the last day of the Performance Period (without interest thereon), or in a combination of Shares and cash, as determined by the Administrator at any time prior to settlement and in its discretion, as soon as practicable, and in any event within 90 days, after the last day of the Performance Period, in each case, subject to the terms of the Program (including Section 4.2 thereof). Shares issued in respect of a Performance Unit shall be deemed to be issued in consideration of past services actually rendered by you to the Company or an Affiliate or for its benefit for which you have not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value thereof.
(b)Voluntary Retirement. In the event that your employment with the Company or an Affiliate is terminated prior to the last business day of the Performance Period by reason
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of your Voluntary Retirement and you are Retirement-Eligible on the date of such termination, the full or prorated amount of your Award, if any, applicable to the Performance Period shall be paid in accordance with the provisions of Article VI of the Program. For purposes of the foregoing, the amount of your Award (rounded down to the nearest whole number) shall be determined based on the Company’s performance as compared to the Performance Goals for the Performance Period and (i) if the Award was granted with respect to a Performance Period commencing in a calendar year prior to the calendar year in which your Voluntary Retirement occurs, the full amount of the Award is payable, and (ii) if the Award was granted with respect to the Performance Period commencing in the calendar year in which your Voluntary Retirement occurs, the Award otherwise payable is multiplied by a fraction (rounded to two decimal places), the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12). Notwithstanding the foregoing, you shall not be entitled to such full or prorated amount of your Award pursuant to this paragraph (b) unless either you execute and do not revoke a general release and waiver in a form provided by the Company (for the purpose of resolving any potential or actual disputes arising from your employment and the termination of your employment with the Company) (a “Release”) and deliver it to the Company no later than the date specified by the Company, or the Company waives such release requirement in writing; provided, however, that in no event shall payment of such full or prorated amount of your Award be made later than the specified payment date as set forth in Section 6.1 of the Program. This paragraph (b) shall supersede Section 7.1(a) of the Program.
(c)Death and Disability. In the event that your employment with the Company or an Affiliate is terminated prior to the last business day of the Performance Period by reason of your death or Permanent and Total Disability, the full or prorated amount of your Award, if any, applicable to such Performance Period shall be paid in accordance with the provisions of Article VI of the Program. For purposes of the foregoing, the amount of your Award (rounded down to the nearest whole number) shall be determined based on the Company’s performance as compared to the Performance Goals for the Performance Period and (i) if the Award was granted with respect to a Performance Period commencing in a calendar year prior to the calendar year in which such termination occurs, the full amount of the Award is payable, and (ii) if the Award was granted with respect to the Performance Period commencing in the calendar year in which such termination occurs, the Award otherwise payable is multiplied by a fraction (rounded to two decimal places), the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12). Notwithstanding the foregoing, if your employment is terminated due to your death or Permanent and Total Disability, you shall not be entitled to such full or prorated amount of your Award pursuant to this paragraph (c) unless either you execute and do not revoke a Release and deliver it to the Company no later than the date specified by the Company, or the Company waives such release requirement in writing; provided, however, that in no event shall payment of such full or prorated amount of your Award be made later than the specified payment date as set forth in Section 6.1 of the Program. This paragraph (c) shall supersede Section 7.1(b) of the Program.
(d)Other. In the event that your employment with the Company or an Affiliate is terminated prior to the last business day of the Performance Period for any reason other than as specified in paragraphs (b) and (c) above, all of your rights to an Award for the Performance Period shall be forfeited, unless, prior to the payment date described in Article VI of the Program, the Company, in its sole discretion, makes a written
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determination to otherwise pay the full or prorated amount of your Award, if any, applicable to the Performance Period, which full or prorated amount shall be paid in accordance with the provisions of Article VI of the Program. For purposes of the foregoing, if the payment of your Award is prorated, the amount of your Award (rounded down to the nearest whole number) shall be determined based on the Company’s performance as compared to the Performance Goals for the Performance Period and (i) if the Award was granted with respect to a Performance Period commencing in a calendar year prior to the calendar year in which such termination occurs, the full amount of the Award is payable, and (ii) if the Award was granted with respect to the Performance Period commencing in the calendar year in which such termination occurs, the Award otherwise payable is multiplied by a fraction (rounded to two decimal places), the numerator of which is the number of complete months you remained continuously and actively employed by the Company or an Affiliate during the calendar year in which your termination occurs, and the denominator of which is twelve (12). Notwithstanding the foregoing, you shall not be entitled to such full or prorated amount of your Award pursuant to this paragraph (d) unless either you execute and do not revoke a Release and deliver it to the Company no later than the date specified by the Company, or the Company waives such release requirement in writing; provided, however, that in no event shall payment of such full or prorated amount of your Award be made later than the specified payment date as set forth in Section 6.1 of the Program. This paragraph (d) shall supersede Section 7.1(c) of the Program.
V.Issuance of Shares; Tax Withholding. Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to your participation in the Plan and the Program and legally applicable to you (the “Tax Obligations”), you acknowledge that the ultimate liability for all Tax Obligations is and remains your responsibility and may exceed the amount, if any, actually withheld by the Company and/or your Employer. You further acknowledge that the Company and/or your Employer (i) make no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Performance Units or the underlying Shares, including the grant of the Performance Units, the vesting of the Performance Units, the conversion of the Performance Units into shares or the receipt of an equivalent cash payment, the subsequent sale of any shares acquired at settlement and the receipt of any Dividends (as defined in Section VI, below) or Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Performance Units to reduce or eliminate your liability for Tax Obligations or to achieve any particular tax result. Furthermore, if you become subject to tax in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former employer, as applicable) may be required to withhold or account for Tax Obligations in more than one jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you shall pay or make adequate arrangements satisfactory to the Company or to your Employer (in their sole discretion) to satisfy all Tax Obligations. In this regard, you authorize the Company and/ or your Employer, or their respective agents, at their discretion, to satisfy all applicable Tax Obligations by one or a combination of the following:
(a) withholding from your wages or other cash compensation paid to you by the Company and/or your Employer; or
(b) withholding from proceeds of the sale of Shares issued upon settlement of the Performance Units, either through your voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); or
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(c) withholding in Shares issuable, or cash payable, upon settlement of the Performance Units provided that, if such Shares are withheld, the Company and your Employer shall only withhold an amount of Shares with a fair market value not to exceed the Tax Obligations as determined in the discretion of the Company or your Employer, as applicable.
Depending on the withholding method, the Company may withhold or account for Tax Obligations by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. If the Tax Obligations are satisfied by withholding in Shares, for tax purposes you are deemed to have been issued the full number of Shares subject to the earned Performance Units, notwithstanding that a number of Shares is held back and not actually issued to you solely for the purpose of paying the Tax Obligations due as a result of any aspect of your participation in the Plan (any Shares withheld by the Company hereunder shall not be deemed to have been issued by the Company for any purpose under the Plan and shall remain available for issuance thereunder).
Finally, you shall pay to the Company or your Employer any amount of Tax Obligations that the Company or your Employer may be required to withhold or account for as a result of your participation in the Plan and the Program that cannot be or were not satisfied by the means previously described. You agree to take any further actions and to execute any additional documents as may be necessary to effectuate the provisions of this Section V. Notwithstanding Section IV above, the Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax Obligations.
VI.Dividend Equivalents
(a) Crediting of Dividend Equivalents. Subject to this Section VI, Dividend Equivalents shall be credited on each Performance Unit granted to you under this Agreement in the manner set forth in the remainder of this Section VI. With respect to each Performance Unit covered by the Award, if the Company declares one or more dividends or distributions (each, a “Dividend”) on its Common Stock with a record date which occurs during the period commencing on the Grant Date through and including the day immediately preceding the day the Share subject to each Performance Unit is issued to you, whether in the form of cash, Common Stock or other property, then, on the date such Dividend is paid to the Company’s stockholders, you shall be credited with an amount equal to the amount or fair market value of such Dividend which would have been payable to you if you held a number of Shares equal to the number of Performance Units granted to you on the Grant Date (including any previously credited Dividends which have been deemed to have been reinvested in Common Stock as provided by the next succeeding sentence), as of each such record date for each such Dividend (not including on any Performance Units which were previously paid or forfeited) as if each such amount had been reinvested in Common Stock as of the date of the payment of such Dividend (such accumulated dividends, the “Target Accumulated Dividends”). Each such Dividend Equivalent shall be deemed to have been reinvested in Common Stock as of the applicable Dividend payment date. Dividend Equivalents shall be payable in full Shares, unless the Administrator determines, at any time prior to payment and in its discretion, that they shall be payable in cash. Dividend Equivalents payable with respect to fractional Shares shall be paid in cash.
(b) Treatment of Dividend Equivalents. Except as otherwise expressly provided in this Section VI any Dividend Equivalents credited to you shall be subject to all of the provisions of this Agreement which apply to the Performance Units with respect to which they have been credited and shall be payable, if at all, at the time and to the extent that the underlying Performance Unit becomes payable. Dividend Equivalents shall not be payable on any
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Performance Units that do not vest, or are forfeited, pursuant to the terms of this Agreement. Dividend Equivalent rights and any amounts that may become distributable in respect thereof shall be treated separately from the Performance Units and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Grant Date, “Section 409A”).
VII.Nontransferability. No benefit payable under, or interest in, this Agreement, the Units, or the Shares that may become issuable to you hereunder shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, your or your beneficiary’s debts, contracts, liabilities or torts; provided, however, nothing in this Section VII shall prevent transfer (i) by will or (ii) by applicable laws of descent and distribution.
VIII.No Contract for Employment. This Agreement is not an employment or service contract with the Company or an Affiliate and nothing in this Agreement shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ or service of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment or service with the Company or an Affiliate.
IX.Nature of Grant. In accepting the grant of Performance Units, you acknowledge, understand and agree that:
(a) the Plan and the Program are established voluntarily by the Company, are discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan and in the Program;
(b) the grant of the Performance Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future awards of Performance Units, or benefits in lieu of Performance Units, even if Performance Units have been awarded in the past;
(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;
(d) your participation in the Plan and the Program is voluntary;
(e) the grant of Performance Units, the Shares subject to the Performance Units, and the income from and value of same, are not intended to replace any pension rights or compensation;
(f) neither the grant of Performance Units nor any provision of this Agreement, the Plan, the Program or the policies adopted pursuant to the Plan or Program confer upon you any right with respect to employment or continuation of current employment and shall not interfere with the ability of your Employer to terminate your employment or service relationship (if any) at any time;
(g) in the event that you are not an employee of the Company or any Affiliate, the Performance Units shall not be interpreted to form an employment contract or relationship with the Company or any Affiliate;
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(h) the future value of the Shares that may be earned upon the end of the Performance Period is unknown, indeterminable, and cannot be predicted with certainty;
(i) in consideration of the grant of Performance Units hereunder, no claim or entitlement to compensation or damages arises from termination of Performance Units, and no claim or entitlement to compensation or damages shall arise from forfeiture of the Performance Units resulting from termination of your employment by the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any) and you irrevocably release the Company and your Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim;
(j) in the event of termination of your employment (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to receive Performance Units and receive shares under the Plan and the Program, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period (e.g., active employment would not include a period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any);
(k) unless otherwise agreed with the Company, the Performance Units, the Shares subject to the Performance Units, and the income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of an Affiliate of the Company;
(l) except as otherwise provided in this Agreement or the Plan, the Performance Units and the benefits evidenced by this Agreement do not create any entitlement to have the Performance Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and
(m) the following provisions apply only if you are providing services outside the United States:
(A) for employment law purposes outside the United States, the Performance Units, the Shares subject to the Performance Units, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose, including but not limited to for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, holiday pay, long-service awards, pension or retirement benefits or similar mandatory payments; and
(B) neither the Company, your Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Performance Units or of any amounts due to you pursuant to the settlement of the Performance Units or the subsequent sale of any Shares acquired upon settlement.
X.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan and the Program, or your acquisition or sale of the underlying Shares. You should
6
consult with your personal tax, legal and financial advisors regarding your participation in the Plan and the Program before taking any action related thereto.
XI.Notices. Any notices provided for in this Agreement, the Plan or the Program shall be given in writing or electronically and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail or equivalent foreign postal service, postage prepaid, addressed to you at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company Stock Administrator. Such notices may be given using any automated system for the documentation, granting or settlement of Awards, such as a system using an internet website or interactive voice response, as approved by the Company.
XII.Resolutions, Plan and Program. This Agreement is subject to all of the provisions of the Resolutions, the Plan and the Program and their provisions are hereby made a part of this Agreement and incorporated herein by reference, including, without limitation, the provisions of Articles 5 and 9 of the Plan (relating to Performance-Based Compensation and Performance Awards, respectively) and Section 13.2 of the Plan (relating to adjustments upon changes in the Common Stock), and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Agreement and those of the Resolutions, the Plan and the Program, the provisions of the Plan shall control. Notwithstanding any provision of this Agreement or the Program to the contrary, any earned Performance Units paid in cash rather than Shares shall not be deemed to have been issued by the Company for any purpose under the Plan.
XIII.Code Section 409A. The time and form of payment of the Performance Units is intended to comply with the requirements of Section 409A and this Agreement shall be interpreted in accordance with Section 409A. Accordingly, no acceleration or deferral of any payment shall be permitted if it would cause the payment of the Performance Units to violate Section 409A. In addition, notwithstanding any provision herein to the contrary, in the event that following the Grant Date, the Committee determines that it may be necessary or appropriate to do so, the Committee may adopt such amendments to the Plan, Program and/or this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Plan, Program and/or the Performance Units from the application of Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to this Award, or (b) comply with the requirements of Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Committee to adopt any such amendment, policy or procedure or take any such other action. No payment hereunder shall be made to you during the six (6)-month period following your “separation from service” (within the meaning of Section 409A) to the extent that the Company determines that paying such amount at the time set forth herein would be a prohibited distribution under Section 409A(a)(2)(B)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then within thirty (30) days following the end of such six (6)-month period (or, if earlier, your death), the Company shall pay to you (or to your estate) the cumulative amounts that would have otherwise been payable to you during such period, without interest.
XIV.Provisions Applicable to Participants in Foreign Jurisdictions. Notwithstanding any provision of this Agreement or the Program to the contrary, if you are employed by the Company or an Affiliate in any of the countries identified in the attached Appendix A (which constitutes a part of this Agreement), are subject to the laws of any foreign jurisdiction, or relocate to one of the countries included in the attached Appendix A, your award of Performance Units shall be subject to any additional terms and conditions for such country set forth in Appendix A and to the following additional terms and conditions:
7
(a) the terms and conditions of this Agreement, including Appendix A, are deemed modified to the extent necessary or advisable to comply with applicable foreign laws or facilitate the administration of the Plan and the Program;
(b) if applicable, the effectiveness of your Award is conditioned upon its compliance with any applicable foreign laws, regulations, rules or local governmental regulatory exemption and subject to receipt of any required foreign regulatory approvals;
(c) to the extent necessary to comply with applicable foreign laws, the payment of any earned Performance Units shall be made in cash or Common Stock, at the Company’s election; and
(d) the Committee may take any other action, before or after an award of Performance Units is made, that it deems necessary or advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals.
Notwithstanding anything to the contrary contained herein, the Company shall not take any actions hereunder, and no Award of Performance Units shall be granted, and no Shares payable with respect to an Award shall be issued, that would violate the Securities Act, the Exchange Act, the Code, or any other securities or tax or other applicable law or regulation, or the rules of any Securities Exchange. Notwithstanding anything to the contrary contained herein, no Shares issuable with respect to an Award shall be issued unless such shares are then registered under the Securities Act, or, if such shares are not then so registered, the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act and that the issuance satisfied all other applicable legal requirements.
XV.Data Privacy. In order for the Company to facilitate your participation in the Plan and the Program, the Company and your Employer must collect and use personal data about you. In accordance with applicable laws, reasonable security measures will be implemented and maintained to protect the security of your personal data; however, you understand that absolute security cannot be guaranteed.
You understand that the Company and your Employer may hold certain personal information about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor, for the purposes of implementing, administering and managing the Plan and the Program (“personal data”).
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan and the Program to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan and the Program, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received in settlement of the Performance Units may be deposited. You understand that such authorized recipients of your personal data may be located in countries that do not provide the same level of data privacy laws and protections as the country in which your personal data originated. Transfers of personal data among Company and its group entities follow applicable laws and our Binding Corporate Rules (BCRs). For more information on
8
Company’s BCRs, please visit http://www.amgen.com/bcr/. You acknowledge that the collection, use and transfer of your personal data is necessary to facilitate to your participation in the Plan, as well as to grant you Performance Units or other equity awards and administer or maintain such awards.
You may correct or update your personal data previously provided to Company, by contacting your local human resources representative. Subject to applicable law, you may have additional rights, including the right to object and/or request destruction of your personal data. To exercise these rights, where applicable, please contact your local human resources representative.
XVI.Language. By electing to accept this Agreement, you acknowledge that you are sufficiently proficient in English, or have consulted with an advisor who is sufficiently proficient in English, so as to allow you to understand the terms and conditions of this Agreement. Furthermore, if you have received this Agreement or any other document related to the Plan and/or the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
XVII.Governing Law and Venue. The terms of this Agreement shall be governed by the laws of the State of Delaware without giving effect to principles of conflicts of laws. For purposes of litigating any dispute that arises hereunder, the parties hereby submit to and consent to the jurisdiction of the State of Delaware, and agree that such litigation shall be conducted in the courts of the State of Delaware, or the federal courts for the United States for the federal district located in the State of Delaware, and no other courts, where this Agreement is made and/or to be performed.
XVIII.Severability. If one or more of the provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed so as to foster the intent of this Agreement and the Plan.
XIX.Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan and/or the Program (including this Agreement) by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
XX.Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan and the Program, on the Performance Units and on any Shares acquired under the Plan and the Program, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
XXI.Compensation Subject to Recovery. The Performance Units subject to and Shares issuable under this Award and all compensation payable with respect to them shall be subject to clawback, recoupment and/or recovery by the Company pursuant to any and all of the Company’s policies with respect to the clawback, recoupment or recovery of compensation in effect as of the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including, without limitation, the Company’s Policy on Recovery of Erroneously
9
Awarded Compensation (effective October 2, 2023) and Executive Officer Equity Recoupment Policy (effective December 31, 2020), as they shall be in effect and may be amended from time to time, to the maximum extent permitted by applicable law.
XXII.Waiver. You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other grantee.
XXIII.Headings. This Agreement’s section headings are for convenience only and shall not constitute a part of this Agreement or affect this Agreement’s meaning.
Very truly yours,
AMGEN INC.
By:___________________________
Name:
Name:
Title:
10
APPENDIX A
ADDITIONAL TERMS AND CONDITIONS OF THE
AMENDED AND RESTATED
AMGEN INC. 2009 EQUITY INCENTIVE PLAN,
AS AMENDED AND/OR RESTATED FROM TIME TO TIME
AWARD OF PERFORMANCE UNITS
(BY COUNTRY)
Certain capitalized terms used but not defined in this Appendix A shall have the meanings set forth in the Plan and/or the Agreement to which this Appendix is attached.
TERMS AND CONDITIONS
This Appendix includes additional terms and conditions that govern any Performance Units granted under the Plan if, under applicable law, you are a resident of, are deemed to be a resident of or are working in one of the countries listed below. Furthermore, the additional terms and conditions that govern the Performance Units granted hereunder may apply to you if you transfer employment and/or residency to one of the countries listed below and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to you.
NOTIFICATIONS
This Appendix also includes notifications relating to exchange control and other issues of which you should be aware with respect to your participation in the Plan. The information is based on the exchange control, securities and other laws in effect in the countries to which this Appendix refers as of November 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the notifications herein as the only source of information relating to the consequences of your participation in the Plan because the information may be outdated when you acquire Shares under the Plan, or when you subsequently sell Shares acquired under the Plan and the Program.
In addition, the notifications are general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of any particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently residing and/or working or are considered a resident of another country for local law purposes, the information contained herein may not be applicable to you or you may be subject to the provisions of one or more jurisdictions.
APPENDIX A-1
ALL NON-U.S. JURISDICTIONS
TERMS AND CONDITIONS
Issuance of Shares; Tax Withholding. The following provision supplements Section V. of the Agreement:
In the event the Company withholds or accounts for Tax Obligations by considering maximum applicable rates in your jurisdiction(s), in the event of over-withholding, you may receive a refund of any over-withheld amount in cash and will not be entitled to the equivalent amount in Shares, or if not refunded, you may seek a refund from the local tax authorities. In the event of under-withholding, you may be required to pay any additional Tax Obligations directly to the applicable tax authority or to the Company and/or your Employer.
NOTIFICATIONS
Insider Trading Restrictions/Market Abuse Laws. You may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., Performance Units) or rights linked to the value of Shares (e.g., Dividend Equivalents) during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you place before you possessed inside information. Furthermore you could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You are responsible for ensuring your compliance with any applicable restrictions and you should speak with your personal legal advisor on this matter.
Foreign Asset/Account, Tax Reporting Information. Your country of residence may have certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any Dividends or Dividend Equivalents received, or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside of your country. You may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to your country within a certain time after receipt. You are responsible for ensuring your compliance with such regulations, and you should speak with your personal legal advisor on this matter.
APPENDIX A-2
ALL EUROPEAN ECONOMIC AREA (“EEA”) / EUROPEAN UNION (“EU”) JURISDICTIONS, UNITED KINGDOM AND SWITZERLAND
TERMS AND CONDITIONS
Data Privacy Notice. This provision replaces Section XV of the Agreement:
Please refer to the Fair Processing Notice previously provided by your local human resources representative, which notice governs the collection, use and transfer of your personal data necessary for the Company to facilitate your participation in the Plan and the Program. If you have any questions or concerns regarding the Fair Processing Notice, including questions about your rights afforded thereunder, you should contact your local human resources representative or send an email to hrconnect@amgen.com.
For purposes of implementing, administering and managing the Plan, Company and your Employer may hold certain personal data about you, including your name, home address and telephone number, email address, date of birth, social insurance/security number (to the extent permitted under applicable local law), passport or other identification number, salary, nationality, job title/work history/service periods, residency status, citizenship, tax withholding and payroll data, any shares of stock or directorships held in the Company, details of all equity compensation or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding in your favor (“personal data”).
You authorize the transfer of your personal data to Merrill Lynch Bank & Trust Co., FSB, or any successor thereto, and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing your participation in the Plan and the Program to receive, possess, use, retain and transfer your personal data, in electronic or other form, for the purpose of implementing, administering and managing your participation in the Plan and the Program, including any requisite transfer of such personal data as may be required to any other broker, escrow agent or other third party with whom the Shares received in settlement of the Performance Units may be deposited.
ARGENTINA
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section IX of the Agreement:
In accepting the grant of Performance Units, you acknowledge, understand and agree that the grant of the Performance Units is made by the Company (not your Employer) in its sole discretion and that the value of the Performance Units or any Shares acquired under the Plan and the Program shall not constitute salary or wages for any purpose under Argentine labor law including, but not limited to, the calculation of (i) any labor benefits including, without limitation, vacation pay, thirteenth salary, compensation in lieu of notice, annual bonus, disability, and leave of absence payments, etc., or (ii) any termination or severance indemnities or similar payments.
NOTIFICATIONS
Securities Law Information. Neither the Performance Units nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina.
APPENDIX A-3
Exchange Control Information. Exchange control regulations in Argentina are subject to frequent change. You should consult with your personal legal advisor regarding any exchange control obligations that you may have prior to receiving proceeds from Dividend Equivalents, the sale of Shares or dividends. You must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with your participation in the Plan and the Program.
Foreign Asset/Account Reporting Information. If you are an Argentine resident, you are required to report certain information regarding any Shares you hold as of December 31 each year to the Argentine tax authorities on your annual tax return.
AUSTRALIA
NOTIFICATIONS
Australia Offer Document. This grant of Units is being made under Division 1A, Part 7.12 of the Corporations Act 2001 (Cth).
Please note that if you offer Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. You should obtain legal advice on your disclosure obligations prior to making any such offer.
Tax Information. Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) applies to the Performance Units granted under the Plan, such that the Performance Units are intended to be subject to deferred taxation.
Exchange Control Information. If you are an Australian resident, exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on your behalf. If there is no Australian bank involved in the transfer, you will be required to file the report.
AUSTRIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you are an Austrian resident and you hold Shares acquired under the Plan and the Program outside of Austria, you may be subject to reporting obligations to the Austrian National Bank.
Exchange Control Information. A separate reporting requirement applies when you sell Shares acquired under the Plan and the Program, receive a cash Dividend paid on such Shares or Dividend Equivalents paid in cash. In that case, there may be exchange control obligations if the cash proceeds are held outside of Austria. If the transaction volume of all cash accounts abroad meets or exceeds a specified threshold, the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, on the prescribed form (Meldungen SI-Forderungen und/oder SI-Verpflichtungen).
BELGIUM
NOTIFICATIONS
Tax Reporting; Foreign Asset/Account Reporting Information. If you are a Belgian resident, you are required to report any taxable income attributable to the Award granted hereunder on your annual tax return. You are also required to report any securities (e.g., Shares acquired
APPENDIX A-4
under the Plan and the Program) held and bank accounts (including brokerage accounts) opened and maintained outside of Belgium on your annual tax return. The first time you report the foreign security and/or bank account on your annual income tax return you will have to provide the National Bank of Belgium Central Contact Point with the account details of any such foreign accounts (including the account number, bank name and country in which such account was opened) in a separate form. This report, as well as information on how to complete it, can be found on the website of the National Bank of Belgium, www.nbb.be, under the Kredietcentrales / Centrales des crédits caption.
Stock Exchange Tax Information. A stock exchange tax applies to transactions executed by a Belgian resident through a non-Belgian financial intermediary, such as a U.S. broker. The stock exchange tax likely will apply when Shares acquired under the Plan and the Program are sold. It is your responsibility to comply with this tax obligation and you should consult your personal tax advisor for additional details on your obligations with respect to the stock exchange tax.
Annual Securities Accounts Tax Information. An annual securities accounts tax may be payable if the total value of securities held in a Belgian or foreign securities account (e.g., Shares acquired under the Plan and the Program) exceeds a certain threshold on four reference dates within the relevant reporting period (i.e., December 31, March 31, June 30 and September 30). In such case, the tax will be due on the value of the qualifying securities held in such account. It is your responsibility to comply with this obligation and you should consult with your personal tax or financial advisor for additional details.
BRAZIL
TERMS AND CONDITIONS
Compliance with Law. By accepting the Performance Units, you acknowledge that you agree to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the vesting of the Performance Units, the sale of Shares acquired under the Plan and the Program, the payment of Dividends on such Shares and the receipt of any Dividend Equivalents paid in cash.
Nature of Grant. This provision supplements Section IX of the Agreement:
In accepting the grant of Performance Units, you acknowledge (i) that you are making an investment decision, (ii) that the Shares will be issued to you only if the vesting conditions are met and any necessary services are rendered by you during the vesting period set forth in the Vesting Schedule, and (iii) that the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.
NOTIFICATIONS
Exchange Control Information. If you are resident or domiciled in Brazil, you will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights on December 31 of each year exceeds US$1,000,000. If such amount exceeds US$100,000,000, the referenced declaration must be submitted quarterly, in the month following the end of each quarter. Assets and rights that must be reported include the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan and the Program; (vii) financial derivatives investments; and (viii) other investments, such as real estate. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil.
APPENDIX A-5
Individuals holding assets and rights outside of Brazil valued at less than US$1,000,000 are not required to submit a declaration.
BULGARIA
Foreign Asset/Account Reporting Information. You will be required to file statistical forms with the Bulgarian National Bank annually regarding your receivables in bank accounts abroad as well as securities held abroad (e.g., Shares acquired under the Plan) if the total sum of all such receivables and securities equals or exceeds a certain threshold as of the previous calendar year-end. The reports are due by March 31. You should contact your bank in Bulgaria for additional information regarding these requirements.
CANADA
TERMS AND CONDITIONS
Termination of Service. This provision supplements Section IX(j) of the Agreement:
in the event of involuntary termination of your employment (regardless of the reason for such termination and whether or not later found to be invalid or unlawful, including for breaching employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to receive an Award and vest in such Award under the Plan and the Program, if any, will terminate effective as of the date that is the earlier of: (1) the date you receive written notice of termination of employment from the Company or your Employer, or (2) the date you are no longer actively employed by the Company or your Employer regardless of any period during which notice, pay in lieu of notice or related payments or damages are provided or required to be provided under local law. Your right, if any, to acquire Shares pursuant to an Award after termination of employment will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law. You will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which your right to vest terminates, nor will you be entitled to any compensation for lost vesting. Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued vesting during a statutory notice period, your right to vest in the Performance Units, if any, will terminate effective as of the last day of your minimum statutory notice period, but you will not earn or be entitled to pro-rated vesting if the vesting date falls after the end of your statutory notice period, nor will you be entitled to any compensation for lost vesting;
Form of Settlement - Performance Units Payable Only in Shares. Notwithstanding any discretion in Section 9.5 of the Plan or the Program or anything to the contrary in the Agreement, the Award does not provide any right for you, as a resident of Canada, to receive a cash payment and shall be paid in Shares only.
The following provision will apply to you if you are a resident of Quebec:
French Language Documents. A French translation of this document and certain other documents related to this Award will be made available to Participant as soon as reasonably practicable. Participant understands that, from time to time, additional information related to the Award may be provided in English and such information may not be immediately available in French. However, upon request, the Company will provide a translation of such information into French as soon as reasonably practicable. Notwithstanding anything to the contrary in the Agreement, and unless Participant indicates otherwise, the French translation of this document and certain other documents related to the Award will govern Participant’s participation in the Plan.
APPENDIX A-6
Data Privacy Notice. This provision supplements Section XV of the Agreement:
You hereby authorize the Company and the Company’s representative to discuss with and obtain all relevant information from all personnel (professional or not) involved in the administration of the Plan and the Program. You further authorize the Company, your Employer and Merrill Lynch Bank & Trust Co., FSB (or any other stock plan service provider) to disclose and discuss your participation in the Plan with their advisors. You also authorize the Company and your Employer to record such information and keep it in your file.
NOTIFICATIONS
Securities Law Information. You are permitted to sell Shares acquired through the Plan through the designated broker appointed under the Plan, if any, provided that the resale of such Shares takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (e.g., the Nasdaq Global Select Market).
Foreign Asset/Account Reporting Information. Specified foreign property, including Shares, stock options and other rights to receive Shares (e.g., Performance Units) of a non-Canadian company held by a Canadian resident employee generally must be reported annually on a Form T1135 (Foreign Income Verification Statement) if the total cost of the employee’s specified foreign property exceeds C$100,000 at any time during the year. Thus, such stock options and Performance Units must be reported – generally at nil cost – if the C$100,000 cost threshold is exceeded because other specified foreign property is held by the employee. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily would equal the fair market value of the Shares at the time of acquisition, but if the employee owns other shares of the same company, this ACB may have to be averaged with the ACB of the other shares.
CHINA
TERMS AND CONDITIONS
The following terms apply only to individuals who are subject to exchange control restrictions in the People’s Republic of China (the “PRC”), as determined by the Company in its sole discretion:
Vesting of the Performance Units. Notwithstanding anything to the contrary in Article 7.1 of the Program, if your employment with the Company or an Affiliate terminates at any time during the Performance Period, you shall forfeit all Performance Units.
Sale Requirement. Notwithstanding anything to the contrary in the Agreement, due to exchange control laws in the PRC, you agree that the Company reserves the right to require the immediate sale of any Shares acquired upon settlement of the Performance Units. You understand and agree that any such immediate sale of Shares will occur as soon as is practical following settlement of the Performance Units. Alternatively, if the Shares are not immediately sold upon settlement of the Performance Units, the Company will require the sale of any Shares you may then hold within six (6) months (or such other period as may be required under applicable legal or exchange control requirements) following the termination of your employment with the Company, including its Affiliates.
You agree that the Company is authorized to instruct Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company to assist with the sale of the Shares on your behalf pursuant to this authorization, and you expressly authorize such broker to
APPENDIX A-7
complete the sale of such Shares. You also agree to sign any agreements, forms and/or consents that may be reasonably requested by the Company (or the Company’s designated broker) to effectuate the sale of the Shares (including, without limitation, as to the transfers of the proceeds and other exchange control matters noted below) and to otherwise cooperate with the Company with respect to such matters, provided that you shall not be permitted to exercise any influence over how, when or whether the sales occur. Upon the sale of the Shares, you will receive the cash proceeds from the sale, less any applicable Tax Obligations, brokerage fees or commissions, in accordance with applicable exchange control laws and regulations.
You acknowledge that Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company is under no obligation to arrange for the sale of the Shares at any particular price. Due to fluctuations in the Share price and/or applicable exchange rates between the settlement date and (if later) the date on which the Shares are sold, the amount of proceeds ultimately distributed to you may be more or less than the market value of the Shares on the settlement date (which is the amount relevant to determining your liability for Tax Obligations). You understand and agree that the Company is not responsible for the amount of any loss that you may incur and that the Company assumes no liability for any fluctuations in the Share price and/or any applicable exchange rate.
Designated Broker Account. If Shares issued upon the settlement of the Performance Units are not immediately sold, you acknowledge that you are required to maintain the Shares in an account with Merrill Lynch Bank & Trust Co., FSB or such other designated broker as may be selected by the Company until the Shares are sold through such Company-designated broker.
Exchange Control Requirements. You understand and agree that, pursuant to local exchange control requirements, you will be required to repatriate the cash proceeds from the sale of the Shares issued upon settlement of the Performance Units and from the receipt of any Dividends or Dividend Equivalents to China. You further understand that, under applicable laws, such repatriation of your cash proceeds will need to be effectuated through a special exchange control account established by the Company or any Affiliate, including your Employer, and you hereby consent and agree that any proceeds may be transferred to such special account prior to being delivered to you. You also understand that the Company will deliver the proceeds to you as soon as possible, but that there may be delays in distributing the funds to you due to exchange control requirements in China. Proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to you in U.S. dollars, you will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are paid to you in local currency, the Company is under no obligation to secure any particular currency conversion rate and the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You further agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.
COLOMBIA
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section IX of the Agreement:
You acknowledge that pursuant to Article 15 of Law 50/1990 (Article 128 of the Colombian Labor Code), the Plan, the Program and related benefits do not constitute a component of “salary” for any purpose. Therefore, they are considered to be of an extraordinary nature and will not be included and/or considered for purposes of calculating any and all labor benefits, such as
APPENDIX A-8
legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amounts, subject to the limitations provided in Law 1393/2010.
NOTIFICATIONS
Securities Law Information. The Shares are not and will not be registered with the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and therefore the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.
Exchange Control Information. Investment in assets located abroad (such as Shares acquired under the Plan and the Program) does not require prior approval from the Central Bank (Banco de la República). Nonetheless, such investments are subject to registration before the Central Bank as foreign investments held abroad, regardless of value. In addition, you must file an annual informative return with the local tax authority detailing assets you hold abroad, which must include the Shares acquired at vesting (every year as long as you keep them). This obligation is only applicable if the assets held abroad exceed the amount of 2,000 Tax Units (approx. US $22.000).
Any payments for your investment originating in Colombia (and the liquidation of such investments) must be transferred through the Colombian foreign exchange market (e.g., local banks), which includes the obligation to correctly complete and file the appropriate foreign exchange form (declaración de cambio).
Foreign Asset/Account Reporting Notice. An annual information return may need to be filed with the Colombian Tax Office detailing any assets held abroad (including Shares acquired under the Plan). If the individual value of any of these assets exceeds a certain threshold, each asset must be described (e.g., its nature and its value) and the jurisdiction in which it is located must be disclosed. It is your responsibility to comply with this tax reporting requirement.
CROATIA
NOTIFICATIONS
Exchange Control Information. Croatian residents may be required to report any foreign investments (including Shares acquired under the Plan) to the Croatian National Bank for statistical purposes and obtain prior approval from the Croatian National Bank for bank accounts opened abroad. You should be aware that exchange control regulations in Croatia are subject to frequent change and you are solely responsible for ensuring your continued compliance with current Croatian exchange control laws.
CZECH REPUBLIC
NOTIFICATIONS
Exchange Control Information. If you are a resident of the Czech Republic, you may be required to notify the Czech National Bank (“CNB”) of the acquisition of Shares under the Plan or maintenance of a foreign account if (i) you maintains foreign direct investments with a value of 2,500,000 Kč or more in the aggregate, (ii) you maintain a certain threshold of foreign financial assets, or (iii) you are specifically requested to do so by the CNB.
DENMARK
TERMS AND CONDITIONS
APPENDIX A-9
Danish Stock Option Act. In accepting the Performance Units, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable to you and required to comply with the Stock Option Act, as amended with effect from January 1, 2019.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. The requirement to report certain information to the Danish Tax Administration via Form V or K was eliminated effective January 1, 2019. However, you still must report the foreign bank/brokerage accounts and their deposits, and Shares held in a foreign bank or brokerage account in your tax return under the section on foreign affairs and income.
EGYPT
NOTIFICATIONS
Exchange Control Information. If you transfer funds into Egypt in connection with the Performance Units, you are required to transfer the funds through a registered bank in Egypt.
FINLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. There are no specific reporting requirements with respect to foreign assets/accounts. However, please note that you must check your pre-completed tax return to confirm that the ownership of Shares and other securities (foreign or domestic) are correctly reported. If you find any errors or omissions, you must make the necessary corrections electronically or by sending specific paper forms to the local tax authorities.
FRANCE
TERMS AND CONDITIONS
Language Consent. By accepting the Award, you confirm having read and understood the Plan and Agreement which were provided in the English language. You accept the terms of these documents accordingly.
Consentement Relatif à la Langue Utilisée. En acceptant l’prix, vous confirmez avoir lu et compris le Plan et le Contrat, qui ont été communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. French residents and non-residents must declare to the Customs Authorities the cash and securities they import or export without the use of a financial institution when the value of such cash or securities exceeds €10,000. French residents also must report all foreign bank and brokerage accounts on an annual basis (including accounts opened or closed during the tax year) on Form N° 3916, together with the income tax return. Failure to comply could trigger significant penalties.
APPENDIX A-10
GERMANY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If your acquisition of Shares under the Plan leads to a qualified participation at any point during the calendar year, you will need to report the acquisition when you file your tax return for the relevant year. A qualified participation is attained only in the unlikely event (i) you own at least 1% of the Company and the value of the Shares acquired exceeds €150,000 or (ii) you hold Shares exceeding 10% of the Company’s total Common Stock.
Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (Bundesbank). In case of payments in connection with securities (including proceeds realized upon the sale of Shares or the receipt of Dividends or Dividend Equivalents), the report must be made by the 5th day of the month following the month in which the payment was received and must be filed electronically. The form of report (Allgemeines Meldeportal Statistik) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. In addition, you may be required to report the acquisition or sale of Shares to the Bundesbank if the value of the Shares acquired or sold exceeds €12,500. You are responsible for satisfying any applicable reporting obligation.
GREECE
NOTIFICATIONS
Foreign Asset/Account Reporting Information. The reporting of foreign assets (including Shares and other investments) is your own obligation and takes place through your annual tax return.
HONG KONG
TERMS AND CONDITIONS
Form of Settlement - Performance Units Payable Only in Shares. Notwithstanding any discretion in Section 9.5 of the Plan or the Program or anything to the contrary in the Agreement, the Award does not provide any right for you, as a resident of Hong Kong, to receive a cash payment and shall be paid in Shares only.
Sale of Shares. Shares received at vesting are accepted as a personal investment. In the event that Shares are issued in respect of Performance Units within six (6) months of the Grant Date, you agree that you will not offer to the public or otherwise dispose of such Shares prior to the six (6)-month anniversary of the Grant Date.
NOTIFICATIONS
SECURITIES WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You should exercise caution in relation to the offer. If you are in doubt about any of the contents of the Agreement, including this Appendix, or the Plan, you should obtain independent professional advice. The Performance Units and any Shares issued in respect of the Performance Units do not constitute a public offering of securities under Hong Kong law and are available only to members of the Board and Employees. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for
APPENDIX A-11
a public offering of securities under the applicable securities legislation in Hong Kong. The Performance Units and any documentation related thereto are intended solely for the personal use of each member of the Board and/or Employee and may not be distributed to any other person.
HUNGARY
There are no country-specific provisions.
ICELAND
NOTIFICATIONS
Exchange Control Information. Approval by the Central Bank of Iceland is no longer required to participate in the Plan and the Program, regardless of the value of the Shares acquired under the Plan and the Program. Despite the recent relaxation of the exchange control requirements, you should consult with your personal advisor to ensure compliance with applicable exchange control regulations in Iceland as such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in Iceland.
INDIA
NOTIFICATIONS
Exchange Control Information. You understand that you must repatriate any cash Dividends paid on Shares acquired under the Plan to India or any Dividend Equivalents paid in cash, as well as any proceeds from the sale of Shares acquired under the Plan within such time as may be required under applicable Indian exchange control laws, which may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency, and you must maintain the FIRC as proof of repatriation of funds in the event that the Reserve Bank of India or your Employer requests proof of repatriation. It is your responsibility to comply with these requirements. Neither the Company nor the Employer will be liable for any fines or penalties resulting from your failure to comply with any applicable laws. You may be required to provide information regarding funds received from participation in the Plan to the Company and/or the Employer to enable them to comply with their filing requirements under exchange control laws in India.
Foreign Asset/Account Reporting Information. You are required to declare foreign bank accounts and any foreign financial assets (including Shares held outside of India) in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor in this regard.
IRELAND
TERMS AND CONDITIONS
Nature of Grant. This provision supplements Section IX of the Agreement:
In accepting the grant of Performance Units, you acknowledge that the benefits received under the Plan will not be taken into account for any redundancy or unfair dismissal claim.
ITALY
TERMS AND CONDITIONS
APPENDIX A-12
Nature of Grant. In accepting the grant of Performance Units, you acknowledge that (1) you have received a copy of the Plan, the Program, the Agreement and this Appendix; (2) you have reviewed the applicable documents in their entirety and fully understand the contents thereof; and (3) you accept all provisions of the Plan, the Program, the Agreement and this Appendix.
You further acknowledge that you have read and specifically and explicitly approve, without limitation, the following sections of the Agreement: Section III, Section IV, Section V, Section IX, Section IV, Section XVI, Section XX and the Data Privacy Notice for All European Economic Area (“EEA”) / European Union (“EU”) Jurisdictions, United Kingdom and Switzerland in this Appendix.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Foreign Financial Assets Tax. The fair market value of any Shares held outside of Italy is subject to a foreign assets tax at a flat rate. The market value is considered to be the value of the Shares on the Nasdaq Global Select Market on December 31 of the applicable year in which you held the Shares (or when the Shares are acquired during the course of the year, the tax is levied in proportion to the actual days of holding over the calendar year). No tax payment duties arise if the amount of the foreign financial assets tax calculated on all financial assets held abroad does not exceed a certain threshold. You should consult with your personal tax advisor about the foreign financial assets tax.
JAPAN
NOTIFICATIONS
Foreign Asset/Account Reporting Information. You will be required to report to the Japanese tax authorities details of any assets held outside of Japan as of December 31st (including any Shares acquired under the Plan and the Program) to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15 each year. You should consult with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include in the report details of any Shares or cash that you hold.
KOREA
NOTIFICATIONS
Domestic Broker Requirement. Korean residents are not permitted to sell foreign securities (including Shares) through non-Korean brokers or deposit funds resulting from the sale of Shares in an account with an overseas financial institution. If you wish to sell Shares acquired under the Plan, you may be required to transfer the Shares to a domestic investment broker in Korea and to effect the sale through such broker. You are solely responsible for engaging the domestic broker in Korea, and non-compliance with the requirement to sell Shares through a domestic broker can result in significant penalties. You should consult with a personal advisor regarding any regulatory obligations in connection with your participation in the Plan.
APPENDIX A-13
Foreign Asset/Account Reporting Information. You are required to declare all foreign financial accounts (e.g. non-Korean bank accounts, brokerage accounts holding Shares, etc.) to the Korean tax authority and file a report regarding such accounts if the monthly balance of such accounts exceeds a certain threshold. It is your responsibility to comply with this reporting obligation and you should consult your personal tax advisor to ensure compliance with this requirement.
LITHUANIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you (i) hold certain job positions established by the law or (ii) donate to political parties or political campaigners, you must file an Annual Asset Return of the Individual (Family) in Form No. FR0001 with respect to assets held outside of Lithuania (e.g., Shares). If you open an account in a foreign financial institution and annual turnover in the account exceeds EUR 15,000, you must file a foreign account report.
MEXICO
TERMS AND CONDITIONS
Acknowledgement of the Grant. In accepting the Award granted hereunder, you acknowledge that you have received a copy of the Plan and the Program, have reviewed the Plan and the Program and the Agreement, including this Appendix, in their entirety and fully understand and accept all provisions of the Plan, the Program and the Agreement, including this Appendix. You further acknowledge that you have read and specifically and expressly approve the terms and conditions of Section IX of the Agreement, in which the following is clearly described and established:
(1) Your participation in the Plan and the Program do not constitute an acquired right.
(2) The Plan and your participation in the Plan and the Program are offered by Amgen Inc. on a wholly discretionary basis.
(3) Your participation in the Plan and the Program is voluntary.
(4) Amgen Inc. and its Affiliates are not responsible for any decrease in the value of any Shares issued with respect to the Award.
Labor Law Acknowledgement and Policy Statement. In accepting any Award granted hereunder, you expressly recognize that Amgen Inc., with registered offices at One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., is solely responsible for the administration of the Plan and that your participation in the Plan and acquisition of Shares do not constitute an employment relationship between you and Amgen Inc. since you are participating in the Plan on a wholly commercial basis and your sole employer is Amgen Mexico S.A. de C.V. (“Amgen-Mexico”). Based on the foregoing, you expressly recognize that the Plan and the Program and the benefits that you may derive from participation in the Plan and the Program do not establish any rights between you and your Employer, Amgen-Mexico, and do not form part of the employment conditions and/or benefits provided by Amgen-Mexico and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
APPENDIX A-14
You further understand that your participation in the Plan and the Program is as a result of a unilateral and discretionary decision of Amgen Inc.; therefore, Amgen Inc. reserves the absolute right to amend and/or discontinue your participation in the Plan at any time without any liability to you.
Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against Amgen Inc. for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and you therefore grant a full and broad release to Amgen Inc., its Affiliates, stockholders, officers, agents or legal representatives with respect to any claim that may arise.
Spanish Translation
Reconocimiento del Otorgamiento. Al aceptar cualquier Otorgamiento de Acciones bajo el presente documento, usted reconoce que ha recibido una copia del Plan y del Programa, que ha revisado el Plan y el Programa, así como también el Apéndice en su totalidad, además que comprende y está de acuerdo con todas las disposiciones tanto del Plan, del Programa y del Otorgamiento, incluyendo este Apéndice. Asimismo, usted reconoce que ha leído y manifiesta específicamente y expresamente la conformidad con los términos y condiciones establecidos en la Sección IX del Acuerdo del Otorgamiento, en los que se establece y describe claramente que:
(1) Su participación en el Plan y en el Programa de ninguna manera constituye un derecho adquirido.
(2) Su participación en Plan y en el Programa son ofrecidos por Amgen Inc. de forma completamente discrecional.
(3) Su participación en el Plan y en el Programa es voluntaria.
(4) Amgen Inc. y sus Afiliados no son responsables de ninguna disminución en el valor de las Acciones Comunes emitidas mediante el Plan.
Reconocimiento de la Ley Laboral y Declaración de Política. Al aceptar cualquier Otorgamiento bajo el presente, usted reconoce expresamente que Amgen Inc., con oficinas registradas localizadas en One Amgen Center Drive, Thousand Oaks, California 91320, U.S.A., es la única responsable de la administración del Plan y que su participación en el mismo y la adquisición de Acciones Comunes no constituyen de ninguna manera una relación laboral entre usted y Amgen Inc., debido a que su participación en el Plan es únicamente una relación comercial y que su único empleador es Amgen Mexico S.A. de C.V. (“Amgen-Mexico”). Derivado de lo anterior, usted reconoce expresamente que el Plan y el Programa y los beneficios a su favor que pudieran derivar de la participación en el mismo, no establecen ningún derecho entre usted y su empleador, Amgen – México, y no forman parte de las condiciones laborales y/o los beneficios otorgados por Amgen – México, y cualquier modificación del Plan o la terminación del mismo no constituirá un cambio o desmejora de los términos y condiciones de su trabajo.
Asimismo, usted entiende que su participación en el Plan y en el Programa es resultado de la decisión unilateral y discrecional de Amgen Inc., por lo tanto, Amgen Inc. se reserva el derecho absoluto de modificar y/o descontinuar su participación en el Plan en cualquier momento y sin ninguna responsabilidad para usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de Amgen Inc., por cualquier compensación o daños y perjuicios, en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y en consecuencia
APPENDIX A-15
usted exime amplia y completamente a Amgen Inc. de toda responsabilidad, como así también a sus Afiliadas, accionistas, directores, agentes o representantes legales con respecto a cualquier demanda que pudiera surgir.
NOTIFICATIONS
Securities Law Information. The Performance Units and the Shares offered under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Performance Units may not be publicly distributed in Mexico. These materials are addressed to you only because of your existing relationship with the Company and your Employer and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of Amgen-Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
NETHERLANDS
NOTIFICATIONS
Securities Law Information.
NORWAY
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Norwegian residents may be subject to foreign asset reporting as part of their ordinary tax return. Norwegian banks, financial institutions, limited companies etc. must report certain information to the Tax Administration. Such information may then be pre-completed in a Norwegian resident’s tax return. However, if the resident has traded, or is the owner of, financial instruments (e.g., Shares) not pre-completed in the tax return, the Norwegian resident must enter this information in Form RF-1159, which is an appendix to the tax return.
Exchange Control Information. In general, Norwegian residents should not be subject to any foreign exchange requirements in connection with their acquisition or sale of Shares under the Plan, except normal reporting requirements to the Norwegian Currency Registry. If any transfer of funds into or out of Norway is made through a Norwegian bank, the bank will make the registration.
POLAND
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Polish residents holding foreign securities (including Shares) and maintaining accounts abroad must file reports with the National Bank of Poland if the aggregate value of cash and securities held in such foreign accounts exceeds a
APPENDIX A-16
certain threshold. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter and must be filed on special forms available on the website of the National Bank of Poland.
Exchange Control Information. In addition, Polish residents are required to transfer funds through a bank account in Poland if the transferred amount in any single transaction exceeds a specified threshold (currently €15,000 (or PLN 15,000 if such transfer of funds is associated with the business activity of a consultant)). You must store all documents connected with any foreign exchange transactions you engage in for a period of five (5) years from the end of the year when such transactions were made. Penalties may apply for failure to comply with exchange control requirements.
PORTUGAL
TERMS AND CONDITIONS
Consent to Receive Information in English. You hereby expressly declare that you have full knowledge of the English language and have read, understood and fully accepted and agreed with the terms and conditions established in the Plan, the Program and Agreement.
Conhecimento da Lingua. Por meio do presente, eu declaro expressamente que tem pleno conhecimento da língua inglesa e que li, compreendi e livremente aceitei e concordei com os termos e condições estabelecidas no Plano, no Programa e no Acordo.
ROMANIA
NOTIFICATIONS
Exchange Control Information. Certain transfers of funds may need to be reported to the National Office for Prevention and Control of Money Laundering on specific forms by the relevant bank or financial institution. If you deposit proceeds from the sale of Shares or the receipt of Dividends or Dividend Equivalents in a bank account in Romania, you may be required to provide the Romanian bank assisting with the transaction with appropriate documentation explaining the source of the income. You should consult with a legal advisor to determine whether you will be required to submit such documentation to the Romanian bank.
RUSSIA
TERMS AND CONDITIONS
You understand that the exchange control rules and regulations in Russia, legal restrictions impacting your participation in the Plan, are subject to frequent change. You should consult with your personal legal advisor to determine the applicability of any requirements or restrictions applicable to any Shares or cash received in connection with the Plan.
SINGAPORE
TERMS AND CONDITIONS
Restriction on Sale and Transferability. You hereby agree that any Shares acquired pursuant to the Performance Units will not be offered for sale in Singapore prior to the six (6)-month
APPENDIX A-17
anniversary of the Grant Date, unless such sale or offer is made pursuant to one or more exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the Securities and Futures Act (Chap. 289, 2006 Ed.) (“SFA” ), or pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.
NOTIFICATIONS
Securities Law Information. The grant of the Performance Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SFA, on which basis it is exempt from the prospectus and registration requirements under the SFA, and is not made with a view to the Performance Units being subsequently offered for sale to any other party. The Plan has not been, and will not be, lodged or registered as a prospectus with the Monetary Authority of Singapore.
Director Notification Requirement. Directors (including alternate, substitute, associate and shadow directors) of a Singapore Affiliate are subject to certain notification requirements under the Singapore Companies Act , regardless of whether they are resident or employed in Singapore. Directors of a Singapore Affiliate must notify the Singapore Affiliate in writing of an interest (e.g., Performance Units, Shares, etc.) in the Company or any related company within two (2) business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.
SLOVAK REPUBLIC
There are no country-specific provisions.
SLOVENIA
NOTIFICATIONS
Foreign Asset/Account Reporting Information. Slovenian residents may be required to report the opening of bank and/or brokerage accounts to tax authorities within eight (8) days of opening such account. You should consult with your personal tax advisor to determine whether this requirement will be applicable to any accounts opened in connection with your participation in the Plan (e.g., your brokerage account with the Company’s designated broker).
SPAIN
TERMS AND CONDITIONS
Labor Law Acknowledgement. The following provision supplements Section IX of the Agreement:
By accepting the Award granted hereunder, you consent to participation in the Plan and the Program and acknowledge that you have received a copy of the Plan and the Program.
You understand that the Company has unilaterally, gratuitously and in its sole discretion decided to grant the Award under the Plan and the Program to individuals who may be members of the Board or Employees of the Company or its Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that the Awards granted will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis, other than as expressly set forth in the applicable Agreement, including this Appendix. Consequently, you understand that the Award granted hereunder is given on the assumption and condition that it shall not become a part of any employment contract (either with
APPENDIX A-18
the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. Further, you understand and freely accept that there is no guarantee that any benefit whatsoever shall arise from any gratuitous and discretionary grant of the Award since the future value of the Award and any Shares that may be issued in respect of such Award is unknown and unpredictable. In addition, you understand that the Award granted hereunder would not be made but for the assumptions and conditions referred to above; thus, you understand, acknowledge and freely accept that, should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then the grant of the Award or right to the Award shall be null and void.
Further, the vesting of the Performance Units is expressly conditioned your continued and active rendering of service, such that if your employment terminates for any reason whatsoever, the Performance Units may cease vesting immediately, in whole or in part, effective on the date of your termination of employment (unless otherwise specifically provided in Section I of the Agreement). This will be the case, for example, even if (1) you are considered to be unfairly dismissed without good cause (i.e., subject to a “despido improcedente”); (2) you are dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) you terminate service due to a change of work location, duties or any other employment or contractual condition; (4) you terminate service due to a unilateral breach of contract by the Company or an Affiliate; or (5) your employment terminates for any other reason whatsoever. Consequently, upon termination of your employment for any of the above reasons, you may automatically lose any rights to Performance Units that were not vested on the date of your termination of employment, as described in the Plan and the Agreement.
You acknowledge that you have read and specifically accept the conditions referred to in Section I of the Agreement.
NOTIFICATIONS
Securities Law Information. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory. The Agreement (including this Appendix) has not been nor will it be registered with the Comisión Nacional del Mercado de Valores, and does not constitute a public offering prospectus.
Exchange Control Information. If you acquire Shares under the Plan, you must declare the acquisition to the Direccion General de Comercio e Inversiones (“DGCI”). If you acquire the Shares through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGCI for you; otherwise, you will be required to make the declaration by filing a D-6 form. You must declare ownership of any Shares with the DGCI each January while the Shares are owned and must also report, in January, any sale of Shares that occurred in the previous year for which the report is being made, unless the sale proceeds exceed the applicable threshold, in which case the report is due within one (1) month of the sale.
Foreign Asset/Account Reporting Information. You are required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000.
To the extent that you hold Shares and/or have bank accounts outside of Spain with a value in excess of €50,000 (for each type of asset) as of December 31 each year, you will be required to report information on such assets in your tax return (tax form 720) for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than
APPENDIX A-19
€20,000 or if you sell or otherwise dispose of previously-reported Shares or accounts. If the value of such Shares and/or accounts as of December 31 does not exceed €50,000, a summarized form of declaration may be presented.
SWEDEN
TERMS AND CONDITIONS
Authorization to Withhold. This provision supplements Section III of the Agreement:
Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax Obligations as set forth in the Agreement, in accepting the Performance Units, you authorize the Company to withhold Shares or to sell Shares otherwise issuable to you upon vesting or settlement to satisfy Tax Obligations, regardless of whether the Company and/or Employer have an obligation to withhold such Tax Obligations, provided that such withholding would not, in the Company’s determination, result in adverse accounting consequences to the Company
SWITZERLAND
NOTIFICATIONS
Securities Law Information. Neither this document nor any other materials relating to the Performance Units (i) constitutes a prospectus according to articles 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), (ii) may be publicly distributed or otherwise made publicly available to any person other than an employee of the Company or one of its Subsidiaries in Switzerland or (iii) has been or will be filed with, approved or supervised by any Swiss reviewing body according to article 51 of FinSA or any Swiss regulatory authority, including the Swiss Financial Market Supervisory Authority.
TAIWAN
NOTIFICATIONS
Exchange Control Information. You may acquire and remit foreign currency (including proceeds from the sale of Shares or the receipt of Dividends or Dividend Equivalents) up to US$5,000,000 per year without justification. If the transaction amount is TWD500,000 or more in a single transaction, you must submit a Foreign Exchange Transaction Form. If the transaction amount is US$500,000 or more in a single transaction, you must also provide supporting documentation to the satisfaction of the remitting bank.
THAILAND
NOTIFICATIONS
Exchange Control Information. If proceeds from the sale of Shares or the receipt of any Dividends or Dividend Equivalents exceed US$1,000,000, you must (i) immediately repatriate such funds to Thailand and (ii) report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form. In addition, within three hundred and sixty (360) days of repatriation, you must either convert any funds repatriated to Thailand to Thai Baht or deposit the funds in a foreign exchange account with a Thai commercial bank. Any such commercial bank must be duly authorized by the Bank of Thailand to engage in the purchase, exchange and withdrawal of foreign currency.
APPENDIX A-20
TÜRKIYE
NOTIFICATIONS
Securities Law Information. The sale of Shares acquired under the Plan is not permitted within Türkiye. The sale of Shares acquired under the Plan must occur outside of Türkiye. The Shares are currently traded on the Nasdaq Global Select Market in the U.S. under the ticker symbol “AMGN” and Shares may be sold on this exchange.
Exchange Control Information. You may be required to engage a Turkish financial intermediary to assist with the sale of Shares acquired under the Plan. To the extent a Turkish financial intermediary is required in connection with the sale of any Shares acquired under the Plan, you are solely responsible for engaging such Turkish financial intermediary. You should consult your personal legal advisor prior to the sale of Shares to ensure compliance with the current requirements.
UNITED ARAB EMIRATES
NOTIFICATIONS
Securities Law Information. Performance Units under the Plan are available only to Participants under the Program and are for the purpose of providing equity incentives. The Plan, the Program and the Agreement are intended for distribution only to such Participants and must not be delivered to, or relied on by, any other person. You should conduct your own due diligence on the Performance Units offered pursuant to this Agreement. If you do not understand the contents of the Plan and/or the Agreement, you should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. Further, the Ministry of the Economy and the Dubai Department of Economic Development have not approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.
UNITED KINGDOM
TERMS AND CONDITIONS
Tax Withholding. This provision supplements Section V of the Agreement:
Without limitation to Section V of the Agreement, you agree that you are liable for all Tax Obligations and hereby covenant to pay all such Tax Obligations as and when requested by the Company or your Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified the Company and your Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on your behalf.
Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act, as amended, from time to time), you understand that you may not be able to indemnify the Company or your Employer for the amount of income tax not collected from or paid by you, as it may be considered a loan. In the event that you are an executive officer or director and income tax is not collected from you within ninety (90) days after the end of the tax year in which the Taxable Event occurs, the amount of any uncollected income tax may constitute an additional benefit to you on which additional income tax and national insurance contributions (“NICs”) may be payable. You acknowledge that you are
APPENDIX A-21
responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying your Employer for the amount of any NICs due on this additional benefit, which the Company or your Employer may obtain from you by any of the means set forth in Section V of the Agreement.
If the maximum applicable withholding rate is used, any over-withheld amount may be credited to you by the Company or your Employer (with no entitlement to the Common Stock equivalent) or if not so credited, you may seek a refund from the local tax authorities.
Joint Election. If you are a resident of the United Kingdom between the Grant Date and the vesting of the Performance Units, as a condition of the Award, you agree to accept any liability for secondary Class 1 National Insurance Contributions (the “Employer NICs”) which may be payable by the Company or your Employer with respect to the earning and/or payment of the Performance Units and issuance of Shares in respect of the Performance Units, the assignment or release of the Performance Units for consideration or the receipt of any other benefit in connection with the Performance Units.
Without limitation to the foregoing, you agree to make an election (the “Election”), in the form specified and/or approved for such election by HMRC, that the liability for your Employer NICs payments on any such gains shall be transferred to you to the fullest extent permitted by law. You further agree to execute such other elections as may be required between you and any successor to the Company and/or your Employer. You hereby authorize the Company and your Employer to withhold such Employer NICs by any of the means set forth in Section V of the Agreement.
Failure by you to enter into an Election, withdrawal of approval of the Election by HMRC or a joint revocation of the Election by you and the Company or your Employer, as applicable, shall be grounds for the forfeiture and cancellation of the Performance Units, without any liability to the Company or your Employer.
UNITED STATES
TERMS AND CONDITIONS
Nature of Grant. The following provision replaces Section IX(j) of the Award Agreement:
(j) in the event of termination of your employment (whether or not in breach of local labor laws), your right to receive Performance Units and receive Shares under the Plan and the Program, if any, will terminate effective as of the date that you are no longer actively employed; provided, however, that such right will be extended by any notice period mandated by law (e.g., the Worker Adjustment and Retraining Notification Act (“WARN Act”) notice period or similar periods pursuant to local law) and any paid administrative leave (as applicable), unless the Company shall provide you with written notice otherwise before the commencement of such notice period or leave. In such event, payment of the Performance Units shall be made in accordance with Section IV; provided, further, however, that notwithstanding the effect of any such extension, subject to Section 4.2 of the Program, in no event will the Performance Units be paid later than the 90th day following the last day of the Performance Period.
APPENDIX A-22
Exhibit 10.6
AMGEN INC. 2009 DIRECTOR EQUITY INCENTIVE PROGRAM
(Effective January 1, 2024 (the “Effective Date”))
As Amended and Restated October 24, 2023
ARTICLE I
PURPOSE
The purpose of this document is to set forth the general terms and conditions of the Amgen Inc. 2009 Director Equity Incentive Program (the “Program”) established by the Board of Directors of Amgen Inc. (the “Company”) including, with respect to certain awards granted to Non-Employee Directors of the Company hereunder, pursuant to the Company’s 2009 Equity Incentive Plan, as amended and/or restated from time to time (the “2009 Plan”). The Program is intended to provide a means to reinforce and motivate the Non-Employee Directors of the Company to focus on sustained long-term performance and value creation by awarding each such Non-Employee Director (alternatively, each an “Eligible Director”) stock or stock-based awards, subject to the restrictions and other provisions of the Program and, as applicable, the 2009 Plan.
ARTICLE II
DEFINITIONS
Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms in the 2009 Plan.
“Alternate Payee” shall mean the spouse, former spouse or child of an Eligible Director.
“Award” shall mean a Restricted Stock Unit granted to an Eligible Director pursuant to the Program.
“Board” shall mean the Board of Directors of the Company.
“Cash Compensation Payment Date” shall mean each date that the Company makes an Eligible Periodic Cash Compensation payment to Eligible Directors who have not elected to defer such compensation pursuant to Section 3.2 of this Program or the Deferred Compensation Program.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder.
“Common Stock” shall mean the common stock, par value $0.0001 per share, of the Company.
“Deferred Compensation Plan” shall mean the Amgen Nonqualified Deferred Compensation Plan, as amended and/or restated from time to time.
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“Eligible Director” shall mean a member of the Board who is not an employee of the Company or any Affiliate.
“Eligible Periodic Cash Compensation” shall mean the Board retainer, committee meeting fees and/or, if applicable, chair, lead independent director or other fees payable periodically to an Eligible Director by the Company for services performed as a member of the Board in respect of the applicable period to which such retainer and/or fees relate, in each case, with respect to which no valid deferral election has been made under the Deferred Compensation Plan.
“Final Eligible Periodic Cash Compensation” shall mean the last Eligible Periodic Cash Compensation amount earned by a Participating Eligible Director (but not paid by the Company) prior to the date that such director retires from, or otherwise ceases to serve as a member of, the Board.
“Participating Eligible Director” shall mean an Eligible Director who, pursuant to Sections 3.2(e) or (f), has elected to receive deferred Restricted Stock Units in lieu of all or a portion of his or her Eligible Periodic Cash Compensation for a given calendar year or any remainder thereof, as applicable.
“QDRO” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.
“Restricted Stock Unit” shall mean a restricted right to receive, on the applicable settlement date, a share of Common Stock or an amount in cash equal to the Fair Market Value of a share of Common Stock as of such settlement date, granted pursuant to Article III. For the avoidance of doubt, Restricted Stock Units may, but need not be, granted pursuant to the 2009 Plan.
ARTICLE III
RESTRICTED STOCK UNITS
3.1 (a) Annual Grants. On the date of each annual meeting of stockholders of the Company, beginning with the 2021 annual meeting of stockholders (the “Annual Grant Date”), each person who is at that time elected to serve as an Eligible Director shall automatically be granted, without further action by the Company, the Board, or the Company’s stockholders, Restricted Stock Units to acquire a number of shares of Common Stock (rounded down to the nearest whole number) equal to the quotient obtained by dividing (x) $220,000, by (y) the closing market price of a share of Common Stock on the Annual Grant Date (rounded to two decimal places) (such Restricted Stock Units, the “Annual RSU Award”). Notwithstanding the foregoing, each person who becomes an Eligible Director during the period following the Annual Grant Date with respect to any year and the date of the next annual meeting of stockholders (such period, the “Initial Period”) shall automatically be granted, on the date which is two business days after the release of the Company's quarterly or annual earnings for the Initial Period next following such person becoming an Eligible Director, and without further action by the Company, the Board, or the Company’s stockholders, a prorated Annual RSU Award (rounded down to the nearest whole number) for the Initial Period based on the number of months during which such person would serve as an Eligible Director during the Initial Period if the Eligible Director were to serve through the end of the Initial Period.
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(b) Quarterly Grants in Lieu of Cash Compensation. A Participating Eligible Director shall automatically be granted, on the date which is two business days after the release of the Company’s quarterly earnings for the fiscal quarter most recently ending after the occurrence of each applicable Cash Compensation Payment Date (each such date of grant, a “Quarterly Grant Date”), Restricted Stock Unit awards as follows: (i) with respect to each such Eligible Periodic Cash Compensation amount other than Final Eligible Periodic Cash Compensation, deferred Restricted Stock Units to acquire a number of shares of Common Stock (rounded to four decimal places) equal to the quotient obtained by dividing (x) the dollar value of such Eligible Periodic Cash Compensation amount by (y) the closing market price of a share of Common Stock on such Quarterly Grant Date (rounded to two decimal places), and (ii) with respect to Final Eligible Periodic Cash Compensation, a number of cash-settled deferred Restricted Stock Units equal to the quotient obtained by dividing (x) the dollar value of such Final Eligible Periodic Cash Compensation by (y) the closing market price of a share of Common Stock on such Quarterly Grant Date (rounded to two decimal places) (the “Cash-Settled RSUs” and, together with the Restricted Stock Units described in (i), the “Quarterly RSU Awards”). Each Cash-Settled RSU granted pursuant to Section 3.1(b)(ii) shall represent a restricted right to receive, on the applicable Deferred Payment Date (as defined in Section 3.2(d) below), an amount in cash per Restricted Stock Unit equal to the Fair Market Value of a share of Common Stock as of such Deferred Payment Date. For the avoidance of doubt, no portion of the Board retainer, committee meeting fees or, if applicable, chair, lead independent director or other fees payable to an Eligible Director by the Company for services performed as a member of the Board with respect to which a valid deferral election has been made by such Eligible Director pursuant to the Deferred Compensation Plan shall constitute “Eligible Periodic Cash Compensation” hereunder. In the event of any conflict between the deferral elections made by an Eligible Director pursuant to the Deferred Compensation Plan and this Program, the deferral election made under the Deferred Compensation Plan shall control.
Any fractional Restricted Stock Units that remain outstanding as of the Deferred Payment Date shall represent a restricted right to receive, on the applicable Deferred Payment Date, an amount in cash per fractional Restricted Stock Unit equal to the corresponding fraction of the Fair Market Value of a share of Common Stock as of such Deferred Payment Date, and any such fractional Restricted Stock Units shall be settled in cash.
3.2 Terms of Restricted Stock Units.
(a) Restricted Stock Units, other than Cash-Settled RSUs, shall constitute Restricted Stock Units under Section 9.5 of the 2009 Plan. Cash-Settled RSUs granted pursuant to Section 3.1(b)(ii) hereof shall not be granted under, or subject to the terms of, the 2009 Plan. Each Restricted Stock Unit granted pursuant to this Program shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Restricted Stock Units need not be identical, but each Restricted Stock Unit shall include (through incorporation of provisions hereof by reference in the Restricted Stock Unit agreement or otherwise) the substance of each of the following provisions as set forth in this Section 3.2 and Section 9.5 of the 2009 Plan.
(b) Each grant of Restricted Stock Units made to an Eligible Director shall be fully vested as of the date of grant of such Restricted Stock Units (such date, “Vesting Date”).
(c) A holder’s vested Restricted Stock Units shall be paid by the Company in shares of Common Stock (on a one-to-one basis) on, or as soon as practicable after, the Vesting Date (the “Payment Date”), but in any event by the fifteenth day of the third month following the end of the tax year in which such Restricted Stock Units vest, unless the
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payment of such Restricted Stock Units has been properly deferred pursuant to this Section 3.2.
(d) With respect to an Eligible Director’s Annual RSU Award, such Eligible Director may irrevocably elect in writing by December 31 of the year preceding the grant of such Annual RSU Award to defer the payment of such Annual RSU Award, and any dividends paid thereon, to another date under one of the following options (a “Deferred Payment Date”), which payment form or forms shall be specified at the time of the deferral election: (i) full payment of the vested Restricted Stock Units in January of a year specified by the Eligible Director which shall be no earlier than the third calendar year following the calendar year in which the date of grant occurs and no later than the tenth calendar year following such year; (ii) full payment of the vested Restricted Stock Units in January of the calendar year following the year in which the Eligible Director with respect to whom the Restricted Stock Units were granted ceases to be an Eligible Director and ceases to otherwise provide services to the Company in a manner that constitutes a “separation from service” (within the meaning of Code Section 409A) for any reason; (iii) payment of the vested Restricted Stock Units in five substantially equal annual installments, commencing in January of the calendar year following the year in which the Eligible Director with respect to whom the Restricted Stock Units were granted ceases to be an Eligible Director and ceases to otherwise provide services to the Company in a manner that constitutes a “separation from service” (within the meaning of Code Section 409A) for any reason; or (iv) payment of the vested Restricted Stock Units in ten substantially equal annual installments, commencing in January of the calendar year following the year in which the Eligible Director with respect to whom the Restricted Stock Units were granted ceases to be an Eligible Director and ceases to otherwise provide services to the Company in a manner that constitutes a “separation from service” (within the meaning of Code Section 409A) for any reason.
(e) On or before December 31 of any year, an Eligible Director may irrevocably elect in writing to receive deferred Restricted Stock Units in lieu of all or a portion of his or her Eligible Periodic Cash Compensation earned during the year following the year of such election. In the event of such election, such Eligible Director shall be granted Quarterly RSU Awards pursuant to Section 3.1(b) hereof and, at the time of any such election, such Eligible Director shall further irrevocably elect in writing to defer the payment of such Quarterly RSU Award, and any dividends paid thereon, to a Deferred Payment Date in accordance with Section 3.2(d) hereof.
(f) Notwithstanding anything in Sections 3.2(d) or 3.2(e) to the contrary, any person who shall become an Eligible Director during any year, and who was not an Eligible Director on the preceding December 31, may elect within thirty (30) days after such person first becomes an Eligible Director to (i) defer payment of the portion of such Eligible Director’s Annual RSU Award earned during the remainder of such year and any dividends paid thereon, to a Deferred Payment Date, and (ii) receive Restricted Stock Units in lieu of all or a portion of his or her Eligible Periodic Cash Compensation earned during the remainder of such year and granted as deferred Quarterly RSU Awards pursuant to Section 3.1(b) hereof, the payment of which (and any dividends paid thereon) shall be deferred to a Deferred Payment Date.
(g) In each case, any shares of Common Stock issued in respect of a Restricted Stock Unit shall be deemed to be issued in consideration for future services to be rendered or past services actually rendered to the Company or for its benefit, by the Eligible Director, which the Board deems to have a value not less than the par value of a share of Common Stock.
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3.3 Dividend Equivalents.
(a) Crediting and Payment of Dividend Equivalents. Subject to this Section 3.3, Dividend Equivalents shall be credited on each Restricted Stock Unit (including fractional Restricted Stock Units) granted to an Eligible Director under the Program in the manner set forth in the remainder of this Section 3.3. If the Company declares one or more dividends or distributions (each, a “Dividend”) on its Common Stock with a record date which occurs during the period commencing on the date of grant through and including the day immediately preceding the day the shares of Common Stock and/or the cash amount subject to the Restricted Stock Units are issued or paid to the Eligible Director, whether in the form of cash, Common Stock or other property, then on the date such Dividend is paid to the Company’s stockholders the Eligible Director shall be credited with an amount equal to the amount or fair market value of such Dividend which would have been payable to the Eligible Director if the Eligible Director held a number of shares of Common Stock (including fractional shares) equal to the number of the Eligible Director’s Restricted Stock Units (including fractional Restricted Stock Units) as of the record date for such Dividend. Any such Dividend Equivalents, including Dividend Equivalents with respect to Cash-Settled RSUs, shall be credited and deemed reinvested in the Common Stock as of the Dividend payment date. Dividend Equivalents with respect to Quarterly RSU Awards other than Cash-Settled RSUs shall be payable in full shares of Common Stock, unless the Board determines, at any time prior to payment and in its discretion, that they shall be payable in cash, and Dividend Equivalents with respect to Cash-Settled RSUs granted pursuant to Section 3.1(b)(ii) hereof shall be payable in cash. Dividend Equivalents payable with respect to fractional shares of Common Stock shall be paid in cash.
(b) Treatment of Dividend Equivalents. Except as otherwise expressly provided in this Section 3.3, any Dividend Equivalents credited to an Eligible Director shall be subject to all of the provisions of the Program and the Restricted Stock Unit Agreement which apply to the Restricted Stock Units with respect to which they have been credited and shall be payable, if at all, at the time and to the extent that the underlying Restricted Stock Unit becomes payable.
ARTICLE IV
MISCELLANEOUS
4.1 Administration of the Program. The Program shall be administered by the Board and, to the extent permitted by applicable law or the rules of any Securities Exchange, the Board may delegate to a committee of one or more members of the Board the authority to administer the Program.
4.2 Application of 2009 Plan. The Program is subject to all of the provisions of the 2009 Plan, including Section 13.2 thereof (relating to adjustments upon changes in the Common Stock), and its provisions are hereby made a part of the Program, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the 2009 Plan. In the event of any conflict between the provisions of this Program and those of the 2009 Plan, the provisions of the 2009 Plan shall control.
4.3 Amendment and Termination. Notwithstanding anything herein to the contrary, the Board may, at any time, terminate, modify or suspend the Program; provided, however, that, without the prior consent of the Eligible Directors affected, no such action may adversely affect any rights or obligations with respect to any Awards theretofore earned but unpaid, whether or not the amounts of such Awards have been computed and whether or not
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such Awards are then payable. Any amendment of this Program may, in the sole discretion of the Board, be accomplished in a manner calculated to cause such amendment not to constitute an “extension,” “renewal” or “modification” (each within the meaning of Code Section 409A) of any Restricted Stock Units that would cause such Restricted Stock Units to be considered “nonqualified deferred compensation” (within the meaning of Code Section 409A).
4.4 No Contract for Employment. Nothing contained in the Program or in any document related to the Program or to any Award shall confer upon any Eligible Director any right to continue as a director or in the service of the Company or an Affiliate or constitute any contract or agreement of service for a specific term or interfere in any way with the right of the Company or an Affiliate to reduce such person’s compensation or to remove, disqualify or otherwise terminate the service of such person, with or without cause.
4.5 Nontransferability.
(a) No benefit payable under, or interest in, this Program shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, debts, contracts, liabilities or torts of any Eligible Director or beneficiary; provided, however, that, nothing in this Section 4.5 shall prevent transfer (i) by will, (ii) by applicable laws of descent and distribution or (iii) to an Alternate Payee to the extent that a QDRO so provides.
(b) The transfer to an Alternate Payee of an Award pursuant to a QDRO shall not be treated as having caused a new grant. If an Award is so transferred, the Alternate Payee generally has the same rights as the Eligible Director under the terms of the Program; provided however, that (i) the Award shall be subject to the same terms and conditions, including the vesting terms and termination provisions, as if the Award were still held by the Eligible Director, and (ii) such Alternate Payee may not transfer an Award, except transfer (1) by will or (2) by applicable laws of descent and distribution. In the event of the Company Stock Administrator’s receipt of a domestic relations order or other notice of adverse claim by an Alternate Payee of an Eligible Director of an Award, transfer of the proceeds of such Award, whether in the form of cash, stock or other property, may be suspended. Such proceeds shall thereafter be transferred pursuant to the terms of a QDRO or other agreement between the Eligible Director and Alternate Payee.
4.6 Nature of Program. No Eligible Director, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset of the Company or any Affiliate by reason of any award hereunder. There shall be no funding of any benefits which may become payable hereunder. Nothing contained in this Program (or in any document related thereto), nor the creation or adoption of this Program, nor any action taken pursuant to the provisions of this Program shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company or an Affiliate and any Eligible Director, beneficiary or other person. To the extent that an Eligible Director, beneficiary or other person acquires a right to receive payment with respect to an award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company or other employing entity, as applicable. All amounts payable under this Program shall be paid from the general assets of the Company or employing entity, as applicable, and no special or separate fund or deposit shall be established and no segregation of assets shall be made to assure payment of such amounts. Nothing in this Program shall be deemed to give any person any right to participate in this Program except in accordance herewith.
4.7 Governing Law. This Program shall be construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof.
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4.8 Code Section 409A. To the extent that this Program constitutes a “non-qualified deferred compensation plan” within the meaning of Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, this Program shall be interpreted and operated in accordance with Code Section 409A. Notwithstanding any provision of this Program to the contrary, in the event that following the grant of any Restricted Stock Units, the Board determines that any Award does or may violate any of the requirements of Code Section 409A, the Board may adopt such amendments to the Program and any affected Award or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (a) exempt the Program and any such Award from the application of Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Code Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Board to adopt any such amendment, policy or procedure or take any such other action.
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Exhibit 10.9.5
FIFTH AMENDMENT TO THE
AMGEN INC. SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE OCTOBER 16, 2013
The Amgen Inc. Supplemental Retirement Plan, as Amended and Restated Effective October 16, 2013, and as subsequently amended (the “Plan”), is hereby amended, effective as of the dates below, as follows:
1.Effective January 1, 2024, Section 2.27 is amended by adding the following at the end thereof:
“If you were employed by Horizon Therapeutics plc or any of its subsidiaries (“Horizon”) on October 6, 2023 (the “Effective Time”) and, effective as of the Effective Time, your employment continued with Horizon or you transitioned to employment with the Company, then, for purposes of calculating your Years of Service under the Plan, you shall receive credit for your service with the Company Group and its predecessors (as defined in the Transaction Agreement) to the same extent and for the same purposes for which your service was credited under the Horizon Therapeutics USA, Inc. Deferred Compensation Plan as of the Effective Time.”
2. Effective January 1, 2024, Appendix A is amended by adding the following entity to the end of the list of Participating Subsidiaries and Affiliates of Amgen Inc.:
“12. Horizon Therapeutics USA, Inc. and its U.S. subsidiaries - January 1, 2024”
To record this Fifth Amendment to the Plan as set forth herein, the Company has caused its authorized officer to execute this document this _18__ day of December, 2023.
AMGEN INC.
By: /s/ Derek Miller
Name: Derek Miller
Title: Senior Vice President, Human Resources
Exhibit 10.12.4
FOURTH AMENDMENT TO THE
AMGEN NONQUALIFIED DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE OCTOBER 16, 2013
The Amgen Nonqualified Deferred Compensation Plan, as Amended and Restated Effective October 16, 2013, and as subsequently amended (the “Plan”), is hereby amended, effective January 1, 2024, as follows:
1.Appendix A is amended by adding the following entity to the end of the list of subsidiaries and affiliates designated as Employers:
“Horizon Therapeutics USA, Inc. and its U.S. subsidiaries”
To record this Fourth Amendment to the Plan as set forth herein, the Company has caused its authorized officer to execute this document this _18__ day of December, 2023.
AMGEN INC.
By: /s/ Derek Miller
Name: Derek Miller
Title: Senior Vice President, Human Resources
Exhibit 10.14
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 805.447.1000 www.Amgen.com | |||||
December 12, 2023
Dr. James (Jay) E. Bradner
XXXXXXXX
XXXXXXXX
Dear Jay:
Congratulations! You have made an excellent impression on Amgen and I am excited to present you with the attached offer package. As an organization dedicated to improving the lives of patients around the world, Amgen welcomes you to join the environment of diverse, ethical, committed and highly accomplished people who respect each other while competing intensely to win. Together, we live the Amgen values as we continue advancing science to serve patients.
On behalf of Amgen, I am pleased to offer you the position of Executive Vice President Research and Development & Chief Scientific Officer, Global Career Framework (GCF) Level 11. You will have duties and authorities commensurate with such position. You will report solely and directly to Amgen’s Chief Executive Officer, Robert A. Bradway.
Amgen will pay you an annual salary of $1,200,000.00 paid out bi-weekly and over 26 pay periods in one year. Your annual salary will be subject to regular review for increases (but not decreases).
You will commence employment on December 18, 2023 (the “Start Date”) or such other date as may be mutually agreed in writing between you and Amgen.
This position is located in Thousand Oaks, California. Amgen acknowledges and agrees that during 2024 you may work from your current home in Massachusetts, and that you shall split your time in your good faith, reasonable discretion; notwithstanding the foregoing, upon the request of your supervisor, you agree to be present in Thousand Oaks.
Provided that you sign a “Sign-On/Retention Bonus Agreement for New Hire Staff Members” in the form provided by Amgen and attached hereto, Amgen will pay you a bonus of $1,250,000.00, less federal and state tax and other applicable deductions and withholdings, subject to the terms of that Agreement. Please review that Agreement for information regarding timing and other payment details.
Subject to the terms and conditions set forth in the grant agreement, Amgen will grant you restricted stock units (RSU) with a USD value of $2,500,000.00. The actual number of RSUs to be awarded shall be determined by dividing the grant value by the Amgen common stock closing price on the applicable grant date. Upon each applicable vesting date, you will receive a number of shares of Amgen common stock equal to the number of restricted stock units that vest, less any shares that are withheld to satisfy applicable taxes. This grant will vest beginning with the second anniversary of the grant date through the fourth anniversary at a rate of 33%, 33% and 34% each year, respectively, contingent upon your being actively employed with Amgen through each vesting date.
As an Amgen executive you are required to hold Amgen common stock in accordance with the Amgen Stock Ownership Guidelines. Your holding requirement is based on your Amgen GCF level and as an EVP you are required to hold Amgen common stock in the amount equal to 3X your base salary. You must meet your holding requirement by December 31st of the fifth calendar year following the date on which you became an Officer of Amgen. To help you meet your holding requirement, the Amgen Stock Ownership Guidelines prohibit you from selling stock that you receive as part of your Amgen LTI awards (including shares that you receive as a result of option exercise, special, promotional, and annual grants) until you have met your required stock ownership level.
You will be eligible for future grants as part of Amgen’s Long Term Incentive (LTI) program, beginning with our 2024 annual grant cycle. Amgen will grant you a 2024 annual grant that will be allocated between performance units, stock options and restricted stock units consistent with other senior executive grants and on terms and conditions that are no less favorable than other senior executive grants. The projected value of such 2024 grant is $4,300,000.00, which value will not be pro-rated based on your start date. Grants under the LTI program are discretionary as approved by the Compensation and Management Development Committee of the Board of Directors of Amgen Inc. (the “Compensation Committee”).
You will be eligible to participate in Amgen’s Global Management Incentive Plan (the “GMIP”) pursuant to the terms of the GMIP. Your annual target incentive opportunity will be 100% of your base salary earnings during the plan year. Your 2024 GMIP bonus will not be pro-rated based on your start date. Awards under the GMIP are discretionary. Your actual GMIP bonus may be more or less than this target amount, and may vary based on Company performance, any other criteria selected by the Company, and management’s assessment of your individual performance and contribution. You must be actively employed through the last regularly scheduled Amgen business day of the plan year to be eligible for that year’s GMIP bonus.
You are also eligible to participate in the Amgen Nonqualified Deferred Compensation Plan (the “DCP”) to voluntarily defer, on a pre-tax basis, a portion of your annual earnings, including base salary, sales incentive plan, and/or Executive Incentive Plan/Global Management Incentive Plan (GMIP) bonus. Shortly after commencing your employment at Amgen, you will receive an enrollment notice via e-mail regarding the Amgen’s DCP plan. A Q&A regarding the DCP is enclosed.
In addition, your position will make you eligible to participate in the Amgen Inc. Change of Control Severance Plan, as amended from time to time (the “COC”). COC eligibility and benefit levels are determined immediately prior to a “Change of Control” as defined in the COC. If, upon your termination, you are eligible to receive severance benefits under the COC and you are also eligible to receive severance benefits from another plan agreement or other source, you will be paid the greater of the amount from that plan or the amount provided in the COC, but not both amounts. A copy of the COC is enclosed.
If, within the first 2 years of your employment with Amgen, Amgen terminates your employment without “Cause”, as defined in below, you will be entitled to the benefits described in this paragraph (the “Termination Paragraph”), provided that you sign a general release in the form furnished to you by Amgen and do not timely revoke it. The following are such benefits: two (2) years of your annual base salary, then in effect, and two (2) times your target cash incentive opportunity (i.e., GMIP or successor bonus plan target, which is currently 100%), then in effect, paid in a lump sum by the second payroll date following the date which the release of claims becomes non-revocable and (2) if you elect continuation coverage under the Amgen group medical and dental plans for yourself and your qualified beneficiaries under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), Amgen will pay the cost of such coverage until the earlier to occur of the following: (A) twelve (12) months following your termination of employment or (B) the date on which you are no longer eligible for such COBRA coverage. Please note that this Termination Paragraph does not alter the at-will nature of your employment at Amgen.
You will not be obligated to seek or obtain other employment after the date of termination, or take any other action by way of mitigation of the amounts payable under the Termination Paragraph or otherwise, and such amounts shall not be reduced, whether or not you obtain other employment.
For purposes of the Termination Paragraph, “Cause” means (i) unfitness for service, inattention to or neglect of duties, or incompetence; (ii) dishonesty; (iii) disregard or violation of the policies or procedures of Amgen; (iv) refusal or failure to follow lawful directions of the Company; (v) breach of the attached Amgen Proprietary Information and Inventions Agreement or (vi) you have committed or do commit any act, or you have conducted or do conduct your behavior in a manner, which: (a) shall be a criminal offense involving moral turpitude under federal, state or local laws; or (b) has a material adverse effect on the business or reputation of Amgen.
You have advised the Company of one or more Restrictive Agreements (as defined in the New Staff Member Letter and Certification) with Novartis (the “Novartis Agreement”). For purposes of this offer letter, “Specified Forfeiture” means the forfeiture, due to your acceptance of Amgen’s offer of employment and employment with Amgen as contemplated in this offer letter, of Performance Share Units (PSUs) scheduled to vest in 2024 and 2025 and Restricted Stock Units scheduled to vest in 2024, 2025 and 2026, in all cases as described in Section D of the Novartis Agreement (“Share Forfeitures”). Amgen agrees to make awards to you in a mix of cash and Amgen RSUs equal to the value of any Share Forfeitures, upon confirmation of the forfeiture(s). Any cash award will be equal to that portion of the Share Forfeitures that is attributable to shares that would have otherwise vested by March 15, 2024. Such cash award will be paid to you by December 31, 2023, but in no event later than January 15, 2024. The value of any Share Forfeitures will be determined using the average closing stock price of Novartis AG common stock on the Start Date. Further, the value of any Share Forfeiture associated with Performance Share Units (PSUs) scheduled to vest in 2024 will be paid at the actual level of performance, capped at a level of achievement of 150%; the value of any Share Forfeiture associated with PSUs scheduled to vest in 2025 calculated using the target (100%) level of achievement. To the extent that the level of performance for PSUs scheduled to vest in 2024 is not known at the time the cash award is made, the level of performance will be assumed to be 100% and a true up payment will be made when the actual performance is known. You must be employed with Amgen on the date of payment or grant, as applicable. Amgen RSU grants are subject to vesting and other terms pursuant to their grant agreements and consistent with the forgoing.
As an executive at Amgen, you will be eligible for the following: an annual physical examination provided by Amgen; and, reimbursement for up to $15,000.00, per year for financial counseling, tax preparation and related services.
You will also have the opportunity to participate in our comprehensive benefits program. Amgen’s excellent health care plan currently includes medical, dental, and vision coverage for you and your eligible dependents. Amgen covers the majority of the health care plan’s cost while staff members contribute toward the balance through payroll deductions. Please be advised that in order for you and your dependents to be eligible for Amgen’s benefits program you must:
1.Report to work at Amgen or another location to which you are required to travel and perform the regular duties of your employment.
2.Contact the Amgen Benefits Center at 1-800-97AMGEN, to enroll in the plan within 31 days of your hire date.
3.Meet all other eligibility requirements under the plan.
The Amgen Retirement and Savings Plan, our 401(k) plan, provides an opportunity for you to save a percentage of your pay on a tax-deferred basis, within Internal Revenue Service limits. Amgen will also contribute to your 401(k) account to help you save for your future financial goals. These benefits, services and programs are summarized in the enclosed brochure called “A Guide to Total Rewards at Amgen.”
Amgen is a Military Friendly Employer and proudly offers a generous military leave policy for Military Active Duty and Reservists.
This offer of employment is contingent upon confirmation by Amgen of information listed on your employment application, and the receipt by Amgen of satisfactory results from a background verification. Your employment may commence before you complete a pre-employment drug test, but your continued employment is contingent on Amgen’s receipt of satisfactory results from that test. The drug test will be initiated on the day Amgen receives acceptance of this offer and must be taken within 72 hours.
Enclosed and included as part of this offer (Attachment 1) is information regarding Amgen's Proprietary Information and Inventions Agreement, and a packet of materials entitled "Arbitration of Disputes" which includes a Mutual Agreement to Arbitrate Claims. Also enclosed and included as part of this offer in Attachment 1 is information regarding Amgen's New Staff Member Letter and Certification. This offer is contingent upon you truthfully and accurately completing the Certification, and returning it to the Company before your first day of employment.
2
This offer of employment is contingent upon you completing the items described in Attachment 1, and upon your ability to perform for Amgen all of the duties of your position without restriction from, or violation of, any enforceable contractual obligations owed to any former employer or entity for whom you worked or provided service(s).
By signing this letter, you understand and agree that your employment with Amgen is at-will. This means that your employment can terminate, with or without Cause, and with or without notice, at any time, at your option or Amgen's option. This at-will relationship will remain in effect throughout your employment with either Amgen Inc. or any of its subsidiaries or affiliates. This letter, and its enclosures, constitutes the entire agreement, arrangement and understanding between you and Amgen on the nature and terms of your employment with Amgen, including, but not limited to, the kind, character and existence of your proposed job duties, the length of time your employment will last, and the compensation you will receive. This letter, its enclosures, supersedes any prior or contemporaneous agreement, arrangement or understanding on this subject matter. By executing this letter as provided below, you expressly acknowledge the termination of any such prior agreement, arrangement or understanding, except as referenced in this letter and/or its enclosures. Also, by your execution of this letter, you affirm that no one has made any written or oral statement that contradicts the provisions of this letter or its enclosures. The at-will nature of your employment, as set forth in this paragraph, can be modified only by a written agreement signed by both Amgen's Senior Vice President of Human Resources and you which expressly alters it. This at-will relationship may not be modified by any oral or implied agreement or by any Company policies, practices or patterns of conduct.
The complete terms of the plans, programs and policies referenced to in this letter are set forth in their respective documents, which are maintained by the Company. The Company reserves the right to amend or terminate any of these plans, programs or policies at any time, in its sole discretion. In the event of any difference between this offer letter and the provisions of the respective plan, program or policy document, the respective document will govern.
You have made an excellent impression on the staff at Amgen. We are enthusiastic about the contribution you can make, and we believe that Amgen can provide you with attractive opportunities for personal achievement and growth. I look forward to your favorable reply by December 12, 2023. If you accept our offer, please sign and date the copy of the letter and return it to our Talent Acquisition Department along with the completed and signed Proprietary Information and Inventions Agreement and the Mutual Agreement to Arbitrate Claims. Please retain the original offer letter for your records. If you have any questions regarding this offer, please contact your recruiter, Julia Dupps at (805) 313-XXXX.
Sincerely,
/s/ Daniel A. Lopez
Daniel A. Lopez
Executive Director, Talent Acquisition
JC:ac Enclosures
| /s/ James E. Bradner, M.D. | 12/13/2023 | |||||||
| Signature of Acceptance | Date | |||||||
| December 18, 2023 | ||||||||
| Anticipated Start Date | ||||||||
3
ATTACHMENT 1
In order to accept our offer you will be required to:
A)Complete, date and sign the Amgen New Staff Member Letter and Certification and return it with your signed offer letter.
B)Complete, date and sign the Amgen Proprietary Information and Inventions Agreement and return it with your signed offer letter.
C)Date and sign the enclosed Mutual Agreement to Arbitrate Claims and return it with your signed offer letter.
D)You will be required to provide Amgen with proof of your identity and eligibility for employment per requirements of the Immigration Reform and Control Act of 1986 within 3 (three) days of hire.
4
NEW STAFF MEMBER LETTER AND CERTIFICATION
Welcome to Amgen! Amgen has no need to learn and does not want any proprietary, confidential or trade secret information or other property that belongs to any prior employers, entities or other persons you have worked for (collectively, “Prior Employers”). Please review carefully and comply with the following instructions and policies. After a complete and thorough review, please execute the Certification below.
•Carefully read Amgen’s Proprietary Information and Inventions Agreement (“PIIA”) that you have executed, and make sure that you understand your obligations under the terms of the PIIA. If you have any questions, please contact Amgen Human Resources.
•You may not bring any material to Amgen from third parties in hard copy, in electronic format or in any other form. Nor should you use any such material in your work for Amgen.
•Prior to commencing any work for Amgen, conduct a search of your personal computer(s), email accounts, and any other electronic storage devices you possess, as well as any files you maintain in hard copy, for information or materials belonging to your Prior Employers. You are instructed to make appropriate arrangements to return any such information or materials belonging to your Prior Employers, consistent with any obligations you have to the Prior Employers.
•Do not disclose to or provide Amgen with any customer lists you obtained from or during your employment with your Prior Employers. When interacting with doctors or other members of the healthcare industry with whom you may have had contact while working for your Prior Employers, clearly indicate to such persons that you are an Amgen staff member, and focus on Amgen’s products rather than using or discussing information related to your prior employment.
•If you have any doubts regarding whether you may take, disclose, upload, access, or use any information in your possession, you must err on the side of not taking, disclosing, uploading, accessing or using the information.
•Do not begin any work for Amgen before your employment with your Prior Employers has officially ended.
•After commencing work for Amgen, do not request that any employee of your Prior Employers provide you with, or take any other steps to obtain, any information or property of your Prior Employers.
•Under no circumstances are you permitted to connect to an Amgen computer any electronic storage device containing information or property relating to your Prior Employers. Likewise, in performing work for Amgen, you are not permitted to use, disclose, access or upload any such information or property. If you discover that any confidential, proprietary, or trade secret information or property of your Prior Employers has been uploaded to any Amgen computer or email system(s), immediately inform Amgen Human Resources.
•Amgen may monitor and/or conduct an audit of your use of Amgen computer systems, and you should not have any expectation of privacy in data sent, stored or received on any Amgen systems. See the Use of Amgen Systems and Internet Conduct Policy for further details.
•Disclose and identify below all agreements relating to your Prior Employers that may affect your eligibility to become employed by and/or to perform work for Amgen, including any non-competition agreement(s), agreements relating to the solicitation of employees or customers, or other restrictive agreements (collectively, “Restrictive Agreements”), regardless of whether you believe these agreements are enforceable, apply to your potential employment with Amgen, or have expired, and provide a copy to Amgen Human Resources. If “none,” please so indicate. Do not leave blank.
•If your position at Amgen will involve manufacturing or process development; chemical, biologic, pharmaceutical, medical device, or diagnostic research; or development of therapeutic molecules, medical devices, or diagnostic assays or agents, please review your agreements with Prior Employers to determine whether you are required to assign intellectual property rights to any Prior Employer even after that employment has ended. If you do find such an agreement or if you are unsure, please send such agreement to Amgen Human Resources. If “none,” please so indicate. Do not leave blank.
| Name of Agreement | Employer | Date signed | ||||||||||||
| Separation Letter and General Release (as amended) | Novartis International AG | September 3, 2022, March 1, 2023 | ||||||||||||
| Employment Contract | Novartis Institutes for BioMedical Research, Inc | January 1, 2016 | ||||||||||||
| Annual Awards under the Novartis AG Deferred Share Bonus Plan (forfeiture condition only, not prohibition on future employment) | ||||||||||||||
| Annual Awards under the Novartis AG LTIP (forfeiture condition only, not prohibition on future employment) | ||||||||||||||
| (Attach additional sheets, if necessary) | ||||||||||||||
5
•If you are subject to an agreement not to solicit employees of your Prior Employers, you should refrain from doing so. You should specifically inform Human Resources if you are subject to such an agreement. If you are subject to such an agreement and a former colleague contacts you about employment opportunities with Amgen, please contact Human Resources for assistance.
•Do not use any email account (including Amgen email accounts), text messages, Instant Messaging, or any other method of written communication to store or discuss any proprietary, confidential or trade secret information or other property belonging to your Prior Employers.
•Immediately inform Amgen Human Resources if you are contacted in any manner by any former employer regarding your work for Amgen and/or any non-competition agreements, agreements that relate to the solicitation of employees or customers, or any other restrictive agreements you entered into in connection with any Prior Employers.
CERTIFICATION
I understand that the above list is only a summary and does not purport to include all of my continuing obligations to Amgen. By signing below, I certify that I have and will continue to comply with the above instructions and policies.
I hereby agree that Amgen may, at its sole option and discretion contact my Prior Employer(s) to determine whether any Restrictive Agreements exist and, if so, their applicable terms. I acknowledge that Amgen may revoke its offer or terminate my employment if it determines in its reasonable business judgment that I have failed to disclose or am otherwise subject to an enforceable Restrictive Agreement or my failure to abide by the certifications contained herein.
Nothing in this Letter and Certification is intended to alter, or shall have any impact on, my status as an at-will employee of Amgen. In addition to its right to terminate my employment, Amgen shall have the right to suspend me from work without pay during its investigation into (1) the existence and/or enforceability of any restrictions on my ability to perform work for Amgen should I fail to disclose a Restrictive Agreement, or (2) the failure to abide by the certifications contained herein.
| I agree: | ||
| /s/ James E. Bradner, M.D. | ||
| Signature of Staff Member | ||
| James E. Bradner, M.D. | ||
| Print Name of Staff Member | ||
| December 13, 2023 | ||
| Date | ||
6
AMGEN SIGN-ON/RETENTION BONUS AGREEMENT FOR NEW HIRE STAFF MEMBERS
I, James E. Bradner, agree to accept my sign-on/retention bonus payment (“Bonus”) from Amgen on the following terms.
1.The amount of the Bonus is described in the offer letter (as may be amended) that was provided separately to me.
2.The Bonus will generally be paid to me as follows:
•Within (30) days following my start date with Amgen, I will be paid $750,000.00 as an advance. This amount will be earned only after I complete two years of employment with Amgen. I understand that the Bonus is intended to facilitate my acceptance of employment with Amgen and my continued employment with Amgen for a period of at least two years and that Amgen is providing me with the advance with the expectation that I will not resign my employment during this two-year period. Amgen will use its best efforts to cause this amount to be paid in calendar year 2023.
•$500,000.00 to be paid on or about the first anniversary of my start date. I understand that if I am not employed by Amgen on this date, I have not earned any portion of this amount.
3.I understand and agree that I am an at-will employee and that I am free to resign at any time and Amgen is free to terminate my employment, with or without cause, at any time. Nevertheless, I understand that if I resign my employment with Amgen or are terminated for cause before I complete two years of employment, I have not earned any portion of the Bonus amount. Therefore, I agree to repay Amgen for the gross amount of my Bonus if I resign my employment for any reason or are terminated for cause within two years from my hire date at Amgen. I also agree that in the event of such a resignation, the amount to be reimbursed shall be due in full and payable by me immediately in cash (i.e., by check, wire transfer, or similar immediate payment) without further notice or demand by Amgen.
4.In the event that prior to receiving and/or earning the full Bonus, my employment terminates as a result of my death or Permanent and Total Disability (as defined in the Amgen RSU grant agreement by which I am awarded the RSU grant valued at $2,500,000.00 pursuant to my December 12, 2023 offer letter), in exchange for signing a general release of claims in the form provided by Amgen, Amgen will pay me (or my beneficiaries) any unpaid portion of the Bonus amount within thirty (30) days following the effective date of the release and any amounts paid will be deemed to have been earned by me.
5.Generally, a sign-on/retention bonus is considered ordinary wage income to the recipient. I understand that Amgen will report to appropriate federal and state taxing authorities all income that Amgen considers to be subject to taxation and will withhold appropriate taxes in accordance with federal and state regulations. I understand that it is my obligation to declare all income and pay all taxes owed on such income, if any.
6.I understand that this agreement shall be governed by the law of the State of California.
7.Nothing in this Agreement will be construed as an employment contract or to guarantee me employment at Amgen for any fixed term. I understand that my employment at Amgen is at will.
8.The provisions of this agreement are severable. If any part is found to be unenforceable, all other provisions shall remain fully valid and enforceable.
| I agree: | Amgen Inc: | |||||||
| /s/ James E. Bradner, M.D. | /s/ Daniel A. Lopez | |||||||
| Signature of Staff Member | Signature of Authorized Representative | |||||||
| James E. Bradner, M.D. | Executive Director, Talent Acquisition | |||||||
| Print Name of Staff Member | Title of Representative | |||||||
| December 13, 2023 | 12/12/2023 | |||||||
| Date | Date | |||||||
7
Exhibit 10.17
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[*]”.
COLLABORATION AND LICENCE AGREEMENT
Between
AMGEN INC.
and
CELLTECH R&D LIMITED
Re
BEER
BEER
COLLABORATION AND LICENCE AGREEMENT
I N DE X
| Article | Description | Page | |||||||||
Recitals | 1 | ||||||||||
| 1 | Definitions | 2 | |||||||||
| 2 | Scope of Relationship 2.1 Exclusive Collaboration 2.2 Provision of Assistance 2.3 Decision Making and Obligations 2.4 Transfer of Materials 2.5 Third Party Research Agreements 2.6 Employee Obligations 2.7 No Parking | 18 18 18 19 19 19 20 20 | |||||||||
| 3 | Research & Development of Antibody Products 3.1Collaboration Regarding Research & Development 3.2Activities 3.3Sharing of Information 3.4Celltech Opt-Out Right 3.5Budgets 3.6Costs 3.7Governance of Research and Development | 21 21 23 30 31 34 35 38 | |||||||||
i
| Article | Description | Page | ||||||
4 | Regulatory 4.1 Rights and Responsibilities through [*] 4.2Rights and Responsibilities of Territorial Commercial Leads 4.3Additional Rights and Responsibilities of Manufacturing Lead 4.4Co-operation 4.5Access to INDs 4.6Adverse Event Reporting; Customer Complaints 4.7Communications 4.8Recalls 4.9Applications for Regulatory Exclusivity | 42 42 44 44 44 45 45 46 48 49 | |||||||||
| 5 | Commercialisation of Antibody Products 5.1 Territorial Commercial Lead 5.2 Co-Detailer 5.3 Third Parties 5.4 Joint Commercialisation Committee Formation 5.5 Joint Commercialisation Committee and Territorial Commercial Lead Responsibilities 5.6 Decision Making 5.7 Dispute Resolution | 49 49 51 52 52 53 55 55 | |||||||||
ii
| Article | Description | Page | ||||||
5.8 Commercialisation Plan 5.9 Country Plans 5.10 Implementation of Commercialisation Plan and Country Plan 5.11 Co-Detailing 5.12 Commercialisation Budget 5.13 Public Statements Regarding Antibody Products 5.14 Medical and Other Inquiries 5.15 Compliance with Laws 5.16 Detailing Reports 5.17 Post-Regulatory Approval Activities | 56 56 57 57 59 60 61 61 62 64 | ||||||||||
| 6 | Manufacture and Supply 6.1 Manufacturing 6.2 Manufacture of Antibody Products for Development 6.3 Manufacture of Antibody Product(s) for Commercialisation 6.4 Third Party Manufacturers 6.5 Standards of Supply 6.6 Audit 6.7 Manufacturing Option 6.8 Quality Responsibility | 65 65 66 66 67 68 69 69 72 | |||||||||
iii
| Article | Description | Page | ||||||
| 7 | Consideration 7.1 Up-front Fees 7.2 Milestone Payments | 73 73 73 | |||||||||
| 8 | Compensation 8.1 Product Contribution 8.2 Calculation and Duration of Product Contribution 8.3 Quarterly Reconciliation of Product Contribution 8.4 Payments; Tax Matters 8.5 Records; Audits | 75 75 75 75 77 79 | |||||||||
| 9 | Collaboration 9.1 Collaboration Committee Formation 9.2 Collaboration Committee Responsibilities 9.3 Decision Making; Administrative Matters | 80 80 80 81 | |||||||||
| 10 | Grant of Rights 10.1 Patent Licences 10.2 Trademark; Copyright Licences | 82 82 84 | |||||||||
| 11 | Intellectual Property Rights 11.1 Ownership 11.2 Prosecution and Defence | 85 85 85 | |||||||||
iv
| Article | Description | Page | ||||||
11.3 Patent and Trademark Expenses 11.4 Enforcement 11.5 Infringement Defence 11.6 Trademarks 11.7 Patent Markings 11.8 Co-operation 11.9 Third Party Licences | 92 92 94 95 95 95 96 | ||||||||||
| 12 | Confidentiality and Non-Use 12.1 Confidential Information 12.2 Disclosure 12.3 Exceptions 12.4 Terms of Agreement 12.5 Public Announcements 12.6 Residual Information 12.7 Third Party Obligations | 98 98 98 101 102 102 102 103 | |||||||||
| 13 | Publications 13.1 Procedure 13.2 Credit | 103 103 104 | |||||||||
v
| Article | Description | Page | ||||||
| 14 | Term and Termination 14.1 Term 14.2 Termination for Convenience 14.3 Mutual Consent 14.4 Termination for Default 14.5 Bankruptcy 14.6 Additional Termination Right of Celltech 14.7 Opt-Out by Celltech 14.8 Continuing Party; Effective Date of Termination 14.9 Effects of Termination 14.10 Accrued Rights | 104 104 105 106 106 107 108 109 110 110 118 | |||||||||
| 15 | Dispute Resolution 15.1Referral of Unresolved Matters to [*] | 119 119 | |||||||||
| 16 | Representations and Warranties 16.1Authority and Consents 16.2Mutual Representations and Warranties 16.3Additional Representation and Warranty of Celltech 16.4Mutual Covenants 16.5Disclaimer of Representation and Warranty | 120 120 120 121 121 122 | |||||||||
vi
| Article | Description | Page | ||||||
| 17 | Change of Control 17.1 Change of Control | 123 123 | |||||||||
| 18 | Indemnification; Insurance 18.1 Indemnification by Amgen 18.2 Indemnification by Celltech 18.3 Joint Liability 18.4 Insurance 18.5 No Liability 18.6 Pre-Effective Date Losses | 124 124 125 126 126 127 127 | |||||||||
| 19 | Miscellaneous 19.1 Amendments 19.2 Notices 19.3 Force Majeure 19.4 Use of Names, Logos or Symbols 19.5 Governing Law; Jurisdiction 19.6 Performance by Affiliates 19.7 Assignment 19.8 [*] 19.9 Joint Committees 19.10 Subcontracting | 128 128 128 129 129 130 131 131 132 132 132 | |||||||||
vii
| Article | Description | Page | ||||||
19.11 No Strict Construction 19.12 Interpretation and Schedules 19.13 Severability 19.14 No Consequential Damages 19.15 General Provisions 19.16 Whole Agreement | 133 133 134 134 135 136 | ||||||||||
| Schedule | |||||||||||
| A | Research Plan | A1 to A6 | |||||||||
| B | Costs and Calculation of Product Contribution | B1 to B6 | |||||||||
| C | Principles for Detail Cost | C1 | |||||||||
| D | Net Sales Definition | D1 to D2 | |||||||||
| E | Calculation of Fully Absorbed Manufacturing Cost | E1 to E5 | |||||||||
| F | Patent Rights | F1 to F11 | |||||||||
| G | Antibody Licence Agreement | ||||||||||
viii
COLLABORATION AND LICENCE AGREEMENT
This Collaboration and Licence Agreement (the “Agreement”) is made and entered into the 10th day of May, 2002 (the “Effective Date”) by and between:
AMGEN INC., a corporation organised and existing under the laws of the State of Delaware, USA and having its principal place of business at One Amgen Center Drive, Thousand Oaks, California 91320-1799 USA (“Amgen”), and
CELLTECH R & D LIMITED, a company organised and existing under the laws of England and having its principal office at 208 Bath Road, Slough, Berkshire SL1 3WE, England (“Celltech”).
RECITALS
WHEREAS,
A. Celltech and Amgen are biopharmaceutical companies with an ongoing interest in the research, development, manufacture and commercialisation of pharmaceutical products for the treatment of human diseases.
B. Celltech and/or its Affiliates have developed certain intellectual property rights, technology, know-how and expertise which relate to BEER, the modulation of which may be useful in the treatment of the Osteoporosis Indication and Other Indications (all terms used in these recitals as defined in Article 1), and which may be useful in Developing and exploiting of BEER technology and know-how and Antibody Products.
C. Amgen has reviewed and evaluated the technology, know-how and intellectual property rights relating to Celltech’s BEER programme supplied by Celltech under terms of confidentiality and limited use and Amgen now wishes to collaborate with Celltech regarding using BEER technology, intellectual property rights and know-how in the further Research, Development and Commercialisation of Antibody Products.
1
D. Amgen and/or its Affiliates have certain technology, know-how and expertise which may be useful in Developing and exploiting of BEER technology and know-how and Antibody Products, and Celltech now wishes to collaborate with Amgen regarding using BEER technology and know-how in the further Research, Development and Commercialisation of Antibody Products.
E. The Parties believe it to be in their mutual interest and in the interest of the public to grant each other such intellectual property licences and other rights as are necessary to continue the research and development begun by Celltech so as to Commercialise Antibody Products resulting from the aforesaid Research and Development.
NOW, THEREFORE, Celltech and Amgen, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
DEFINITIONS
When used in this Agreement, each of the following terms shall have the meanings set forth in this Article 1:
“Affiliate” means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party. For purposes of this definition, “control” shall be presumed to exist if one of the following conditions is met: (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. The Parties acknowledge that in the case of certain entities organised under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity.
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“Amgen Initial Countries” means the United States, Canada, Mexico and Japan.
“Amgen Know-How” means, other than [*] Know-How and [*] Know-How, all Information and Materials which are [*] for the [*] of Antibody Products to the extent the same are [*] whether [*].
“Amgen Patent Rights” means, other than [*] Patent Rights and [*] Patent Rights, (i) all Patent Rights to the extent the same are [*] and which claim [*] Know-How and (ii) all Patent Rights of [*] to the extent the same are [*]; and in each case which if not licensed herein would be infringed by [*] Antibody Products.
“Amgen [*] Know-How” means all Information and Materials characterized, conceived, developed, derived, discovered, generated or identified solely by employees of or consultants to Amgen in the course of the [*] of Antibody Products [*] and, in each case, [*] of [*].
“Amgen [*] Patent Rights” means those Patent Rights of [*] which specifically disclose and claim [*] Know-How.
“Amgen Technology” means, collectively, [*] Know-How, [*] Know-How, [*] Patent Rights, [*] Patent Rights, and Amgen’s interest in [*] Know-How and Amgen’s interest in [*] Patent Rights.
“Amgen Territory” means each or all countries (a) in the Amgen Initial Countries and (b) in the Territory in which Amgen is designated the Territorial Commercial Lead pursuant to Article 5.1.
“Amgen Trademarks” means the Trademarks including house marks and house dress [*] from time to time [*] and used on or in connection with Antibody Products, but excluding the [*] Trademarks.
“Antibody(ies)” means a polyclonal or monoclonal antibody, whether multiple or single chain, recombinant or naturally occurring or a combination of the foregoing, whole or fragment, monospecific or multi-specific, and any analogs, constructs, conjugates, fusions or chemical or other modifications and/or attachments thereof.
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“Antibody Product(s)” means any Antibody or Antibodies in whatever form that is (i) delivered by [*] to [*]; (ii) [*] by [*]; or (iii) [*] by [*]; and in each case that binds to BEER. Antibody Product also includes any product incorporating any such Antibody.
“Antibody Raw Material” means the bulk Antibody Product, manufactured and quality control tested in accordance with Article 6 (including, if appropriate, [*] and suitable for use in the manufacture of Antibody Product in Finished Form.
“BEER” means any protein or a portion thereof comprising the polypeptide sequence of [*] and any polypeptide sequence having [*] and any [*].
“Business Day” means a day on which banking institutions in both New York, New York, USA, and London, England are open for business.
“Celltech [*] Patent Rights” means the patent applications and patents set forth in Part A of Schedule F and all Patent Rights that issue from or claim priority from those Patent Rights and foreign counterparts thereof.
“Celltech [*] Patent Rights” means the Patent Rights set forth in Part B of Schedule F and all Patent Rights that issue from or claim priority from those Patent Rights and foreign counterparts thereof
“Celltech Initial Countries” means (a) the United Kingdom, France, Germany, Spain, Italy, Norway, Switzerland and any country in addition to those named which, as of the date of first Regulatory Approval for Commercialisation of an Antibody Product is a member state of the European Union; and (b) Australia and New Zealand.
“Celltech Know-How” means, other than [*] Know-How and [*] Know-How, all Information and Materials relating to Antibodies or BEER which are [*] for the [*] of Antibody Products to the extent the same are [*] whether [*].
“Celltech Patent Rights” means, other than [*] Patent Rights, [*] Patent Rights and [*] Patent Rights, (i) all Patent Rights to the extent the same are [*] and which claim [*] Know-How and
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(ii) all Patent Rights of [*] to the extent the same are [*]; and in each case which if not licensed herein would be infringed by [*] Antibody Products. [*] Patent Rights include [*] Patent Rights.
“Celltech [*] Know-How” means all Information and Materials characterized, conceived, developed, derived, discovered, generated or identified solely by employees of or consultants to Celltech in the course of the [*] of Antibody Products [*] and, in each case, any [*] of [*].
“Celltech [*] Patent Rights” means those Patent Rights of [*] which specifically disclose and claim [*] Know-How.
“Celltech Technology” means, collectively, [*] Know-How, [*] Know-How, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, and Celltech’s interest in [*] Know-How and Celltech’s interest in [*] Patent Rights.
“Celltech Territory” means each or all countries (a) in the Celltech Initial Countries and (b) in the Territory in which Celltech is designated the Territorial Commercial Lead pursuant to Article 5.1.
“Celltech Trademarks” means the Trademarks including house marks and house dress [*] from time to time [*] and used on or in connection with Antibody Products but excluding the [*] Trademarks.
“Collaboration Committee” means the committee formed pursuant to Article 9.1.
“Commercialisation” or “Commercialise” means any and all activities (whether before or after Regulatory Approval) directed to the marketing, Detailing and Promotion of an Antibody Product after Regulatory Approval for commercial sale has been obtained and shall include pre-launch and post-launch marketing, manufacturing for commercial sale, Promoting, Detailing, distributing, offering to sell and selling an Antibody Product, importing an Antibody Product for sale, conducting Marketing Clinical Studies (but not Development clinical studies), and interacting with Regulatory Authorities regarding the foregoing. When used as a verb,
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“Commercialising” means to engage in Commercialisation and “Commercialised” shall have a corresponding meaning.
“Commercialisation Expense” shall have the meaning as set forth in Schedule B.
“Commercialisation Plan” means the comprehensive plan and overall strategy, and any updates thereto, and consolidated budget for the Commercialisation of the Antibody Products to be prepared pursuant to Article 5.8.
“Commercially Reasonable Efforts” means efforts and resources commonly associated with good business practice and standards in the research-based pharmaceutical industry to research, develop or commercialise (as appropriate) a product of similar market potential at a similar stage in its product life, taking into account efficacy, the competitiveness of alternative products and product candidates in the marketplace (excluding other products owned or controlled or marketed by a Party or any of its Affiliates), the patent and other proprietary position of the product, the likelihood of regulatory approval given the regulatory structure involved, the profitability of the product including the royalties payable to licensors of patent rights, alternative Third Party products and product candidates and other relevant factors. Commercially Reasonable Efforts where appropriate shall be determined on a market-by-market basis for a particular product, and the level of effort may change over time, reflecting changes in the status of the product and the market involved.
“Confidential Information” means all Information disclosed in good faith for the purposes of this Agreement which is designated as confidential in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such Information is disclosed by the disclosing Party to the other Party. Notwithstanding anything in the foregoing to the contrary, Information which is disclosed in good faith for the purposes of the Agreement, whether orally, electronically, visually or in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a Party (a) if the disclosing Party within thirty (30) days after such disclosure, delivers to the other Party a written document or documents describing the Information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made
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or (b) if such Information is of the type that is customarily considered to be confidential information by persons engaged in activities that are substantially similar to the activities being engaged in by the Parties. Any Information of a Party disclosed at a meeting of the Collaboration Committee, Joint Research Committee, Joint Development Committee or the Joint Commercialisation Committee (or any sub-committee or project team of the foregoing) or disclosed through a report to any such committee shall constitute Confidential Information of such Party unless otherwise specified. The terms of this Agreement shall be considered Confidential Information of each Party.
“Contract Year” means (a) with respect to the first Contract Year, the period beginning on the Effective Date and ending on 31 December 2002 (the “First Contract Year”), and (b) with respect to each subsequent Contract Year, the twelve (12) month period beginning on the day following the end of the First Contract Year and each succeeding twelve (12) month period thereafter.
“Control” or “Controlled” means with respect to any (a) Material or Information or (b) intellectual property right, in each case the possession (whether by ownership, licence or other right, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access and/or a licence (or sublicence) as provided herein under such item or right without violating the terms of any agreement or other arrangement with any Third Party existing before or after the Effective Date and existing as of the date such Party obtains such ownership, licence or other right in such Material, Information or intellectual property.
“Cost of Goods” shall have the meaning set forth in Schedule B.
“Detail” means an interactive face-to-face contact (including a live video presentation) of a Representative with (a) a medical professional with prescribing authority or (b) an office nurse with influence over the pharmaceutical treatment of a patient, provided that in the case of (b) such contacts shall not be considered a Detail to the extent they exceed [*] percent ([*]%) of the interactive face-to-face contacts performed by a Party during the Contract Year. To constitute a Detail such interactive face-to-face contact (i) shall be with a medical professional or office nurse designated by the Territorial Commercial Lead as a target call audience in its Lead
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Territory, (ii) shall occur at the office of such medical professional or office nurse, at hospitals or at other locations (excluding exhibits, displays and other forms of communication not involving face-to-face contact by such sales representative), and (iii) during such contact Regulatory Authority-approved indicated uses, safety, effectiveness, contraindications, side effects, warnings and/or other relevant characteristics of an Antibody Product, shall be described in a fair and balanced manner consistent with the laws and regulations of the relevant part of the Territory, using either or both of the Product Labelling or the Promotional Materials, in an effort to increase physician prescribing preferences of such Antibody Product for its approved indicated uses. A sample drop does not constitute a Detail. When used as a verb, “Detailing” means performing Details and “Detailed” shall have a corresponding meaning.
“Development” or “Develop” means all clinical and other activities undertaken to obtain Regulatory Approval of an Antibody Product after the filing of an IND for an Antibody Product and up to and including the obtaining of Regulatory Approval for commercial sale of such Antibody Product, and including any supplementary Development forming part of Late Stage Development in the Field in the Territory. For the avoidance of doubt, these activities shall include clinical drug development activities, including, among other things: test method development and stability testing, toxicology, formulation, process development, manufacturing, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control development, statistical analysis and report writing, product approval and registration, and regulatory affairs related to the foregoing. When used as a verb, “Developing” means to engage in Development and “Developed” shall have a corresponding meaning.
“Dollar” means a United States dollar, and “$” shall be interpreted accordingly.
“Drug Approval Application” means an application for any Regulatory Approval required before commercial sale or use of an Antibody Product as a drug or to treat a particular indication in a regulatory jurisdiction, including: (a) (i) a Biologics Licence Application (“BLA”) pursuant to 21 C.F.R. 601.2 (or any successor application or procedure) submitted to the FDA and (ii) any counterpart of a U.S. BLA in any other country in the Territory; and (b) all supplements and amendments that may be filed with respect to the foregoing.
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“Early Stage Development” means all post-IND Development up to and including conclusion of Phase II Studies.
“FAMC” shall have the meaning set forth in Schedule E.
“FDA” means the United States Food and Drug Administration or a successor agency thereto.
“Field” means [*].
“Finished Form” means the final finished form of an Antibody Product suitable for use by patients including Antibody Raw Material in combination with excipients, vials or other containers suitable for delivery, delivery devices, packaging and labelling.
“First Commercial Sale” means the first shipment of any Antibody Product sold on arm’s-length terms to a non-sublicensee Third Party by a Party, its Affiliates or its sublicensees, in any country in the Territory after the first Regulatory Approval for Commercialisation has been achieved for such Antibody Product in such country in any indication. Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not constitute a First Commercial Sale.
“Force Majeure” means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by a Party of any of its obligations hereunder.
“FTE” means a full-time equivalent person year of scientific or technical work, full-time being [*].
“FTE Cost” means, for any quarter, the FTE Rate multiplied by the sum of the number of days (calculated by adding the full and partial percentage of days) actually spent in that quarter by FTEs of a Party working directly on Research and Development of Antibody Products under the terms of this Agreement (as per their time sheets) divided by [*].
“FTE Rate” means the sum of the [*] FTE Rate (as calculated herein below) and the [*] FTE Rate (as calculated herein below). The [*] FTE Rate is [*] Dollars ($[*]) per FTE. This [*] FTE Rate shall be adjusted annually beginning with 1st April 2003 in accordance with [*]. The
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[*] FTE Rate is [*] Dollars ($[*]) and shall be adjusted annually beginning on April 1, 2003 at the same time as the [*] FTE Rate, by the then-most recently published annual increase in the [*] (as determined by the average annual [*] from the prior year as quoted from the [*])).
“GAAP” means United States generally accepted accounting principles.
“IND” means (a) (i) an Investigational New Drug Application (as defined in the U.S. Federal Food, Drug and Cosmetic Act, as amended from time to time, and the regulations promulgated thereunder) that is required to be filed with the FDA before beginning clinical testing of an Antibody Product in human subjects, or any successor application or procedure and (ii) any counterpart of a U.S. Investigational New Drug Application in any other country in the Territory; and (b) all supplements and amendments that may be filed with respect to the foregoing.
“Information” means tangible or intangible know-how, trade secrets, inventions (i.e., conceived or reduced to practice, constructively or actually), methods, knowledge, conclusions, skill, experience, test data and results (including chemical, biological, biochemical, pharmaceutical, pharmacological, toxicological and research, pre-clinical and clinical data, assay, control and manufacturing processes, test data and results), analytical and quality control methods and data, results or descriptions, software and algorithms or other information (whether or not patentable) regarding technology, techniques, practices, products, business information or objectives.
“Joint Commercialisation Committee” means the committee formed pursuant to Article 5.4.
“Joint Development Committee” means the committee formed pursuant to Article 3.7.2.
“Joint Know-How” means all Information or Materials that are conceived or developed [*] after [*] and, in each case, [*]of [*].
“Joint Patent Rights” means Patent Rights in any country within the Territory which claim [*] Know-How and which identify [*] as inventors.
“Joint Research Committee” means the committee formed pursuant to Article 3.7.1.
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“Late Stage Development” means Development following completion of Phase II Studies up to and including filing of a Drug Approval Application for an Antibody Product in any jurisdiction and including any supplementary Development necessary or required by a Regulatory Authority (a) in order to obtain a Regulatory Approval; or (b) as required as a condition or maintenance, as the case may be, of a Regulatory Approval; in each case necessary for the commercial sale and/or use of an Antibody Product in that jurisdiction.
“Lead Territory” means Amgen Territory and/or Celltech Territory as the case may be.
“Licence Agreement” means that certain agreement attached hereto as Schedule G.
“Licence Fees” shall have the meaning set forth in Schedule B.
“Marketing Clinical Studies” means, in any jurisdiction, those clinical studies following Early Stage Development of an Antibody Product, including pharmacoeconomic studies, pharmacoepidemiology studies, investigator-sponsored clinical studies, Phase IIIB, Phase IV and other such studies useful for the Commercialisation of an Antibody Product, including those studies required to expand the label of an Antibody Product in the approved indication, but excluding those studies undertaken as part of Late Stage Development of an Antibody Product.
“Materials” means biological and chemical materials including, Antibodies, Antibody Products, screens, animal models, cell lines, cells, vectors, nucleic acids, receptors and reagents.
“Net Sales” shall have the meaning set forth in Schedule D.
“Osteoporosis Indication” means the [*].
“Other Expense” shall have the meaning set forth in Schedule B.
“Other Indications” means all uses of Antibody Products in the Field other than in the Osteoporosis Indication.
“Party” means Amgen or Celltech; “Parties” means Amgen and Celltech.
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“Patent Rights” means all (a) existing issued, unexpired patents (with the term “patent” being deemed to encompass an inventor’s certificate), including any reissue, re-examination, renewal or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent and (b) existing patent applications and patent applications hereafter filed, including any continuations, continuations-in-part, divisionals, provisionals, converted provisional, continued prosecution application, or any substitute applications, any patent issued with respect to any such patent applications, any reissue, re-examination, renewal or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and all foreign counterparts of any of the foregoing.
“[*] Antibody” means an Antibody which is [*] of any [*] and claimed by any of the [*] Patent Rights.
“Phase II Study” means a clinical trial that is designed to establish the safety and preliminary efficacy of a drug for its intended use, and to define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed and that satisfy the requirements of 21 CFR 312.21(b) (or its successor regulation), or its equivalent in any other jurisdiction.
“Pivotal Study” means a clinical trial that, if the defined end-points are met, is designed (and agreed to in advance by a Regulatory Authority(ies) having jurisdiction in the country(ies) in which the trial is to be conducted, based upon existing data in the same patient population as of the start of such clinical trial) to definitively establish that an Antibody Product drug is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with the Antibody Product in the dosage range to be prescribed, and provide pivotal data supporting Regulatory Approval of such Antibody Product and that satisfies the requirements of 21 CFR 321.21(c) (or its successor regulation), or its equivalent in any other jurisdiction.
“Position of Detail” means a Primary Detail, a Secondary Detail or a Tertiary Detail as the case may be.
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“Primary Detail” means a Detail in which the predominant portion of time or emphasis is devoted to the Detailing of Antibody Product, and the Antibody Product is the first product presentation made.
“Product Contribution” shall have the meaning set forth in Schedule B.
“Product Labelling” means (a) the Regulatory Authority-approved full prescribing information for an Antibody Product, including any required patient information and (b) all labels and other written, printed or graphic matter upon any container, wrapper or any package insert or outsert utilised with or for an Antibody Product.
“Product Trademark” means any trademarks and trade names (and trademark applications (whether or not registered), and any renewals, extensions or modifications thereto in the Territory) together with all goodwill associated therewith, trade dress and packaging which (a) are Controlled by either Party and (b) are applied to an Antibody Product or any Promotional Materials and (c) distinguishes that Antibody Product; but excluding any house marks or house dress or any reserve trademarks and trade names (and trademark applications and any resulting trademarks) which are Controlled by a Party and are filed with a trademark office for use with an Antibody Product but which shall not have been applied to an Antibody Product.
“Promote” or “Promotion” or “Promoting” or “Promotional” means, with respect to an Antibody Product, those activities and obligations other than Detailing undertaken by a Party to encourage sales of such Antibody Product including, journal advertising, direct mail programs, direct-to-consumer advertising, education, convention exhibits, and other forms of advertising and promotion.
“Promotional Materials” means all sales representative training materials and all written, printed, graphic, electronic, audio or video matter including, journal advertisements, sales visual aids, direct mail, direct-to-consumer advertising, Internet postings, product inserts, broadcast advertisements, and sales reminder aids (e.g., scratch pads, pens and other such items) intended for use or used by a Party in connection with any Promotion or Detailing of an Antibody Product, except Product Labelling.
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“Regulatory Approval” means any and all approvals (including any applicable supplements, amendments, pre- and post-approvals, governmental price and reimbursement approvals and approvals of applications for regulatory exclusivity), licences, registrations, or authorisations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity necessary for the manufacture, distribution, use, storage, import, export, transport, Promotion, marketing and sale of an Antibody Product in a country or jurisdiction.
“Regulatory Authority” means any governmental or regulatory authority involved in granting Regulatory Approvals of any Antibody Product including, in the United States, the FDA.
“Regulatory Filings” means, collectively, INDs, Drug Approval Applications, establishment licence applications (“ELAs”) and drug master files (“DMFs”) or any other similar filings (including any equivalents in other jurisdictions and further including any related correspondence and discussions) and applications for regulatory exclusivity, and all data contained therein, as may be required by the FDA or equivalent Regulatory Authorities in other jurisdictions, for the Development or Commercialisation of an Antibody Product.
“Representative” shall have the meaning set forth in Schedule B.
“Research” means all research and pre-clinical activities up to and including the filing of any IND for an Antibody Product. When used as a verb “Research” means to engage in Research, and “Researched” and “Researching” shall have a corresponding meaning.
“Research and Development Cost” means for all activities performed following the Effective Date for the Research and Development of Antibody Products (a) all out-of-pocket costs and expenses incurred on an arm’s-length basis (calculated in accordance with GAAP) and paid to Third Party subcontractors (or accrued therefor) by Amgen or Celltech or their Affiliates, (b) the FTE Cost of such activities, and (c) the cost of Materials used in such activities. For the avoidance of doubt, Research and Development Costs excludes [*] made by [*] to [*] pursuant to [*].
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“Research Plan” means the plan of Research activities to be performed by the Parties and attached hereto as Schedule A, and as may be modified from time to time pursuant to Article 3.7.1(c).
“Secondary Detail” means a Detail in which the second-most predominant portion of time or emphasis is devoted to the Detailing of Antibody Product, it being understood that, in most but not all Secondary Details, Antibody Product shall be the second product presentation made.
“Term” means the term of this Agreement as set forth in Article 14.1.
“Territorial Commercial Lead” means, with respect to a particular country, the Party designated pursuant to Article 5.1 to lead Commercialisation of Antibody Products in such country.
“Territory” means all the countries of the world.
“Tertiary Detail” means a Detail in which Antibody Product is included in the Detail, with lesser prominence than a Secondary Detail but more prominence than mere inclusion in a product list.
“Third Party” means any person, partnership, joint venture, corporation, trust, estate, unincorporated organisation, government or any department or agency thereof, or any entity other than a Party or any of its Affiliates.
“Trademark” means any and all corporate names, service marks, logos or trademarks and trademark applications (whether or not registered) together with all good will associated therewith, and any renewals, extensions or modifications thereto either filed or used.
“Wind Down Costs” means all reasonable out-of-pocket costs incurred by either Party in terminating or transferring to the other Party (or its nominee) Research, Development or Commercialisation activities (including the termination or assignment of relevant related contracts and Materials) as set forth in Article 14.9, following the service of a notice of termination of this Agreement to the extent such activities, contracts and Materials have been
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approved by the Collaboration Committee and are not accounted for in Commercialisation Expense or Research or Development Cost.
Each of the following definitions are found in the body of this Agreement as indicated:
Defined Terms | Page/Article | ||||
“Acquiring Party” | Article 17.1 | ||||
“Amgen Indemnitees” | Article 18.2 | ||||
“Amgen Loss(es)” | Article 18.2 | ||||
“Amgen” | Pg. 1, paragraph 2 | ||||
“Auditing Party” | Article 8.5 | ||||
“Balance Payment” | Article 8.3(b) | ||||
“BLA” | Article 1, def. “Drug Approval Application” | ||||
“Celltech Indemnitees” | Article 18.1 | ||||
“Celltech Loss(es)” | Article 18.1 | ||||
“Celltech” | Pg. 1, paragraph 3 | ||||
“[*]” | Article 5.7(i) | ||||
“Co-Detailer” | Article 5.2(a) | ||||
“Consultation Rights” | Article 11.2.2(b) | ||||
“Continuing Party” | Article 14.8(a) | ||||
“Country Plan” | Article 5.9 | ||||
“Defaulting Party” | Article 14.4(a) | ||||
“DMFs” | Article 1, def. “Regulatory Filings” | ||||
“Effective Date” | Pg. 1, paragraph 1 | ||||
“ELAs” | Article 1, def. “Regulatory Filings” | ||||
“Excepted Matters” | Article 3.7.1(e) | ||||
“[*]” | Article 15.1 | ||||
“Filing Notice” | Article 5.2(b) | ||||
“First Contract Year” | Article 1, def. “Contract Year” | ||||
“include” or “includes” or “including” | Article 19.12 | ||||
"intellectual property" | Article 14.5 | ||||
“Indemnify” | Article 18.1 | ||||
“Insolvency Event” | Article 14.5(b) | ||||
“Joint Activities” | Article 5.5(a)(iii) | ||||
“Joint Loss(es)” | Article 18.3 | ||||
“Late Stage Development Plan” | Article 3.4(a) | ||||
“Manufacturing Lead” | Article 6.1(a) | ||||
“[*] Patent Rights” | Article 11.2.2(a) | ||||
“[*] Patent Rights” | Article 11.2.2(a) | ||||
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“Milestone Event” | Article 7.2 | ||||
“Milestone Payment(s)” | Article 7.2 | ||||
“non-Acquired Party” | Article 17.1 | ||||
“Non-Defaulting Party” | Article 14.4(a) | ||||
“Notice of Default” | Article 14.4(a) | ||||
“[*]” | Article 15.1 | ||||
“opt-out right” | Article 3.4(a) | ||||
“Performance Default” | Article 14.4(a) | ||||
“Quality Responsibilities” | Article 6.8 | ||||
“Recall” | Article 4.8(a) | ||||
“Representation Default” | Article 14.4(a) | ||||
“SOPs” | Article 4.8(a) | ||||
“Subsequent Products” | Article 3.4(a) | ||||
“Supply Agreements” | Article 6.1(a)(ii) | ||||
“Termination Date” | Article 14.8(b) | ||||
“Third Party Licence Agreement” | Article 11.9 | ||||
“Transition Date” | Article 11.2.9 | ||||
“Transition Plan” | Article 14.9(b)(iii) | ||||
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ARTICLE 2
SCOPE OF RELATIONSHIP
2.1 Exclusive Collaboration. The Parties agree to collaborate exclusively in the Research, Development and Commercialisation of Antibody Products in the Field in accordance with the terms of this Agreement and, other than as explicitly permitted under this Agreement, not to undertake or enable any Third Party to undertake any activities for Antibody Products without the other Party’s prior written consent (which may be withheld for any reason), including to undertake or enable any Third Party to undertake any activities for Antibody Products for any use outside of the Field (including [*]).
2.2 Provision of Assistance. Each Party shall co-operate reasonably with the other Party to facilitate the Research, Development and Commercialisation of Antibody Products in the Field. In addition to other assistance explicitly set forth in this Agreement, during the Term Amgen shall provide Celltech with reasonable technical assistance relating to the use of [*] Know-How, [*] Know-How and [*] Know-How and Celltech shall provide Amgen with reasonable technical assistance relating to the use of [*] Know-How, [*] Know-How and [*] Know-How, each solely to the extent licensed to the other Party in this Agreement. In addition, during the Term each Party shall make its employees, consultants and agents reasonably available upon reasonable notice during normal business hours at their respective places of employment to consult with the other Party on issues relating to this Agreement or any request from any Regulatory Authority concerning an Antibody Product, including requests relating to regulatory, scientific and technical issues. Each Party shall also keep the Joint Research Committee, Joint Development Committee, Joint Commercialisation Committee and Collaboration Committee, as appropriate, informed as to its progress in the Research, Development and Commercialisation of Antibody Products. A Party shall not be in breach of any obligation under this Agreement to the extent its inability to perform such obligation is caused by the other Party’s failure to perform any of its obligations under this Agreement.
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2.3 Decision Making and Obligations. Control of a final decision-making authority for any aspect of the Research, Development and/or Commercialisation as set forth in this Agreement shall not relieve the Party with such control from any of its obligations under this Agreement .
2.4 Transfer of Materials. The Parties anticipate that each Party may transfer certain of its Materials to the other Party. Each Party agrees that it will use such Materials of the other Party only in accordance with the terms and conditions of, and solely for the purposes of the activities conducted pursuant to, this Agreement, and will not transfer such Materials of the other Party to any Third Party without the consent of the other Party, except as expressly permitted under this Agreement.
2.5 Third Party Research Agreements. The Parties shall, through the Collaboration Committee or its designees, agree upon and co-ordinate Material transfer agreements and collaboration agreements with Third Parties (excluding Third Party subcontractors) to the extent such agreements relate to the Research or Development of Antibody Products or BEER or involve the use of Antibody Products or BEER, in a manner so as to conserve the available quantities of the Parties’ Materials and to avoid compromise of the Parties’ abilities to fulfil their obligations and responsibilities under this Agreement, and with a view toward maintaining access to relevant intellectual property rights. Notwithstanding the above, other than with respect to Antibody Products, neither Party may transfer the other Party’s Materials to any such Third Parties, without the express written consent of the other Party.
2.6 Employee Obligations. Prior to beginning work relating to any aspect of the subject matter of this Agreement and/or being given access to the [*] Technology or [*] Technology, each employee, consultant or agent of Celltech and Amgen shall be bound by an employment agreement or other agreement pursuant to which (a) each such person (other than administrative and/or non-technical personnel) shall (but in the case of a Party’s own Technology, only to the extent such Party’s employees consultants or agents are conducting activities pursuant to this Agreement) be obliged to comply with all of the obligations of Celltech or Amgen under this Agreement, as appropriate, including:
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(i) following Celltech’s or Amgen’s (as appropriate) policies and procedures regarding reporting any invention, discovery, process, software program or other intellectual property right created by such person in the course of his or her employment or retainer with Celltech or Amgen, as appropriate, within [*] Technology or [*] Technology; (ii) assigning to Celltech or Amgen, as appropriate, all of his or her right, title and interest in and to any such invention, discovery, process, software program or other intellectual property right; (iii) co-operating in the preparation, filing, prosecution, maintenance and enforcement of any Patent Rights covering the same; and (iv) performing all acts and signing, executing, acknowledging and delivering any and all papers, documents and instruments required for effecting the obligations and purposes of this Agreement and (b) each person shall be bound by obligations of confidentiality and non-use consistent with the terms of this Agreement. It is understood and agreed that any such agreement need not be specific to this Agreement.
2.7 No Parking. Each Party acknowledges that using Commercially Reasonable Efforts requires it to take ongoing actions that are consistent with a good faith intention to achieve the objective of Developing an Antibody Product and obtaining Regulatory Approvals to Commercialise such Antibody Product for the [*] (or if the [*] is dropped in accordance with the terms of this Agreement an [*] chosen in accordance with the terms of this Agreement) in the Field, and to Commercialise such Antibody Product, throughout the Amgen Territory and Celltech Territory. For the avoidance of doubt, Development and Commercialisation in each instance includes the manufacture and the supply of Antibody Product. If a Party decides that deployment of Commercially Reasonable Efforts does not justify it making continued, ongoing efforts towards this objective it shall promptly notify the other Party in writing.
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ARTICLE 3
RESEARCH AND DEVELOPMENT OF
ANTIBODY PRODUCTS
ANTIBODY PRODUCTS
3.1 Collaboration Regarding Research and Development.
3.1.1 From and after the Effective Date:
(a) the Parties shall use diligent and timely efforts to satisfactorily complete Research of the Antibody Products and obtain in one of the [*] for an Antibody Product an IND in the [*] or, if agreed by the Joint Research Committee pursuant to Article 3.7.1(e), an [*];
(b) In addition to its Development supply obligations as set out in Article 6, Celltech shall use Commercially Reasonable Efforts:
(i)to satisfactorily complete, in respect of an Antibody Product, those Development activities assigned to it pursuant to Article 3.2.2(b) and Article 3.2.2(c); and
(ii) following delivery by Amgen to Celltech of a filed data package pursuant to Article 4.1(d), to obtain Regulatory Approval to Commercialise an Antibody Product supported by, in the indication supported by, such data package, in the Field throughout the Celltech Territory.
(c) Amgen shall:
(i) use Commercially Reasonable Efforts to satisfactorily complete all Development activities with respect to an Antibody Product (other than those Development activities assigned to Celltech pursuant to Article 3.2.2(b) and Article 3.2.2(c)); and
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(ii) use Commercially Reasonable Efforts to obtain Regulatory Approval to Commercialise an Antibody Product;
in each case for the [*] (or if the [*] is dropped in accordance with the terms of this Agreement an [*] chosen in accordance with the terms of this Agreement) in the Field throughout the Amgen Territory.
(d) Each Party acknowledges that the obligations it undertakes pursuant to this Article 3.1.1 are material obligations.
3.1.2 Each Party agrees to conduct its Research activities and Development activities in compliance with all laws, regulations and guidelines that are applicable to the particular stage of Research or Development for the Antibody Product, including, GLP, GCP and GMP, of the relevant jurisdiction as the same may be amended from time to time.
3.1.3 Neither Party will approve, oppose or take any action under this Agreement which is contrary to its preliminary or final conclusions that the safety or toxicity of an Antibody Product then being considered for Development or being Developed pursuant to this Agreement would pose a [*] that is [*] to patients.
3.1.4 Notwithstanding any other term of this Agreement, [*] shall not, except with the written consent of [*], have an Antibody Product in Late Stage Development in more than one [*] unless (i) Regulatory Approval for the Commercialisation of an Antibody Product has been obtained in any of the [*] or (ii) such additional [*] was included in the first [*] for such Antibody Product presented to [*] pursuant to Article [*].
3.2 Activities. Without limiting the obligations of Article 3.1 the Parties shall undertake the Research and Development activities as follows:
3.2.1 Research
(a) The Parties shall conduct all activities for the Research of Antibody Products in accordance with the Research Plan, a copy of which is attached as Schedule A, as
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may be amended from time to time by the Joint Research Committee, with the Research objective of filing an IND and initiating clinical studies for at least one Antibody Product.
(b) As part of the Research, Celltech shall use diligent and timely efforts to:
(i) supply Amgen with [*] Antibody in amounts in line with the Research Plan as of the Effective Date and such additional amounts as may be reasonably requested by Amgen (which request will recognize timing constraints for supply imposed by Celltech’s existing capacity to provide), and in each case to specifications and timing agreed by the Joint Research Committee, for use by Amgen in [*] studies;
(ii) supply Amgen with such quantities of [*] as requested by Amgen and as Celltech shall have the existing capacity to provide, and to specifications and timing agreed by the Joint Research Committee, for use by Amgen in [*] studies; and
(iii) provide Amgen with any Information [*] which [*] reasonably considers to be [*] to the [*] safety and/or toxicity of Antibody Products (being considered for Development or being Developed).
(c) As part of the Research, Amgen shall use diligent and timely efforts to:
(i) conduct [*] studies required to select an Antibody Product clinical candidate and file an IND therefor in one of the [*]. For the avoidance of doubt, nothing in this Agreement shall preclude Amgen from filing INDs in such other countries as it sees fit;
(ii) conduct studies to identify, test and select [*] and, if applicable, [*] for use in the Development of Antibody Products; and
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(iii) provide [*] with any [*] arising from the studies referred to in (i) and (ii), and with any [*] which [*] reasonably considers to be [*] to the [*] safety and/or toxicity of Antibody Products (being considered for Development or being Developed).
(d) If (i) Celltech has not achieved Milestone 1 as set out in Schedule A by the [*] of the [*]; or (ii) if Celltech achieves [*] but subsequently fails to achieve Milestone 3 as set out in Schedule A within [*] of Amgen notifying Celltech in writing (pursuant to Article 3.2.1(g) below) of [*] Antibody as determined by the [*] study results; the Parties (upon the written request of [*]) shall for a period of [*] of [*] with respect to unachieved Milestone 1 or unachieved Milestone 3 (as applicable) discuss the possibility of extending such time period for an additional,
mutually agreed period. Each Party acknowledges that it shall be [*] as to whether or not to agree to such an extension of any such time period.
mutually agreed period. Each Party acknowledges that it shall be [*] as to whether or not to agree to such an extension of any such time period.
(e) Within [*] of expiry of each date referred to in Article 3.2.1(d) or any extension to such dates agreed to by the Parties, Amgen shall notify Celltech in writing that Amgen will either:
(i) assume the right and obligation to Research, Develop, and supply either itself or through agreement with a Third Party the [*] referred to in Milestone 1 and/or (as appropriate) the [*] referred to above in Article 3.2.1(d); or
(ii) terminate this Agreement.
If Amgen does not serve such a notice it will be deemed to have exercised the option set out in Article 3.2.1(e)(i).
(f) Where Amgen has exercised the option set out in Article 3.2.1(e)(i) the following shall apply and this Agreement shall be deemed to be amended as follows:
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(i) all Research and Development Costs incurred by either Party after the exercise of such option shall be shared equally by the Parties;
(ii) Amgen shall have no obligation to pay any Milestone Payments pursuant to Article 7.2 not already paid or due to be paid at the time that Amgen exercises such option;
(iii) Amgen shall cease to have any rights to use or exploit any of the [*] Patent Rights and any other [*] Technology that [*] to any invention claimed by any of the [*] Patent Rights, and Celltech shall cease to have any obligation to provide Amgen with any Information concerning the [*] Patent Rights, or to provide Amgen with assistance or guidance in using or understanding the [*] Technology covered by the same, but without prejudice to the rights [*] has to other [*] Technology as granted hereunder;
(iv) Celltech’s obligations to conduct Research activities shall terminate save for those under Articles 3.2.1(b)(ii) and (iii) and its obligations with respect to the manufacture and supply of Antibody Raw Material (including those pursuant to Articles 3.2.2(c) and Article 6) shall terminate and Amgen shall assume all such responsibilities; and
(v) Amgen’s Research obligations shall, for a period not to exceed [*] from the date Amgen exercised the option pursuant to Article 3.2.1(e), be amended by the substitution of “Commercially Reasonable Efforts” for “diligent and timely efforts” wherever it appears. Celltech shall provide Amgen with reasonable co-operation in connection with its Research activities. If Amgen has not commenced [*] on an Antibody Product clinical candidate within [*] of exercise of the option referred to in Article 3.2.1(e)(i), this Agreement shall terminate automatically and without notice. If Amgen has commenced such [*] before such date, from the commencement of such [*] Amgen shall again be obliged to use diligent
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and timely efforts where it was previously obliged to use diligent and timely efforts. Save for the change in the level of effort required by Amgen during such period, Amgen’s Research and Development obligations as set out in this Agreement shall continue to apply;
provided however if at that time the Parties mutually agree in writing to develop an Antibody Product claimed by any of [*] Patent Rights the provisions of Articles 3.2.1(f)(i) through (v) shall not apply and this Agreement shall remain in force unamended.
(g) Amgen shall provide the Joint Research Committee with the results of the [*] studies conducted as set out in the Research Plan, within [*] of completion of those studies. The Joint Research Committee shall determine the characteristics required of the [*] for Milestone 3 within [*] of its receipt of the results of the [*] studies and Amgen shall promptly notify Celltech in writing of such characteristics. Should the Joint Research Committee subsequently decide to change such characteristics, Amgen shall notify Celltech of such change within [*] of the Joint Research Committee decision and the [*] referred to in Article 3.2.1(d) (with respect to the achievement of Milestone 3) shall commence on the date of Celltech’s receipt of such subsequent notice.
3.2.2 Development
(a) Other than as specifically set forth in this Article 3.2.2 and Article 6, Amgen shall be responsible for all activities of Development of Antibody Products, and shall have the right to make all strategic and tactical decisions with respect to the Development of Antibody Products subject always to its obligations under this Agreement. Amgen shall be responsible for all Development tasks (other than those which Celltech undertakes pursuant to Article 3.2.2(b) or Celltech is responsible for pursuant to Article 3.2.2(c) and Article 6, below), including:
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(i) determining in which [*] to conduct clinical studies provided that Amgen may not select an [*] in substitution of the [*] except in accordance with Article 3.2.2(e);
(ii) submitting all necessary Regulatory Filings for initiation of clinical studies;
(iii) identifying key Development objectives, expected associated resources, risk factors, timelines, Go/No Go decision points and relevant decision criteria;
(iv) forecasting clinical manufacturing production requirements;
(v) carrying out all aspects of (e.g., designing studies and protocols for and conducting) clinical studies (but excluding [*]), as well as establishing new dosage forms, new formulations or other enhancements of approved Antibody Products including (1) establishing/contracting with clinical sites, investigators and CROs; (2) enrolling clinical study patients; (3) organising investigator meetings, scientific meetings, advisory panel workshops and regulatory meetings; and (4) analysing, summarising clinical study results;
(vi) performing any other additional pre-clinical research in support of the clinical development of Antibody Products;
(vii) subject to Article 4, reporting to Regulatory Authorities on study design, study outcome, other regulatory communications and filings; and
(viii) maintaining a database of clinical trial data accumulated from clinical studies of all Antibody Products, all safety data, and any adverse reaction information acquired for all Antibody Products during Development or Commercialisation.
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(b) With respect to any Antibody Product and indication which is in [*], Celltech may undertake supplemental [*] activities for that indication in the Celltech Territory where it reasonably considers that such studies are [*] in order to obtain any Regulatory Approvals within the Celltech Territory. Such studies shall be carried out in a manner consistent with the objectives of [*] for that indication as determined by the Joint Development Committee (which objectives shall recognise Celltech’s right to conduct such studies).
(c) Celltech shall be responsible for providing Amgen with guidance and Information Controlled by Celltech and obtained from Celltech’s experience in the development of [*], including pre-clinical and clinical safety data and other information Controlled by Celltech, in each case to the extent Celltech in good faith considers the same to be [*] to the Development of Antibody Products.
(d) Each Party shall conduct its Development responsibilities regarding Antibody Product(s) pursuant to this Article 3.2.2 in a manner consistent with its obligations under Article 3.1.
(e) Should Amgen reasonably determine that it no longer wishes to continue to pursue Research or Development activities of an Antibody Product for the [*] and that it wishes instead to Develop Antibody Product for an [*] it shall promptly notify the Joint Research Committee (if the Antibody Product is still the subject of Research activities); or the Joint Development Committee if the Antibody Product has ceased to be in Research and is the subject of Development activities. Such notice shall set out Amgen’s reasons in detail, and include reasonable supporting evidence. If Celltech disputes that the [*] should be dropped, or disputes the choice of an [*] and suggests a different [*] it shall notify the relevant Committee in writing setting out its reasons in detail, and including reasonable supporting evidence. If the Joint Research Committee or Joint Development Committee (as appropriate) cannot agree (and [*] has [*]) the decision as to whether the [*] should be dropped and an [*] substituted in its
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place shall be escalated for consideration by the Collaboration Committee. Within the Collaboration Committee, in the case of a dispute arising out of the Research Committee, [*] shall have [*] and, in the case of a dispute arising out of the Development Committee, [*] shall have [*] on this issue. If, following such consideration the relevant Committee determines that the [*] shall be dropped and an [*] substituted in its place then such [*] shall be substituted for the [*] for the purposes of this Agreement. Neither Party shall unreasonably withhold or delay its consent to any [*] proposed by a Party pursuant to this Article. Each Party shall, if requested to do so, provide written reasons to the relevant Committee supporting its choice of an [*], or its rejection of the same.
3.3 Sharing of Information.
3.3.1 Without prejudice to its other obligations, each Party shall disclose to the other Party all Information Controlled by it and which it reasonably considers to be [*] to any Antibody Product as soon as practicable after it is [*] or its [*] is [*]. The Parties shall [*] in the data dossiers used to support applications for Regulatory Approvals and in the database referred to in Article 3.2.2(a)(viii).
3.3.2 In addition to being informed of the progress of the Research and Development via the Joint Research Committee (pursuant to Article 3.7.1) and the Joint Development Committee (pursuant to Article 3.7.2), each Party shall have the right to obtain through the Joint Research Committee or Joint Development Committee (as appropriate), copies of final reports and a reasonable number of interim reports (in existence) of any studies carried out pursuant to Research and Development conducted under this Agreement and the Joint Research Committee and Joint Development Committee shall have no right to refuse any such request. If, after receiving any such report (or in the event no such report exists), a Party reasonably requires additional Information generated during Research and Development by either Party from pre-clinical studies and clinical trials of each Antibody Product, to exercise its rights or fulfil its obligations under this Agreement the other Party shall in response to a request, use Commercially Reasonable Efforts to provide such
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additional Information but only to the extent such additional Information is Controlled by it. The Party requesting such Information shall, if the Information provided by the other Party is incomplete, have the right to access such Information during regular business hours and on reasonable notice.
3.3.3Each Party shall provide reasonable assistance to the other Party in understanding the data dossiers, database and reports referred to in this Article 3.3, provided that such Party shall use such data, dossiers, databases and reports only for the purpose of exercising its rights or fulfilling its obligations under this Agreement.
3.3.4 Notwithstanding the obligations in this Agreement to provide Information, co-operation and assistance, [*] shall not be obliged to provide to [*] any of the same in relation to the [*] Patent Rights or any invention claimed by any of the [*] Patent Rights or any [*] Technology specific to any such inventions, except in compliance with its obligations under Article 6.7.
3.4 Celltech Opt-Out Right.
(a) Celltech shall have the option (the “opt out right”) to terminate this Agreement with respect to any Antibody Product which proceeds to Late Stage Development (as well as all other Antibody Products (“Subsequent Products”) excluding any Antibody Product which has previously been subject to the procedure under this Article 3.4 and for which Celltech shall have previously elected in accordance with this Article 3.4 to remain subject to the terms of this Agreement), as set out in this Article 3.4. Celltech may exercise such opt-out right by providing written notice to Amgen at any time within [*] of Celltech’s receipt from Amgen of (i) a detailed report of the results of the Phase II Studies of such Antibody Product; (ii) Amgen’s proposed plan for Late Stage Development (“Late Stage Development Plan”) for such Antibody Product together with Amgen’s confirmation of its intention to proceed with such plan if Celltech were not to exercise its opt-out right; (iii) Amgen’s good-faith estimate of the Research and Development Costs
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of such Late Stage Development Plan and (iv) if the [*] has been dropped in accordance with Article 3.2.2(e) the Late Stage Development Plan will identify any intention Amgen has to develop the [*]. For the avoidance of doubt, with respect to any such intention set forth in such Late Stage Development Plan, other than as set forth in a revised Late Stage Development Plan provided pursuant to Article 3.4(b) below, Amgen shall not be obliged to inform Celltech of any change to Amgen’s intention after providing such Late Stage Development Plan pursuant to this Article 3.4(a). The report, plan and estimate provided to Celltech pursuant to this Article shall be the same standard, quality and completeness as those utilised by Amgen in its internal deliberations and decision making concerning whether to proceed with Development of such Antibody Product.
(b) If at any stage during the conduct of activities pursuant to a Late Stage Development Plan, but prior to obtaining the first Regulatory Approvals to Commercialise such Antibody Product in the Amgen Territory,
(i) the Joint Development Committee has decided (in accordance with the terms of this Agreement) to drop the indication set out in the Late Stage Development Plan and has selected a new indication (subject to Article 3.2.2(e) where the initial indication is the [*]); and
(ii) Amgen decides to advance such Antibody Product into Late Stage Development for such new indication; and
(iii) the cost of Late Stage Development of such Antibody Product is expected to exceed the good-faith estimate of Research and Development Costs received by Celltech pursuant to Article 3.4(a) by [*] ([*]%) or more; then
Amgen shall provide Celltech with written notice that it wishes to perform Late Stage Development activities pursuant to a revised Late Stage Development Plan. With such notice Amgen shall provide Celltech with:
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(iv) a detailed report of the results of the studies undertaken in Late Stage Development completed at the time of such notice together with preliminary results of any other such studies that are still in progress and for which interim or final results are available;
(v) Amgen’s proposed revised Late Stage Development Plan for such Antibody Product;
(vi) Amgen’s good faith estimate of the Research and Development Costs of such revised Late Stage Development Plan; and
(vii) the revised Late Stage Development Plan will identify any intention Amgen has to develop the [*] (For the avoidance of doubt, with respect to any such intention set forth in such revised Late Stage Development Plan Amgen shall not be obliged to inform Celltech of any change to Amgen’s intention after providing such revised Late Stage Development Plan pursuant to this Article 3.4(b)).
The report, plan and estimate provided to Celltech pursuant to this Article shall be the same standard, quality and completeness as those utilised by Amgen in its internal deliberations and decision making concerning whether to proceed with the Development of such Antibody Product in the new indication. Within [*] of receiving such notice, Celltech may again exercise its opt out right with respect to such Antibody Product by written notice to Amgen.
(c) At the date Celltech provides its written notice to Amgen that it is exercising its opt-out right pursuant to Articles 3.4(a) or 3.4(b), as appropriate, Celltech shall provide Amgen with a document signed by an authorized officer of Celltech on its behalf either indicating in such document that (i) the written representations and warranties of Celltech set out in Articles 16.1, 16.2 and 16.3 are true and correct as if made as of the date of such document and as if referring to the Licence Agreement and not this Agreement or (ii) such written representations and warranties of Celltech are not true and correct and the reasons why such
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representations and warranties are not true and correct; provided that failure to provide Information that is subject to a Third Party confidentiality obligation shall not make the representation and warranty under Article 16.2(c) or 16.3(c) untrue or incorrect.
(d) Within [*] after receipt of Celltech’s written notice to Amgen under Article 3.4(c), Amgen shall provide Celltech with a document signed by an authorized officer of Amgen on its behalf either indicating in such document that (i) the written representations and warranties of Amgen set out in Articles 16.1 and 16.2 are true and correct as if made as of the date of such document and as if referring to the Licence Agreement and not this Agreement or (ii) such written representations and warranties of Amgen are not true and correct and the reasons why such representation and warranties are not true and correct; provided that failure to provide Information that is subject to a Third Party confidentiality obligation shall not make the representation and warranty under Article 16.2(c) untrue or incorrect.
(e) If Celltech shall not have exercised its opt-out right under Articles 3.4(a) or 3.4(b) with respect to an Antibody Product, this Agreement shall remain in full force and effect with respect to all Antibody Products. However, Celltech’s opt out right shall apply to any other Antibody Product that Amgen proposes to advance or advances to Late Stage Development, and Articles 3.4(a) and (b) shall apply mutatis mutandis to all such Antibody Products.
(f) In the event Celltech shall exercise its opt-out right pursuant to Article 3.4(a) or (b) for any Antibody Product, the Licence Agreement shall immediately come into full force and effect for such Antibody Product (as well as all Subsequent Products). This Agreement shall terminate in relation to such Antibody Product (as well as all Subsequent Products), but remain in full force and effect with respect to any Antibody Product which has previously been subject to the procedures set out in Article 3.4(a) and which Celltech shall not have previously exercised its opt-out right. If Celltech exercises its opt-out right, Celltech shall
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have no liability for any Research and Development Costs of Late Stage Development, whether or not incurred prior to expiry of the opt-out period.
3.5 Budgets. The budgets for each Contract Year during Research and Development shall be specified by each Party and submitted to the other Party (via the Joint Research Committee or Joint Development Committee, respectively) in a format to be agreed by the Parties but which must include line item estimates of Research and Development Costs by function. The budgets shall be updated by the Joint Research Committee or Joint Development Committee (as appropriate) at least once annually on a timeline that meets the budget planning requirements of both Parties, but in no event less than [*] before the end of the preceding Contract Year; provided however, it is acknowledged and agreed that such budgets may need to be modified from time-to-time between annual updates, based upon the results of clinical studies and other unanticipated events. In any Contract Year, each Party shall promptly inform the other Party upon such Party determining that it is likely to exceed or underspend by more than [*] ([*]%) its respective total budget in that Contract Year. In addition, if in any Contract Year a Party exceeds its budget by more than [*]%, the Party who has so exceeded its budget shall, at the request of the other Party, provide to the Joint Research Committee or Joint Development Committee (as appropriate) and to the Collaboration Committee (if the matter is escalated to the Collaboration Committee) a full explanation for exceeding its budget (as requested). Each Committee may, [*], reduce the amount of any overspend to be included in the Research and Development Costs as it considers equitable in the circumstances. If either the Joint Research Committee or Joint Development Committee do not [*] on how to deal with such overspend, the matter shall be escalated to the Collaboration Committee for consideration. The members of any such Committee (as appropriate) may elect to reduce or not reduce such overspend [*], and unless the relevant Committee [*] to reduce the overspend, [*].
3.6 Costs. Amgen and Celltech shall share all costs for the Research and Development of Antibody Products on the following basis:
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3.6.1 Research Costs
Other than as provided below with respect to amounts paid to Third Parties, Celltech and Amgen shall each bear its own Research and Development Costs in carrying out its Research activities. The cost of supplying Amgen with Antibodies for Research shall be considered as Research and Development Costs to be borne by Celltech. All out-of-pocket Research and Development Costs paid to Third Parties shall be paid to any such Third Parties by the Party engaging the services of such Third Parties and, as between Amgen and Celltech, shall be shared on the basis of [*]:[*] Amgen: Celltech. Such Third Party costs shall include the cost of supply of GMP Antibody for Research by a Third Party on behalf of Celltech as required by Amgen for the purposes of pre-clinical or formulation studies.
3.6.2 Early Stage Development Costs
All Research and Development Costs cumulatively incurred (whether FTE Cost incurred directly by Amgen or Celltech or amounts payable to Third Parties engaged by Celltech or Amgen) for Early Stage Development of Antibody Products shall be shared, as follows:
(a) up to [*] Dollars ($[*]) of such cumulative Research and Development Costs, on the basis of [*]:[*] Amgen:Celltech;
(b) over [*] Dollars ($[*]) of such cumulative Research and Development Costs on the basis of [*]:[*] Amgen:Celltech.
For the avoidance of doubt, (i) any cost incurred for an Early Stage Development activity shall be a Research and Development Cost of Early Stage Development, even if such activity occurs before the filing of an IND or after any Late Stage Development activity has commenced; and (ii) (without limiting the foregoing) the cost of manufacture of Antibody Product required for the purposes of Early Stage Development shall be deemed Research and Development Costs of Early Stage Development even if such Antibody Product is manufactured before the filing of an IND.
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3.6.3 Late Stage Development Costs
All Research and Development Costs cumulatively incurred (whether FTE Cost incurred directly by Amgen or Celltech or amounts payable to Third Parties engaged by Celltech or Amgen) for Late Stage Development of Antibody Products shall be shared as follows:
(a) up to [*] Dollars ($[*]) of such cumulative Research and Development Costs, on the basis of [*]:[*] Amgen:Celltech; and
(b) over [*] Dollars ($[*]) of such cumulative Research and Development Costs, on the basis of [*]:[*] Amgen:Celltech.
The costs of manufacture, including scale-up and validation of Antibody Raw Material and Antibody Product in Finished Form, shall be deemed Research and Development Costs of Late Stage Development to the extent only that Antibody Raw Material and Antibody Product in Finished Form so produced is not used for Commercialisation and otherwise shall be a Cost of Goods.
3.6.4 Quarterly Reconciliation of Research and Development Costs
(a) At least [*] prior to the end of each Calendar Quarter, each Party shall submit to the other Party: (i) a report of the actual Research and Development Costs incurred by such Party in the first [*] of such quarter; and (ii) an estimate of Research and Development Costs to be incurred in the [*] of such quarter.
(b) Within [*] following the end of each Calendar Quarter, Amgen shall submit to Celltech a written report setting forth in reasonable detail (to the extent made or incurred by Amgen) its Research and Development Costs for such quarter showing, on a line item basis, variances from the budget for that quarter, together with an estimate of Research and Development Costs for the remainder of that Contract Year.
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(c) Within [*] following the end of each Calendar Quarter, Celltech shall submit to Amgen a written report setting forth in reasonable detail (to the extent made or incurred by Celltech) its Research and Development Costs for such quarter showing, on a line item basis, variances from the budget for that quarter, together with an estimate of Research and Development Costs for the remainder of that Contract Year.
(d) Within [*] following the end of each Calendar Quarter, Amgen shall submit to Celltech a written consolidated report setting forth in reasonable detail the calculation of all Research and Development Costs and the calculation of any net amount owed by Celltech to Amgen or by Amgen to Celltech, as the case may be, in order to ensure the appropriate sharing of Research and Development Costs in accordance with the provisions of Article 3.6.1 or 3.6.2 or 3.6.3 as appropriate. The net amount payable shall be paid by Amgen or Celltech, as the case may be, within [*] after receipt of such written report. If the invoiced amount exceeds the initial budget forecast for such quarter (as provided in Article 3.5) by more than [*] ([*]%), the paying Party may elect to carry the difference between the budgeted amount and the invoiced amount over to the next Calendar Quarter. The election to carry the difference over must be provided within [*] after the date such above-referenced written report is provided by Amgen to Celltech. If, as a result of carrying over such difference to a subsequent quarter, the total amount payable in that subsequent quarter exceeds the initial budget forecast for that quarter by more than [*] ([*]%), the difference between the budgeted amount and the invoiced amount (including the carryover from the previous quarter) may be carried over to the next quarter. Such carry over may be continued quarter-by-quarter to the end of the Contract Year when it shall be paid in full within ten (10) Business Days of the receipt of the above-referenced report by Celltech from Amgen at the end of the Contract Year.
3.6.5 Pre-Launch Commercialisation Cost. Each Party shall provide the Joint Development Committee with a good faith preliminary estimate of its pre-launch Commercialisation
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Costs of an Antibody Product on or about the date Amgen provides written notice to Celltech that it intends to proceed with Late Stage Development activities with respect to such Antibody Product.
3.7 Governance of Research and Development.
3.7.1 Research
(a) Promptly after the Effective Date the Parties shall form a Joint Research Committee to co-ordinate the Research activities of the Parties. The Joint Research Committee shall consist of equal numbers (not more than three) from each Party. Either Party may (with the consent of the other Party not to be unreasonably withheld or delayed) invite additional participants from either Party to provide expert opinions for some or all of the meetings.
(b) Meetings of the Joint Research Committee shall be held at least every three (3) months and shall be held more frequently if reasonably requested by either Party. Meetings which are held in person shall be held alternately at Amgen and Celltech locations (with the first meeting to be held at a Celltech location). Meetings may take place by videoconference or similar means if agreed by both Parties. Promptly following the Effective Date the Joint Research Committee shall hold an organisational meeting to establish its operational requirements. At each scheduled Joint Research Committee meeting each Party shall present a detailed report showing any progress on its Research activities since the previous scheduled meeting of the Committee.
(c) The Joint Research Committee generally shall have the responsibility of managing, directing and overseeing Research including the following responsibilities:
(i) modifying the Research Plan, as appropriate;
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(ii) co-ordinating the Research activities of both Parties in accordance with the Research Plan, so as to identify Antibody Products suitable for Development;
(iii) agreeing Antibody Product candidates (including whether to select a [*] Antibody and/or [*] Antibody) for filing of an IND; and
(iv) agreeing key decisions required in order to progress the Research and the appropriate criteria to be met in reaching such decisions.
(d) [*] shall appoint from amongst its representatives a chairperson of the Joint Research Committee with the responsibility to arrange meetings in accordance with this Agreement and to prepare and distribute the minutes of all key decisions made by the Joint Research Committee. Such minutes shall be distributed by the chairperson within ten (10) Business Days of each Joint Research Committee meeting. Minutes shall be approved or disapproved and revised if necessary at the next meeting.
(e) A primary objective of the Joint Research Committee is to reach unanimous decisions, with the representatives of each Party who are members of the Joint Research Committee collectively having one (1) vote, arrived at through open discussions amongst the representatives of each of the Parties. In the event of a tied vote, the [*] shall, after giving due consideration to the views expressed by both Parties, have [*] in all matters, except the following (“Excepted Matters”):
(i) changes in the direction of Research and Development from the [*] to an [*] as the initial indication for which to file an IND;
(ii) [*]. [*] will not, having regard to the potential impact of any proposed change on [*], unreasonably withhold or delay its consent to any reasonable change proposed by [*];
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(iii) changes in the Research Plan that represent a major change in the scope or direction of the Research Plan. [*] will not, having regard to the potential impact of any proposed change on [*], unreasonably withhold or delay its consent to any reasonable change proposed by [*]; or
(iv) any changes to the then-approved [*] as set out in [*].
In the event of a tied vote on an Excepted Matter, the Joint Research Committee shall promptly submit such issue to the Collaboration Committee for resolution. If the Collaboration Committee is unable to resolve such dispute within [*] of submission (in writing) to the Collaboration Committee, such Excepted Matters shall be resolved using the disputes procedure outlined in Article 15.
3.7.2 Development
(a) Upon the decision of the Joint Research Committee to file the first IND application for an Antibody Product, the Parties shall form a Joint Development Committee. The Joint Development Committee shall consist of equal numbers (not more than three) from each Party. Either Party may (with the consent of the other Party, not to be unreasonably withheld or delayed) invite additional participants from either Party to provide expert opinions for some or all of the meetings. Meetings of the Joint Development Committee shall be held at least every six (6) months and shall be held more frequently if reasonably requested by either Party. If agreed between the Parties at any time, the Joint Development Committee may assume any residual responsibilities of the Joint Research Committee, and the latter may then be disbanded.
(b) Meetings of the Joint Development Committee which are held in person shall be held alternately at Amgen and Celltech locations (with the first meeting to be held at an Amgen location). Meetings may take place by videoconference or similar means if agreed by both Parties. At each scheduled Joint Development Committee meeting each Party shall present a detailed report showing any
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progress on its Development activities since the previous scheduled meeting of the Committee.
(c) The responsibilities of the Joint Development Committee shall be to (i) co-ordinate the Development activities of both Parties; (ii) share information about Development activities and the results thereof; and (iii) establish procedures for the collection, sharing and reporting of adverse event information pursuant to Article 4.6 and relating to the Antibody Products obtained after Regulatory Approval thereof.
(d) [*] shall appoint from amongst its representatives a chairperson of the Joint Development Committee with the responsibility to arrange meetings in accordance with this Agreement and to prepare and distribute the minutes of all key decisions made by the Joint Development Committee. Such minutes shall be distributed by the chairperson within fifteen (15) Business Days of each Joint Development Committee meeting. Minutes shall be approved or disapproved and revised if necessary at the next meeting.
(e) A primary objective of the Joint Development Committee is to reach unanimous decisions, with the representatives of each Party who are members of the Joint Development Committee collectively having one (1) vote, arrived at through open discussions amongst the representatives of each of the Parties. In the event of a tied vote, [*] shall, after giving due consideration to the views expressed by both Parties, have [*] in all matters provided that to the extent the matter concerns a Research activity [*] shall not have [*] in respect of the Excepted Matters set out in Article 3.7.1(e).
ARTICLE 4
REGULATORY
REGULATORY
4.1 Rights and Responsibilities through [*].
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(a) The Parties shall fully consult and co-operate with each other on all matters relating to and in communications with Regulatory Authorities and shall use Commercially Reasonable Efforts to obtain Regulatory Approval for Commercialisation of each Antibody Product and indication in [*] at the earliest possible opportunity. In particular, until Celltech assumes exclusive control for regulatory matters in any country in the Celltech Territory the Parties will co-ordinate all communications with Regulatory Authorities in countries in the Celltech Territory to ensure consistent and clear communication with the Regulatory Authorities in those countries. In addition, each Party will discuss in advance with the other Party any planned communication with any Regulatory Authority in the Celltech Territory, where such communication may affect the activities of the other Party.
(b) When designing and implementing [*] studies Amgen will consult with Celltech and accommodate the requirements of the Celltech Territory within Amgen’s [*] studies, to the extent that is practicable. To the extent any such requirements are not accommodated within such Amgen studies, Celltech may conduct such studies as supplemental [*] studies in accordance with Article 3.2.2(b).
(c) Subject to Article 4.1(a) and (b), in each jurisdiction Amgen shall be primarily responsible for all regulatory matters (including communications with Regulatory Authorities) concerning each Antibody Product and each indication with such Antibody Product up to delivery to Celltech of the filed data package in accordance with Article 4.1(d). Notwithstanding the previous sentence, during Development prior to completion of a said data package Celltech shall have the right to communicate with Regulatory Authorities in the Celltech Territory solely for the purposes of Article 4.1(c) (i)-(iv) below:
(i) determining appropriate filing strategies for Drug Approval Applications within the Celltech Territory and matters concerning such Drug Approval Applications;
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(ii) planning, designing and conducting supplemental [*] activities as permitted by Article 3.2.2(b)
(iii) planning, designing and conducting Marketing Clinical Studies; and
(iv) with respect to process Development, manufacture and supply of Antibody Raw Material, unless Amgen is the only Manufacturing Lead.
(d) Amgen shall provide Celltech with a copy of and reasonable opportunity to comment on the data package suitable for a Drug Approval Application for each Antibody Product in each indication intended to be submitted by Amgen to the FDA. Amgen shall provide Celltech with a copy of such data package when filed and with any subsequent data packages filed in such indication.
4.2 Rights and Responsibilities of Territorial Commercial Leads. On an indication-by-indication basis, as reasonably required, each Territorial Commercial Lead shall have the right to monitor, review and direct all aspects of all regulatory matters to the extent the same concern the activities and studies for which it is responsible pursuant to Article 4.1 with respect to each such Antibody Product, including making all strategic and tactical decisions with respect thereto. Each Territorial Commercial Lead shall have the right and responsibility for the filing of a Drug Approval Application in its own name, including the conformation of the data package provided by Amgen to the requirements of each jurisdiction within its Lead Territory and for seeking Regulatory Approvals for such Antibody Products in its Lead Territory. Notwithstanding the above, pursuant to Article 4.1, Amgen shall remain responsible for all regulatory matters for all Antibody Products for any indication which is not yet the subject of [*].
4.3 Additional Rights and Responsibilities of Manufacturing Lead. The Manufacturing Lead in the case of Antibody Raw Material and Amgen in the case of Antibody Products in Finished Form (as appropriate) shall be responsible for obtaining all necessary Regulatory Approvals to enable it to supply the same as specified in Article 6.
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4.4Co-operation. Notwithstanding anything to the contrary in this Agreement, each Party shall have the right to receive from the other Party, and each Party shall provide to the other Party, all regulatory data or information which Amgen or the Territorial Commercial Lead is required to submit to a Regulatory Authority (as it is required by law, rule, regulation or a Regulatory Authority having jurisdiction in any part of the Territory to have access) in sufficient time to comment on and consult with each other with respect to the same.
4.5 Access to INDs. At the request of Celltech and for the purposes set out in Article 4.1(c), Amgen shall grant Celltech a right of access and reference to (and name it a party of record on) all INDs in such country in the Celltech Territory and shall promptly notify Regulatory Authorities in such country of (and as soon as is reasonably practicable thereafter take all actions reasonably necessary to effect or evidence) the right of access and reference to (and naming Celltech as a party of record on) such INDs.
4.6 Adverse Event Reporting; Customer Complaints.
(a) Each Party shall maintain a record of all non-medical and medical product-related complaints and reports of adverse events that it receives with respect to any Antibody Product. Each Party shall notify the other Party of any complaint received by it and, within three (3) days of the initial receipt, shall provide the other Party with a copy of such complaint(s) and adverse event reports. Amgen shall maintain such adverse reaction information in the database described in Article 3.2.2(a).
(b) Except as set forth in Article 4.6(c) below, each Party shall be responsible for reporting to Regulatory Authorities any adverse experience and safety issues for such Antibody Product arising out of its activities and studies, in compliance with the requirements of the laws, rules and regulations in its Territory, and shall promptly thereafter provide the other Party with a copy of such report. If possible, with respect to the Celltech Territory, the other Party shall have an
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opportunity to review and the Parties shall consult with each other, prior to submission of any such report.
(c) Following the delivery of the filed data package for an Antibody Product to Celltech pursuant to Article 4.1(d), each Territorial Commercial Lead shall be responsible for reporting to Regulatory Authorities, in each country within its Lead Territory, any adverse experience and safety issues for such Antibody Product in the relevant jurisdiction in compliance with the requirements of all applicable laws and regulations in such country and shall promptly thereafter provide the other Party with a copy of such report. Notwithstanding anything to the contrary in this Agreement, the Territorial Commercial Lead shall have the right to receive from the other Party (and the other Party shall provide to the Territorial Commercial Lead) any regulatory data or information Controlled by the other Party which the Territorial Commercial Lead, as the holder of any Drug Approval Application or Regulatory Approval in its Lead Territory, requires by law, rule, regulation or a Regulatory Authority having jurisdiction in its Lead Territory to have access, or which the Territorial Commercial Lead reasonably requires in order to carry out its responsibilities pursuant to this Agreement.
4.7 Communications.
(a) In addition to the responsibilities in Article 4.6(c), each Party shall have primary responsibility for all correspondence and for any official communications with Regulatory Authorities in the Territory in respect of the activities and studies for which it is responsible. Each Party shall reasonably co-operate with the other Party regarding any direct communications with the Regulatory Authorities.
(b) Both Parties shall have the right to [*] with Regulatory Authorities having jurisdiction in any part of the Celltech Territory where any matter which may affect the activities or studies of the other Party is to be discussed.
(c) Without prejudice to the other provisions of this Article 4, following delivery of the filed data package to Celltech pursuant to Article 4.1(d), the Territorial
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Commercial Lead for such country shall have exclusive responsibility for all correspondence in respect of the Antibody Product covered by such data package and for any official communications with Regulatory Authorities in such country regarding its rights and responsibilities under this Article 4 (including submitting Regulatory Filings, seeking Regulatory Approvals, filing annual reports, and filing of Promotional Materials) consistent with all applicable laws and regulations of any such country. Except as may be required by applicable laws and regulations, or requested by the Territorial Commercial Lead or any Regulatory Authority having jurisdiction in such country, the other Party shall not communicate regarding any Antibody Product with any Regulatory Authority having jurisdiction in such country. The other Party shall keep the Territorial Commercial Lead informed of any such required communications.
(d) Regarding the manufacture of any Antibody Raw Material and/or Antibody Product, both Parties shall have the right to [*] with Regulatory Authorities having jurisdiction in the Territory wherein issues regarding the manufacturing of such Antibody Raw Material and/or Antibody Product in Finished Form contained in any Regulatory Filings is to be discussed, where the Party responsible for communications is different from the Party responsible for said manufacturing issues or where required by law or regulation. Notwithstanding the above, and unless Amgen is the Manufacturing Lead, Celltech shall have exclusive responsibility for all correspondence and for any official communications with Regulatory Authorities in the Territory in connection with the supply of Antibody Raw Material and as reasonably required to meet its obligations with respect to any such supply under this Agreement. The Manufacturing Lead with respect to Antibody Raw Material, and Amgen with respect to Antibody Product in Finished Form, shall have the right, to the extent permitted by Regulatory Authorities, to file a drug master file with a Regulatory Authority to make their respective proprietary manufacturing information (e.g., the CMC section contained in any Regulatory Filings) and formulation information available directly to the Regulatory Authority, in order to help
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preserve the proprietary nature thereof; provided however, that the other Party shall have the right of access and reference to the extent required, as a result of its responsibilities hereunder, by law, rule, regulation or a Regulatory Authority having jurisdiction in the Territory.
(e) Each Party shall promptly notify and provide the other Party with a copy of any correspondence or other reports or complaints submitted to or received by the first Party from any Regulatory Authority or other Third Party claiming that any Promotional Materials are inconsistent with the Product Labelling or are otherwise in violation of any applicable laws and regulations of any country in the Territory.
4.8 Recalls.
(a) The Parties shall exchange their internal standard operating procedures as to product recalls (“SOPs”) reasonably promptly after the first filing of a Drug Approval Application for an Antibody Product and reasonably promptly after such SOPs are approved or modified thereafter. In the event that, in a country, the Territorial Commercial Lead for such country determines that an event, incident or circumstance has occurred which may result in the need for a “recall” or “market withdrawal” or “stock recovery” (as such terms are defined in U.S. regulations in 21 CFR 7.3 or another similar national, state or local law or regulation), hereinafter collectively referred to as a “Recall”, of Antibody Product or any lot(s) thereof, such Party shall promptly notify the other Party in writing.
(b) The Territorial Commercial Lead shall have the right to determine whether and upon what terms and conditions to Recall the Antibody Product within its Lead Territory; provided however, if the Territorial Commercial Lead shall elect not to conduct a Recall of the Antibody Product, and solely if the other Party is responsible for the manufacture of Antibody Raw Material or Antibody Product in Finished Form, and the manufacture of Antibody Raw Material or Antibody Product in Finished Form is the basis of such proposed Recall, the other Party
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shall have the right to conduct such Recall if, in its good faith opinion, regulatory requirements or public safety considerations so require. Prior to making any Recall decision in any part of its Territory, each Party shall consult with the other Party. The Territorial Commercial Lead shall be responsible for discussions with Regulatory Authorities within the applicable country regarding all aspects of the Recall decision and the execution thereof. Any costs or expenses of any Recall in any part of the Territory shall be a Commercialisation Expense. Celltech and Amgen shall each maintain complete and accurate records of any Recall it has the right to control pursuant to this Article 4.8 for such periods as may be required by legal requirements, but in any event for no less than [*].
4.9 Applications for Regulatory Exclusivity. The Parties recognise that exclusivity rights granted or provided for under regulatory laws of the countries of the Territory may be commercially significant to Antibody Products. To the extent permitted by law, as between the Parties, the Territorial Commercial Lead for a country shall have the exclusive right to file for, request and maintain any regulatory exclusivity rights for Antibody Products in such country (including regulatory exclusivity rights based upon an orphan drug designation of an Antibody Product) and to conduct and prosecute any proceedings or actions to enforce such regulatory exclusivity rights.
ARTICLE 5
COMMERCIALISATION OF ANTIBODY PRODUCTS
COMMERCIALISATION OF ANTIBODY PRODUCTS
5.1 Territorial Commercial Lead. The Parties shall Commercialise each Antibody Product in the Territory, with one Party (on a country-by-country basis) being the Territorial Commercial Lead for all Antibody Products in each such country as follows:
(a) Amgen shall be the Territorial Commercial Lead in the Amgen Initial Countries;
(b) Celltech shall be the Territorial Commercial Lead in the Celltech Initial Countries;
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(c) With respect to additional countries in the Territory outside the Amgen Initial Countries and the Celltech Initial Countries, at a time [*] prior to the planned filing date for the first Drug Approval Application of an Antibody Product, the Joint Commercialisation Committee shall designate (such designation [*]), between the Parties, the Territorial Commercial Lead in such additional countries (and such countries shall be included within the Lead Territory of the Territorial Commercial Lead), in accordance with the following principles. If at the time the Joint Commercialisation Committee considers the issue:
(i) only one Party wishes to be the Territorial Commercial Lead, that Party shall be designated the Territorial Commercial Lead; if neither Party wishes to be the Territorial Commercial Lead, neither Party shall be designated the Territorial Commercial Lead; if both Parties wish to be the Territorial Commercial Lead, then;
(ii) if only one Party has a [*] that is [*] of the Antibody Product in that country, the Party with such [*] shall be designated the Territorial Commercial Lead in that country;
(iii) if both Parties have a [*] the Antibody Product in that country, the Party best able to exploit the Antibody Product to best advantage in that country (having regard to [*]of the [*]) shall be designated the Territorial Commercial Lead;
(iv) if neither Party has a [*] the Antibody Product the Joint Commercialisation Committee shall consider whether either Party has immediate and funded plans to establish a [*] for that country and any other relevant factors that indicate one Party may be better suited to exploit Antibody Products to best advantage in that country, including management of a Third Party subcontractor pursuant to Article 5.3;
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provided that, the Joint Commercialisation Committee shall designate the Territorial Commercial Lead for countries outside the Amgen Initial Countries and Celltech Initial Countries such that the [*] of all Antibody Products from such countries used in the [*] for which such [*], is [*].
(d) If the Joint Commercialisation Committee shall fail, for any reason, to designate the Territorial Commercial Lead in any country where both Parties wish to be the Territorial Commercial Lead, the matter shall be referred to the Collaboration Committee who shall make such designation in accordance with the terms of Article 5.1(c).
(e) In the event a Territorial Commercial Lead is not designated in a country at the time specified in Article 5.1(c) because, at that time, neither Party wished to be the Territorial Commercial Lead in such country, the Joint Commercialisation Committee shall upon receipt of a notice from a Party expressing the wish to be the Territorial Commercial Lead in such country designate such Party as the Territorial Commercial Lead in such country, provided that the Joint Commercialisation Committee shall give the other Party a reasonable period (not to [*]) to also serve such a notice. If both Parties serve such a notice, the Joint Commercialisation Committee shall designate the Territorial Commercial Lead in accordance with Article 5.1(c).
(f) The Territorial Commercial Lead shall use Commercially Reasonable Efforts to maximise the Product Contribution of each Antibody Product in its Lead Territory.
5.2 Co-Detailer.
(a) In the event a Party is not the Territorial Commercial Lead in a country, such Party shall have the right to deploy a supportive co-Detailing sales force in such country. If such Party exercises that right, in accordance with Article 5.2(c) below, such Party shall be termed the “Co-Detailer” in such country.
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(b) The Territorial Commercial Lead shall notify the other Party in writing of the date on which it expects to file the first Drug Approval Application for each Antibody Product in each country in its Lead Territory at least [*] prior to each such filing (“Filing Notice”).
(c) If a Party is not the Territorial Commercial Lead in such country, it shall have the right to notify the Territorial Commercial Lead within [*] of the Filing Notice for such country and such Antibody Product. The notice shall identify the country or countries identified in such Filing Notice where the Party that is not the Territorial Commercial Lead exercises its right to deploy a supportive co-Detailing sales force in such country. The Territorial Commercial Lead shall have the sole right and responsibility to Commercialise in accordance with Article 5 such Antibody Product in any country not identified in the notice (or if no notice is served, in all countries in its Lead Territory) and the Party that is not the Territorial Commercial Lead shall have no further right to co-Detail in such country.
5.3 Third Parties. The Territorial Commercial Lead may determine that the services of a Third Party are required or desirable to Commercialise an Antibody Product in any country in its Lead Territory. The Territorial Commercial Lead shall be free to enter into an agreement with such Third Party on arm’s-length terms; provided that such terms shall be consistent with the terms of this Agreement so as to preserve the rights of the other Party in such country including the right (if any) of such Party to co-Detail pursuant to Article 5.2, and provided that in the reasonable estimation of the Territorial Commercial Lead, in such country, [*] in the absence of such agreement. The Territorial Commercial Lead shall, in entering into such agreement, be entitled to grant such Third Party any licences or sublicences to [*] Technology or [*] Technology required by the Third Party solely to Commercialise an Antibody Product in such country. The Net Sales from and the costs incurred by a Party in such Third Party arrangement shall be included in calculating the Product Contribution for such Antibody Product in such country.
5.4 Joint Commercialisation Committee Formation. Immediately following [*], the Parties shall establish a Joint Commercialisation Committee to facilitate the
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Commercialisation of Antibody Products on a global basis. The Joint Commercialisation Committee shall be comprised of an equal number of Celltech and Amgen representatives (not to exceed three (3) from each Party), with each Party having one vote. The Joint Commercialisation Committee shall meet at times to be agreed and, commencing no later than [*] before the expected date for the first filing of the first Drug Approval Application, at least quarterly. In addition, the Joint Commercialisation Committee shall appoint a chairperson and otherwise follow the organisational and meeting procedures set forth in Article 9 with respect to the Collaboration Committee.
5.5 Joint Commercialisation Committee and Territorial Commercial Lead
Responsibilities.
Responsibilities.
(a) Each Territorial Lead has the right and responsibility to Commercialise Antibody Product in the manner it deems appropriate, but subject always to its obligations under this Agreement including those set out in this Article. If the Joint Commercialisation Committee determines that any Commercialisation activities should be conducted jointly or on a co-ordinated basis, such activities shall be co-ordinated through the Joint Commercialisation Committee. The Parties now agree that it is likely they will wish to co-ordinate the following matters, and that unless and until one Party objects to the Joint Commercialisation Committee determining any or all such matters, and subject always to Article 5.7, the Joint Commercialisation Committee shall be responsible for:
(i)co-ordination of the Commercialisation of Antibody Products throughout the Territory in accordance with the Commercialisation Plan;
(ii)addressing strategic issues with relevance throughout the Territory (e.g., branding, regulatory issues, product positioning);
(iii)deciding any activities that the Parties shall undertake jointly in order to Commercialise Antibody Products on a worldwide basis (e.g. pre-launch activities, market research, launch, and post–launch marketing and promotion) (“Joint Activities”);
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(iv)co-ordinating Marketing Clinical Studies;
(v)co-ordinating the packaging, labelling and language to be included in the package insert;
(vi)co-ordinating commercial manufacturing production requirements;
(vii)selecting, obtaining and maintaining generic names and Product Trademarks and domain names incorporating any of the same or otherwise referencing Antibody Products;
(viii)developing and updating a Commercialisation Plan pursuant to Article 5.8; and
(ix)resolving any complaint by a Party that the activities of the other Party are adversely affecting the Commercialisation of Antibody Product in the Lead Territory of the Party making the complaint;
provided however, and subject to Article 5.7, in the event that the Joint Commercialisation Committee is unable to agree on any such matters within its authority, that particular matter shall at the written request of either Party, be removed from the responsibility of the Joint Commercialisation Committee and the Territorial Commercial Lead shall (to the extent such matters concern its Lead Territory only) determine such matters for its Lead Territory.
(b) The Territorial Commercial Lead shall be responsible in each country in its Lead Territory for determining the Commercialisation of Antibody Product in a manner consistent with the Commercialisation Plan (if any), including:
(i)tactical issues, for example, sales force allocation and disposition;
(ii)determining Promotional Materials suitable for each such country; and
(iii)preparing and implementing a Country Plan (as defined in Article 5.9 below) and monitoring budgets and forecasts for each such country; and
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(iv)booking sales of Antibody Products, taking orders, distributing Antibody Product, handling returns, and contracting and administering accounts.
5.6 Decision Making. A primary objective of the Joint Commercialisation Committee shall be to reach unanimous decisions (with each Party having one (1) vote), arrived at through open discussions amongst the representatives of each of the Parties. All decisions of the Joint Commercialisation Committee shall be made by the unanimous decision of Celltech and Amgen (subject to Article 5.7), with the representatives of each Party who are members of the Joint Commercialisation Committee collectively having one vote in any matter. The Parties agree that all decisions regarding the Commercialisation of an Antibody Product will be made in the interests of securing the best value from the Antibody Product on a global basis.
5.7 Dispute Resolution. If the Joint Commercialisation Committee shall have a disagreement with respect to any issue (including those set forth in Article 5.1(c) and 5.5(a), or should a Party wish to remove any matter set out in Article 5.5(a) from the responsibility of the Joint Commercialisation Committee, such issue shall be promptly submitted in writing to the Collaboration Committee for resolution. If the Collaboration Committee is unable to agree on the resolution of such dispute within [*] of such written submission to the Collaboration Committee:
(i) the matter, if an issue set forth in [*], shall be promptly submitted in writing to [*]. If following discussion between them, the [*] are unable to agree a resolution of the matter within [*] after the matter has been submitted to them, the Territorial Commercial Lead for any country shall determine such issue with respect to any [*]; or
(ii) the matter, if relating to any other issue, shall be determined by [*].
5.8 Commercialisation Plan.
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Pursuant to Article 5.5(a), the Joint Commercialisation Committee shall develop a Commercialisation Plan for each Antibody Product which shall:
(i)outline the overall strategy for the Commercialisation of each Antibody Product throughout the Territory;
(ii)adopt a budget for any Joint Activities;
(iii)consolidate the budgets of each Territorial Commercial Lead; and
(iv)address any other issue where the Parties wish to adopt a co-ordinated approach throughout the Territory.
The Commercialisation Plan shall be first developed and approved by the Joint Commercialisation Committee no later than [*] before it is expected to file the first Drug Approval Application for an Antibody Product and shall be updated and approved as deemed necessary but at least annually, in time for the annual budget cycle of each of the Parties.
5.9 Country Plans. In each country, the Territorial Commercial Lead for such country, in consultation with the Co-Detailer (if any) of that country, shall develop a commercialisation plan and budget (“Country Plan”) for such country setting out the work activities, including the number of Details and the Position of Detail to be carried out in such country in the following year, in a manner consistent with the Commercialisation Plan, but taking into account the specific circumstances appropriate to the Commercialisation of such Antibody Product in such country. The Country Plan shall be developed to a standard and timing consistent with other products marketed by the Territorial Commercial Lead in that country. In the event of any dispute between the Territorial Commercial Lead and the Co-Detailer on any matter relating to the Commercialisation of an Antibody Product in that country, the Territorial Commercial Lead shall, after taking due consideration of the views expressed by the other Party, determine the resolution of such matter. Any dispute regarding whether or not a Country
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Plan is consistent with the Commercialisation Plan shall, at the request of either Party, be determined by the Joint Commercialisation Committee, subject to Article 5.7.
5.10 Implementation of Commercialisation Plan and Country Plan. Once the Commercialisation Plan has been approved by the Joint Commercialisation Committee, or if the Joint Commercialisation Committee fails to approve a Commercialisation Plan, the Territorial Commercial Lead with respect to its Lead Territory shall be free to Commercialise an Antibody Product in each country in such Lead Territory, in such manner that they reasonably deem appropriate in accordance with the Country Plan for such country; provided however, that neither Party shall undertake any activity that is inconsistent with such Commercialisation Plan (if any) or with its obligation to use Commercially Reasonable Efforts to maximise the value of the Antibody Product on a global basis.
5.11 Co-Detailing. The Co-Detailer’s right to support the Territorial Commercial Lead in a country shall include the following terms and conditions.
(a) The Co-Detailer’s sales force shall be deployed as determined by the Territorial Commercial Lead (e.g., whether or not such supportive sales force representatives shall double call on customers already called on by sales force representatives of the Territorial Commercial Lead).
(b) The Co-Detailer’s sales force shall jointly Detail with the sales force of the Territorial Commercial Lead under a single Product Trademark in accordance with the Country Plan including being trained by and using the field sales force materials (including Promotional Materials) of the Territorial Commercial Lead and systems compatible with the systems of the Territorial Commercial Lead.
(c) On an Antibody Product-by-Antibody Product and indication-by-indication basis, the planned level of Detailing effort conducted by the Co-Detailer’s sales force for an Antibody Product in an indication shall be [*] ([*]%) (or such lesser
percentage as the Co-Detailer may agree) of the planned level of Detailing effort of the [*] for that Antibody Product and indication in any Contract Year.
percentage as the Co-Detailer may agree) of the planned level of Detailing effort of the [*] for that Antibody Product and indication in any Contract Year.
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(d) Subject to (c) above the Territorial Commercial Lead shall determine the minimum level of effort and resources the Co-Detailer is directed to commit to individual field activities under this Article 5.11, provided the Co-Detailer shall not be required to provide overall effort and resources that exceed the generally proportional level of effort and resources of the Territorial Commercial Lead, having regard to the relative number of sales representatives deployed by the Co-Detailer in relation to the total number of sales representatives deployed by both Parties in such country, pursuant to the Country Plan for such country.
(e) Except with the prior written consent of the Territorial Commercial Lead, all sales representatives of the Co-Detailer Detailing an Antibody Product shall be [*]. Notwithstanding Article 5.11(g) below, if any sales representative of the Co-Detailer is not competent or qualified to carry out the Co-Detailer’s responsibilities pursuant to this Article 5.11, the Territorial Commercial Lead (at its discretion, after consultation with the Co-Detailer) may require the Co-Detailer to remove such sales representative from the Detailing of all Antibody Products.
(f) If an Antibody Product is returned to the Co-Detailer, it shall promptly be shipped to the facility responsible for shipment of Antibody Products in the country in question, to the attention of a department or another location as may be designated by the Territorial Commercial Lead.
(g) Neither Party shall have any responsibility for the hiring, firing or compensation of the other Party’s employees or for any employee benefits. No employee or representative of a Party shall have any authority to bind or obligate the other Party to a Third Party for any sum or in any manner whatsoever, without said first Party’s written approval.
(h) Upon the other Party’s request and to the extent permitted by law, regulation or Regulatory Authorities in such a country, the other Party’s corporate name and logo shall be included on Promotional Materials and Product Labelling in positions of equivalent prominence and frequency with the corporate name and
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logo of the Territorial Commercial Lead. In order to maintain the value of the other Party’s corporate name and logo, when using the other Party’s corporate name and logo, the Territorial Commercial Lead shall maintain such reasonable quality standards as it maintains for its own corporate name and logo and shall comply with the other Party’s then-current policies regarding use of its corporate name and logo (as applied to products marketed by the other Party in that country); provided however, that such policies are consistent with the first sentence of this Article 5.11(h). Prior to the use thereof, the Territorial Commercial Lead shall provide to the other Party a prototype of any Promotional Materials or Product Labelling which contains the other Party’s corporate name and logo, so that the other Party may review the manner in which its corporate name and logo are used therein. The other Party shall notify the Territorial Commercial Lead within thirty (30) days after delivery of such prototype as to whether the other Party approves or disapproves of the manner of such use and, in the case of disapproval, the specific reasons therefor and an acceptable alternative. In the event the other Party fails to so notify the Territorial Commercial Lead within such thirty (30) day period, the other Party shall be deemed to have approved the manner of such use.
5.12 Commercialisation Budget.
(a) Prior to the First Commercial Sale and before the end of each Contract Year following the First Commercial Sale, at a time to be agreed by the Joint Commercialisation Committee, but consistent with the annual budget cycles of each Party, each Party shall provide the Joint Commercialisation Committee with a budget of expected Commercialisation Expenses and forecasted revenue (calculated as set forth in Schedule B) for the ensuing Contract Year for that Party’s Lead Territory. Such budget shall be in a form to be agreed by the Joint Commercialisation Committee and shall, unless agreed otherwise by the Joint Commercialisation Committee, be prepared by each Party as a consolidation of the individual budgets for each country in such Party’s Lead Territory. For the avoidance of doubt, each budget prepared by a Territorial Commercial Lead will
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be provided to the Joint Commercialisation Committee for its information but not for its approval. The Joint Commercialisation Committee shall also agree a budget for and agree on an allocation of responsibilities between the Parties for any Joint Activities on which the Parties agree for the ensuing year.
(b) The Joint Commercialisation Committee shall review on a quarterly basis the Commercialisation Expenses actually incurred against the budget for such expenses in the applicable calendar year and will consider for approval any appropriate changes to such budget. If in the course of the quarterly review, the Joint Commercialisation Committee should determine for any Antibody Product that the actual amounts incurred are, in the aggregate, likely to be greater than [*] ([*]%) of the amount budgeted, the Joint Commercialisation Committee shall review the reasons for such potential overrun and determine whether such overrun is appropriate. If the Joint Commercialisation Committee determines that such overrun is appropriate, the Joint Commercialisation Committee shall approve a revised Commercialisation budget. If the Joint Commercialisation Committee determines that such overrun is not appropriate, the Joint Commercialisation Committee shall initiate (within [*]) such actions as required to remedy the situation. If the Joint Commercialisation Committee is unable to agree on any matter relating to said overrun, [*].
5.13 Public Statements Regarding Antibody Products. Each Party shall be responsible for disseminating accurate information regarding any Antibody Product to its sales representatives based on Product Labelling and Promotional Materials. In exercising their rights pursuant to this Article 5, Celltech and Amgen shall ensure that no claims or representations in respect of the Antibody Products or the characteristics thereof (e.g., safety or efficacy) are made by or on behalf of it (by members of its sales force or otherwise) which do not represent an accurate summary or explanation of the Product Labelling of the Antibody Product in the country in question.
5.14 Medical and Other Inquiries. The Territorial Commercial Lead shall be responsible for responding to all medical questions or inquiries relating to the Antibody Products sold in
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countries in its respective Lead Territory, except that the Co-Detailer, in the course of carrying out its activities under Article 5.11(c), may respond to any such question or inquiry which can be answered by reference to the Product Labelling and package insert in the applicable country. The Territorial Commercial Lead shall designate a medical liaison to whom the Co-Detailer shall instruct its medical affairs group, as well as its sales forces engaged in the Detailing of Antibody Products, to direct medical questions or inquiries relating to the Antibody Products. The Territorial Commercial Lead shall keep such records and make such reports as are reasonably necessary to document such communications in compliance with all applicable regulatory requirements.
5.15 Compliance with Laws.
(a) Each Party agrees to comply with all applicable laws, regulations and rules with respect to the Commercialisation of Antibody Products and in all material respects to conform its practices and procedures with the recommended industry practices and procedures applicable to the relevant part of the Territory, as the same may be amended from time to time. Each Party shall use Commercially Reasonable Efforts to conduct its business operations and shall use Commercially Reasonable Efforts to cause each of its employees, representatives and agents to do nothing which such Party knows or reasonably should know would jeopardise the good will or reputation of the other Party or the Antibody Products.
(b) Neither Party shall be required to undertake any activity relating to the Commercialisation of Antibody Products that it believes, in good faith, may violate any law.
(c) To the extent that a Party’s sales force engages in the distribution of samples of Antibody Products pursuant to any activities conducted pursuant to this Agreement, that Party shall ensure that all such activities are conducted in a manner which conforms to this Agreement, the Country Plan and all applicable laws.
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(d) In addition to its responsibilities under Article 4.7(e), the other Party shall promptly notify the Territorial Commercial Lead of and provide the Territorial Commercial Lead with a copy of any correspondence or other reports with respect to the Detailing or Promotion of Antibody Products submitted to or received from any Regulatory Authority or industry association in the relevant part of the Territory. Each Party shall in all material respects conform its practices and procedures relating to educating the medical community in the relevant part of the Territory with respect to Antibody Products to any applicable Regulatory Authority or industry association regulations, policies and guidelines, as the same may be amended from time to time, and the other Party shall promptly notify the Territorial Commercial Lead of and provide the Territorial Commercial Lead with a copy of any correspondence or other reports submitted to or received from any such Regulatory Authority or industry association with respect to Antibody Products.
5.16 Detailing Reports.
(a) For information purposes, each Party shall, at country level, provide the other Party with current reports giving detailed information on [*]. Such Detailing reports and any other relevant sales force information related to such Antibody Product shall be provided to the other Party [*].
(b) No later than forty-five (45) days after the conclusion of each Calendar Quarter after First Commercial Sale of an Antibody Product in each country, each Party shall submit to the other Party a report, based upon such Party’s internal Detailing report data, setting forth the [*] or otherwise as required by the Country Plan. Except as set forth in Article 5.16(c) below, for purposes of this Agreement the number of Details and Position of Detail for an Antibody Product performed by the first Party for a given Calendar Quarter shall be based on such first Party’s internal Detailing report data.
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(c) Each Party agrees, if requested by the other Party, to make available to independent accountants nominated by the other Party (subject to the approval of the Party receiving the request, such approval not to be unreasonably withheld or delayed), upon reasonable advance notice, such books and records necessary to verify the accuracy of such report in respect of any Calendar Quarter ending not more than [*] prior to the date of such request. Upon expiration of [*] following the end of any Contract Year, the report reflecting such Party’s Details for such Antibody Product for such Contract Year shall be binding on the other Party, and such Party shall be released from any liability or accountability to the other Party with respect to the number of Details given during such Contract Year unless prior to such expiration the other Party has notified the first Party of an issue regarding such audit report (arising from such inspection) pursuant to this Article 5.16(c).
(i) If, after an audit, the other Party has a good faith concern with the accuracy of the [*] of Details reflected by the first Party’s internal Detailing report data, based on the other Party’s assessment of such data when compared to available Third Party audit data, sampling data (if applicable) or other relevant data relating to the first Party’s Detailing of such Antibody Product, then the other Party shall so advise the first Party of such concern, and promptly thereafter the other Party and the first Party’s representatives shall consider in good faith whether the [*] of Details reflected by the first Party’s internal Detailing report data are accurate and, if not, whether an adjustment to the [*] of Details of such Antibody Product performed by the first Party for such Calendar Quarter is appropriate.
(ii) If such representatives referred to in Article 5.16(c)(i) are unable to resolve the matter, either Party may (by notice to the other Party) have the dispute referred to the [*] of each Party, or their designees, for attempted resolution by good faith negotiations for a period of not more than [*]
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after such notice is received or such other period of time as may be mutually agreed upon by the Parties to determine whether an adjustment to the [*] of the first Party’s Details for Antibody Product in such Calendar Quarter is appropriate.
(iii) If the Parties are unable to resolve the matter after such negotiation as provided in Article 5.16(c)(ii), then such dispute regarding the [*] of the first Party’s Details for Antibody Product in such Calendar Quarter shall be referred for final resolution to an independent market research firm or another expert, mutually acceptable to the Parties. The fees that such market research firm or other expert, shall be paid in connection with such resolution shall be charged to the Product Contribution account as a Commercialisation Expense. The settlement of such dispute by such market research firm or other expert shall, after each Party has been given the reasonable opportunity to present written evidence, be binding upon the Parties, and shall be to the exclusion of any court of law with respect to proceedings based solely on such dispute (it being understood that such matter is not within the Collaboration Committee’s authority).
5.17 Post-Regulatory Approval Activities. The Territorial Commercial Lead shall have the right to conduct all activities for Marketing Clinical Studies in its Lead Territory.
ARTICLE 6
MANUFACTURE AND SUPPLY
MANUFACTURE AND SUPPLY
6.1 Manufacturing.
(a) Celltech shall use Commercially Reasonable Efforts to procure the supply of Antibody Raw Material for Development and Commercialisation and, in so doing, shall be responsible for using Commercially Reasonable Efforts to:
(i) identify one or more suitable Third Party suppliers of Antibody Raw Material;
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(ii) negotiate the terms of and enter into agreements (“Supply Agreements”) with one or more of such Third Party suppliers for the supply of Antibody Raw Material to meet the Development and Commercialisation requirements of the Parties as set forth in Article 6.4; and
(iii) manage the relationship with and require any such Third Party supplier(s) to fulfill the responsibilities of the Manufacturing Lead as set forth in this Agreement.
Such Third Party supplier or suppliers is herein referred to as the “Manufacturing Lead” for Antibody Raw Material, unless a Party assumes manufacture of Antibody Raw Material pursuant to Article 6.7 below, in which case such Party shall be responsible for the supply of Antibody Raw Material and shall be designated the “Manufacturing Lead”.
(b) Amgen shall use Commercially Reasonable Efforts to procure the supply (itself and/or through a Third Party subcontractor) of Antibody Product in Finished Form. To the extent Amgen uses a Third Party subcontractor to supply Antibody Product in Finished Form the terms of Articles 6.1(a)(i)-(iv) and 6.2(b), as they relate to agreement with any such Third Party subcontractor, shall apply mutatis mutandis to the supply of Antibody Product in Finished Form.
6.2 Manufacture of Antibody Products for Development.
(a) With respect to each Antibody Product selected to be advanced to [*], the Manufacturing Lead shall be responsible for [*] and for [*], Antibody Raw Material for use in all pre-clinical studies, formulation, development studies and clinical studies in the Territory, in quantities (as forecast by Amgen) and with the specifications agreed between the Parties.
(b) Development Supply Agreements shall have terms and conditions as are customary in transactions of this type and reasonable under all of the circumstances. The terms and conditions of such Development Supply
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Agreements shall include the cost and specification of the Antibody Raw Material, the quality standards and the method of forecasting demand to be used during Development.
(c) Amgen shall be responsible for [*] Antibody Product in Finished Form, including [*], for all pre-clinical studies, formulation, development studies and clinical studies in the Territory, in quantities (as forecast by the Parties) and with the specifications agreed between the Parties.
6.3 Manufacture of Antibody Product(s) for Commercialisation.
(a) With respect to each Antibody Product receiving Regulatory Approval for Commercialisation, the Manufacturing Lead shall be responsible for [*] Antibody Raw Material for commercial use in the Territory (in quantities as forecast in the Commercialisation Plan and with specifications set forth in the Regulatory Approval of such Antibody Raw Material). Commercialisation Supply Agreements shall have terms and conditions as are customary in transactions of this type and reasonable under all circumstances. The terms and conditions of such Commercialisation Supply Agreements shall include the cost and specification of the Antibody Raw Material, commercial quality standards and the method of forecasting demand to be used during Commercialisation.
(b) Amgen shall be responsible for [*] Antibody Product in Finished Form and [*] Antibody Product in Finished Form in quantities (as forecast in the Commercialisation Plan) and with specifications set forth in the Regulatory Approval of such Antibody Product.
(c) The Parties shall agree procedures and terms for the transfer of title in Antibody Products to the Territorial Commercial Lead prior to the sale thereof in its Lead Territory.
6.4 Third Party Manufacturers. Celltech shall not enter into any Supply Agreement with a Third Party for Antibody Raw Material as specified in this Article 6 without first
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obtaining the consent of Amgen to such agreement (such consent not to be unreasonably withheld or delayed). Celltech shall use Commercially Reasonable Efforts to ensure that, in addition to the terms set forth in Articles 6.2 and 6.3 (as appropriate), such Supply Agreement shall contain terms that, in the event that either Celltech or Amgen assumes exclusive responsibility for manufacture and supply of Antibody Raw Material pursuant to Article 6.7, will grant Celltech the right to (a) terminate such agreement on reasonable notice with respect to Antibody Raw Materials, (b) have transferred to Amgen or Celltech (as appropriate) and to receive assistance reasonably required by Amgen or Celltech (as appropriate) to effect transfer of the Third Party’s Information relating to the manufacture and analysis of Antibody Raw Material in sufficient detail for Amgen or Celltech (as appropriate) to implement the [*] of such [*], including Information contained in the [*] of any applicable Regulatory Filings and the results of any stability studies performed on Antibody Raw Material, (c) have provided Amgen or Celltech (as appropriate) such Information pertaining to the manufacture and analysis of Antibody Raw Material as Amgen or Celltech (as appropriate) shall reasonably request; (d) if requested by Amgen or Celltech (as appropriate), obtain reasonable assistance in the manufacture of trial batches of Antibody Raw Material to enable Amgen or Celltech (as appropriate) to determine its ability to manufacture Antibody Raw Material; (e) audit in accordance with Article 6.6; (f) obtain copies of any direct communications by or to the Manufacturing Lead from Regulatory Authorities having jurisdiction in the Territory regarding and concerning the manufacture of any Antibody Product and (g) name Amgen as a permitted assignee or sublicensee.
Once Amgen has given such consent, Amgen shall be deemed to have accepted the terms of such Third Party Supply Agreement. Both Parties shall comply and operate in accordance with the terms of any such Supply Agreement accepted by Amgen and entered into by Celltech. To the extent the same relates to Antibody Product, all (i) out-of–pocket costs, expenses and liabilities (calculated on an arm’s-length basis in accordance with GAAP), (ii) FTE Cost and (iii) cost of Materials used, which are incurred by Celltech in discharging its obligations pursuant to this Article 6 shall be Research and Development Costs if incurred for Development and a Commercialisation
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Expense if incurred for Commercialisation, and all amounts recovered from any Third Party supplier shall be credited to Product Contribution revenues, provided however, that if the costs, liabilities and/or amounts recovered are also applicable to products other than Antibody Products, then only an equitable portion of such costs, liabilities and/or amounts recovered shall be so allocated. The sharing of liabilities under any Third Party Supply Agreement is without prejudice to Article 18. In the event that Amgen obtains supply of Antibody Product in Finished Form from a Third Party, costs, liabilities and/or amounts recovered shall also be allocated to Research and Development Costs or Commercialisation Expenses mutatis mutandis.
6.5 Standards of Supply. Antibody Raw Material, in the case of the Manufacturing Lead, and Antibody Products in Finished Form, in the case of Amgen, shall be manufactured in accordance with current GMP in manufacturing processes and facilities as described in the applicable Regulatory Filings submitted to and approved by the Regulatory Authority.
6.6 Audit. Each Party, to the extent it is not the Manufacturing Lead, shall have the right to conduct reasonable quality assurance audits with respect to all facilities, operations and laboratories (and any records related thereto) of the other Party or its subcontractors (provided that, where the Manufacturing Lead is a Third Party, only to the extent permitted by the relevant Supply Agreement), where applicable manufacturing activities are conducted, as is reasonably necessary to verify the Manufacturing Lead’s conformance (or Amgen’s conformance with respect to Antibody Product in Finished Form) with cGMP, cGLP, cGCP and other regulatory requirements. Such audits shall be conducted upon reasonable notice during reasonable business hours.
6.7 Manufacturing Option.
(a) At any time during Development or Commercialisation and subject to any commitments already made to any Third Party supplier either Party may seek to manufacture and supply Antibody Raw Material by providing written notice to the other Party and the Collaboration Committee that it wishes to assume manufacture and supply of the Antibody Raw Material for the Territory or its
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Lead Territory. Within [*] after receipt of such request, the other Party shall have the right to provide reciprocal notice of its desire to manufacture and supply Antibody Raw Material.
Thereafter, the Collaboration Committee shall promptly meet to consider any and all requests and determine ([*]) whether one or both of the Parties should have the right and obligation to manufacture and supply Antibody Raw Material, applying the following criteria:
(i) the FAMC resulting from the requesting Party’s manufacturing is likely to be less than the actual or probable FAMC as invoiced by the Third Party manufacturer or, if both Parties desire to assume such responsibility, the probable FAMC as between the Parties;
(ii) other benefits, such as stability of supply or quality of product, are like to accrue to both Parties as a result of manufacture of Antibody Raw Material by the requesting Party or Parties;
(iii) a Third Party manufacturer for Development or Commercialisation supplies has not been identified or such Third Party manufacturer is unable or unwilling to enter into a Supply Agreement on terms reasonably satisfactory to both Parties;
(iv) the desirability of a second (or further) source of supply of Antibody Raw Material;
(v) that the Third Party manufacturer is in material breach of its supplier obligations and that as a result of such breach, the requesting Party or Parties should assume manufacture and supply of Antibody Raw Material; or
(vi) the cost and difficulty of enforcing the relevant Supply Agreement to enable one or both Parties to manufacture and supply Antibody Product.
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(b) If the Collaboration Committee determines that, after applying the foregoing criteria, in total it would be beneficial to the interests of both Parties that the requesting Party or Parties manufacture and supply Antibody Raw Material, the selected Party or Parties shall have the right and obligation to manufacture and supply Antibody Raw Material for either the Territory or its Lead Territory as determined by the Collaboration Committee. Upon selection of a Party, then
(i) If Amgen is the selected Party, Celltech shall itself transfer any Information Controlled by Celltech, and Celltech shall use the level of effort determined by the Collaboration Committee to enforce (or, at the request of Amgen and to the extent permitted by the terms of the Supply Agreement assign to Amgen the right to enforce) the terms and conditions of the Third Party Supply Agreement entered into by Celltech pursuant to Article 6.4 including (but only to the extent permitted by the Supply Agreement with such Third Party) the provision to Amgen of any Information and assistance reasonably required by Amgen from such Third Party pertaining to the manufacture and analysis of Antibody Raw Material with the objective of Amgen being enabled to implement the [*] of [*], including Information contained in the [*] of any applicable Regulatory Filings and the results of any stability studies performed by or on behalf of Celltech; and
(ii) If Amgen is the selected Party, Celltech shall, at the request of Amgen, use the level of effort determined by the Collaboration Committee to enforce (or, to the extent permitted by the Supply Agreement with such Third Party assign to Amgen the right to enforce) the terms and conditions of the Third Party Supply Agreement entered into by Celltech pursuant to Article 6.4 (but only to the extent such terms are included in any such Supply Agreement, and only to the extent such Supply Agreement relates to Antibody Raw Material) including termination of the Third Party Supply Agreement on reasonable notice (but only if the Collaboration Committee
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has determined Amgen shall have the exclusive right and obligation to manufacture and supply Antibody Raw Material); and
(iii) The Parties (as appropriate) shall continue to work with the Third Party supplier in order to achieve the manufacturing transition or second sourcing with minimal disruption, and to ensure adequate supplies of Antibody Raw Material during the transitional process; and
(iv) The Party or Parties assuming the obligation to manufacture and supply Antibody Raw Material Party shall use Commercially Reasonable Efforts to put all necessary manufacturing processes in place so as to be able to meet Development or Commercialisation requirements (as appropriate) of Antibody Raw Material (of a quality and quantity required of the Manufacturing Lead); and
(v) The Party assuming the obligation to manufacture and supply Antibody Raw Material shall have the right to include the cost of [*] as Research and Development Costs if such transfer takes place during Development or as a Commercialisation Expense if such transfer takes place during Commercialisation (but only to the extent any such costs relate to Antibody Raw Material).
(c) All amounts paid to the Third Party in connection with the supply of Antibody Raw Material and any Third Party Supply Agreement (including all amounts paid in connection with the provision of Information and assistance), and all costs incurred by the Parties in enforcing the terms of any Supply Agreement, shall be a Research and Development Cost if incurred for Development and a Commercialisation Expense if incurred for Commercialisation. All amounts recovered from the Third Party by way of damages as a result of any breach by the Third Party supplier in the supply of Antibody Raw Material shall be revenues included in the calculation of the Product Contribution.
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6.8 Quality Responsibility. The Parties acknowledge that, in order to meet regulatory requirements prior to the commencement of any supply of Antibody Raw Material or Antibody Product in Finished Form, appropriate quality assurance agreements relating to such supply must be entered into between the Parties and between each Party and its Third Party manufacturers. The Parties will negotiate such quality assurance agreements in good faith having regard to the document entitled “Quality Responsibilities” and dated March 12, 2002. If the Parties are unable to conclude any such agreement then the matter shall be referred at the request of either Party to the Collaboration Committee.
ARTICLE 7
CONSIDERATION
CONSIDERATION
7.1 Up-front Fees. In consideration of the rights granted hereunder by Celltech, Amgen shall pay Celltech a non-refundable, non-creditable licence fee of [*] ($[*]) within [*] after the Effective Date.
7.2 Milestone Payments. As further consideration for the rights granted hereunder by Celltech, Amgen shall make non-creditable, non-refundable payments (“Milestone Payment(s)”) to Celltech within [*] after the first occurrence of each of the corresponding events listed below (each, a “Milestone Event”), in the amount provided:
Milestone Event Milestone Payment Amount
(a) | [*]. | [*] ($[*]) | ||||||
(b) | [*]. | [*] ($[*]) | ||||||
(c) | [*]. | [*] ($[*]) | ||||||
(d) | [*]. | [*] ($[*]) | ||||||
(e) | [*]. | [*] ($[*]) | ||||||
Each Milestone Payment shall be payable only once, no matter how many times the corresponding Milestone Event is achieved by one or more Antibody Product(s).
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ARTICLE 8
COMPENSATION
COMPENSATION
8.1 Product Contribution. The Parties shall split 50:50 the Product Contribution from Commercialisation of Antibody Products throughout the Territory whether such Product Contribution is a profit or a loss. For the avoidance of doubt, any Commercialisation Expenses incurred prior to Regulatory Approval of an Antibody Product shall be charged to the Product Contribution and be borne by the Parties on a 50:50 basis.
8.2 Calculation and Duration of Product Contribution. The Product Contribution shall be payable in respect of sales in the Territory, on an Antibody Product-by-Antibody Product basis, for so long as there are sales by either Party or their sublicensees or distributors of that Antibody Product in the Territory. The Product Contribution shall be calculated on a quarterly basis for each Antibody Product in accordance with Schedule B.
8.3 Quarterly Reconciliation of Product Contribution.
(a) Within [*] following the end of each Calendar Quarter, each Party shall submit to the other Party a written report (in reasonable detail specified by the categories set out in Schedule B and with supporting documentation) which shall show separately with respect to each Antibody Product and each country in the Territory, to the extent made or incurred by each Party the following: (i) a calculation of the Product Contribution showing all Net Sales achieved and recoveries from legal actions and any other relevant revenues, Cost of Goods, Commercialisation Expenses (per category), Other Expenses and Licence Fees incurred; (ii) the variation from the budgeted Product Contribution for that quarter (identifying in the same any variance which is attributable to fluctuations in currency exchange rates); and (iii) an estimate for the Product Contribution for the remainder of the Contract Year.
(b) Within [*] following the end of each Calendar Quarter, Amgen shall submit to Celltech a written consolidated report setting forth in reasonable detail the
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calculation of total Product Contribution for each Antibody Product in each country in the Territory for that Calendar Quarter and the calculation of any net amount owed by Celltech to Amgen or by Amgen to Celltech, as the case may be in order to ensure the appropriate sharing of Product Contribution in accordance with Article 8.1, and the net amount payable (the “Balance Payment”) shall be paid by Amgen or Celltech (as the case may be) within [*] after receipt of such written report. If the Product Contribution is a negative number and the Balance Payment is [*] ([*]%) or greater in excess of the budgeted Balance Payment for that quarter (after taking into account any change in applicable exchange rates used in calculating the Balance Payment for that quarter and the budgeted Balance Payment), the paying Party may elect to carry over to the next quarter the difference between the budgeted Balance Payment and the invoiced Balance Payment, and such carried sum shall be included in the calculation of the amount of the Balance Payment for the next quarter. The election to roll over must be provided within [*] after receipt of the above-referenced written report.
(c) In the event of a dispute with respect to any amounts under this Article 8.3, the disputing Party shall provide written notice to the Joint Commercialisation Committee within [*] after receipt of the written report in question, specifying such dispute and explaining the basis of the dispute. The Joint Commercialisation Committee shall promptly thereafter meet and negotiate in good faith a resolution to such dispute. The resolution of such dispute shall [*]. In the event that the Parties are unable to resolve such dispute within [*] after written notice by the disputing Party, the matter shall be resolved in the manner set forth in Article 15. Notwithstanding the above, such dispute shall not affect a Party’s obligation to pay all undisputed amounts (and all undisputed amounts shall be paid in accordance with Article 8.3(b)) or a Party’s right to audit the records of the other Party in accordance with Article 8.5.
(d) Interest shall accrue from the due date for payment as set out in Article 8.3(b) on all amounts due and payable but unpaid, including any amounts withheld which
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are subsequently agreed or determined to be payable. All withheld amounts, together with interest, shall be paid within [*] of any such agreement or determination.
8.4 Payments; Tax Matters.
(a) All payments to be made under this Agreement shall be made in U.S. Dollars by bank wire transfer in immediately available funds to a bank account designated from time to time in writing by the Party receiving the funds.
(b) Net Sales or other revenues received or payments due in currencies other than Dollars shall first be calculated in the relevant foreign currency and then converted to Dollars against the currency in question on the rate of exchange applicable on the last Business Day of the Calendar Quarter in respect of which the funds are payable using the currency exchange rates quoted by Bloomberg Professional, a service of Bloomberg L.P., during the period of such Net Sales, or in the event Bloomberg Professional is not available then The Wall Street Journal. Budgets and intra-budget forecasts of future Net Sales and expenses in currencies other than Dollars shall be converted into Dollars at budget rates to be agreed between the Parties at the Joint Commercialisation Committee.
(c) All amounts due under this Agreement shall be paid exclusive of any Value Added Tax (which, if applicable shall be payable by a Party in addition upon receipt of a valid Value Added Tax invoice). Each Party agrees to inform the other Party forthwith if it concludes that there is a Value Added Tax law or practice, or a change in such law or practice, which requires it to account for Value Added Tax on any payments due pursuant to this Agreement at any time after the Effective Date, with a view to the Parties using their best endeavours to agree on the manner in which subsequent payments shall be made to reduce or eliminate the liability of the Parties to pay Value Added Tax.
(d) All amounts due under this Agreement shall be paid in full without deduction for any applicable taxes, levies, imposts, duties and fees of whatever nature imposed
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by or under the authority of any government or public authority, except for tax legally required to be deducted or withheld. Where any sum due to be paid to a Party under this Agreement is subject to any withholding or similar or other tax, the Parties shall take all reasonable steps to do all such acts and things and to sign all such deeds and documents as will enable them to take advantage of any applicable double taxation agreements to reduce the rate of withholding or similar taxes with the object of paying the sums due under deduction of a reduced rate of withholding tax or on a gross basis. In the event there is no double taxation agreement or the reduced rate of withholding tax under the relevant double taxation agreement is greater than [*] ([*]%), the Party making payment shall pay such withholding or similar tax, deduct the relevant amount from the payment due to the other Party, and secure and send to the other Party proof of such withholding or similar tax in a form in accordance with the relevant taxation authority as evidence of such payments. Each Party agrees to inform the other Party forthwith if it concludes that there is any law or practice or any change in such law or practice which requires it to deduct or withhold tax in respect of any payments due pursuant to this Agreement at any time after the Effective Date with a view to the Parties using their best endeavours to agree on the manner in which subsequent payments shall be made to reduce or eliminate the liability of both Parties to deduct or withhold any amount on account of tax.
(e) Any payment of any amount under this Agreement not received by the due date specified herein shall accrue interest thereafter on the sum due and owing from the date payment is due until the date payment is received at the rate equal to [*].
8.5 Records; Audits. Each of Celltech and Amgen and their respective Affiliates shall keep and maintain complete and accurate records and books of account documenting in detail sufficient to track and determine, in a manner consistent with GAAP, all revenues, expenses and all other data necessary for the Product Contributions and other sums payable pursuant to this Agreement and in compliance with the terms of the Agreement. Such records shall be retained for a period of the later of (a) a [*] period following the
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year in which any payments were made hereunder; (b) the expiration of the applicable tax statute of limitations (or any extensions thereof); or (c) such longer period as may be required by law. Each Party and their respective Affiliates shall permit independent accountants of internationally recognised standing retained by the other Party (the “Auditing Party”) and reasonably acceptable to the other Party, upon reasonable prior written notice, to have access to its and its Affiliates’ records and books and premises for the sole purpose of determining the appropriateness of costs charged by or accrued to the Party being audited and the correctness of amounts due and payable under this Agreement for any year ending no more than [*] prior to the date of such request; provided however, that the books and records for any particular Contract Year shall only be subject to one audit. Such examination shall be conducted during regular business hours and no more than once in each calendar year. The report of such accountant shall be limited to a certificate verifying, or not verifying, as the case may be, any report made or payment submitted by the audited Party during such period. In the event the accountant shall be unable to verify the correctness of any such payment, the accountant’s report shall specify why such payment is unverifiable and the amount of any discrepancy. The audited Party shall receive a copy of each such report concurrently with receipt by the Auditing Party and the Parties shall use good faith efforts to resolve any discrepancies. All information contained in any such report shall be deemed Confidential Information hereunder. If such examination reveals that such costs or payments have been misstated, any adjustment shall be promptly refunded or paid, as appropriate. The Auditing Party shall pay the fees and expenses of the accountant engaged to perform the audit, unless such audit reveals a net discrepancy of [*] ([*]%) or more for the period examined which is to the disadvantage of the Auditing Party, in which case the Party who misreported shall pay all reasonable costs and expenses incurred by the Auditing Party in the course of making such determination. Upon the expiration of [*] following the end of any Contract Year, the calculation of any such amounts payable with respect to such year shall be binding and conclusive upon a Party entitled to such audit and the other Party or its Affiliates shall be released from any liability or accountability with respect to such amounts for such year.
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ARTICLE 9
COLLABORATION
COLLABORATION
9.1 Collaboration Committee Formation. As soon as practicable following the Effective Date, the Parties shall establish a Collaboration Committee to oversee the Research, Development and Commercialisation of all Antibody Products. The Collaboration Committee shall be comprised of an equal number (not more than four ) of Celltech and Amgen representatives and shall include senior officers or managers from each Party. The Collaboration Committee shall follow the organisational and meeting procedures set forth in Article 9.3.
9.2 Collaboration Committee Responsibilities.
The Collaboration Committee shall be responsible for:
(a) managing the relationship between the Parties;
(b) resolving issues in the Joint Research, Joint Development and Joint Commercialisation Committees that are [*], or that are expressed to be matters to be considered or determined by the Collaboration Committee; and
(c) performing such other functions as are expressly set out in this Agreement as matters for the Collaboration Committee or are consistent with the terms of this Agreement to further the purposes of the collaboration as set forth in Article 2, as determined by the Parties.
9.3 Decision Making; Administrative Matters.
(a) All decisions of the Collaboration Committee shall be made by the unanimous decision of Celltech and Amgen, with the representatives of each Party who are members of the Collaboration Committee collectively having one vote in any matter requiring the approval of the Collaboration Committee. The Parties agree that all decisions regarding the Research, Development or Commercialisation of
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an Antibody Product will be made in the interests of maximising the value of the Antibody Product on a global basis.
(b) If the Collaboration Committee is unable to reach unanimous agreement on any issue within its authority pursuant to Article 9.2, the Parties shall attempt to resolve such dispute in accordance with the provisions of Article 15.
(c) The Collaboration Committee shall establish its own procedural rules for its operation, consistent with the terms of this Article 9.3(c). A chairperson for the Collaboration Committee shall be appointed from among its members. The chairperson shall be appointed on an annual basis and shall alternate each year between a Celltech representative and an Amgen representative, with Celltech being responsible for designating the chairperson for the First Contract Year after the Effective Date. The chairperson shall be responsible for calling meetings of the Collaboration Committee and for leading the meetings. A Collaboration Committee member of the Party hosting a meeting of the Collaboration Committee shall serve as secretary of that meeting. The secretary of the meeting shall prepare and distribute (within ten (10) Business Days following each meeting) to all members of the Collaboration Committee the minutes of the meeting. Such minutes shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations approved by the Collaboration Committee. The minutes of each Collaboration Committee meeting shall be approved or disapproved, and revised as necessary, at the next meeting. Final minutes of each meeting shall be distributed to the members of the Collaboration Committee by the chairperson.
(d) The Collaboration Committee shall meet at least every six (6) months and in addition within [*] of a request by either Party to have such a meeting . Such meetings shall be held at such times as are mutually agreed upon by the Collaboration Committee. Meetings may take place by video conference or telephone conference or such other means as the Collaboration Committee shall decide, provided that all members of the Collaboration Committee shall meet in
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person at least [*]. Meetings held in person shall alternate between Amgen and Celltech locations. The first meeting shall be held at Celltech’s facilities.
(e) If a Party’s representative is unable to attend a meeting, such Party may designate an appropriate alternate representative to attend such meeting in place of the absent representative. In addition, each Party may (at its discretion and with the consent of the other Party) invite additional employees, consultants or scientific advisors to attend the Collaboration Committee meetings.
ARTICLE 10
GRANT OF RIGHTS
GRANT OF RIGHTS
10.1 Patent Licences.
(a) Amgen hereby grants to Celltech (i) a sole royalty-free licence (co-exclusive with Amgen), under the [*] Patent Rights, [*] Patent Rights, [*] Know-How, [*] Know-How [*] and [*] Know-How; and (ii) a non-exclusive royalty-free licence under the [*] Patent Rights and other [*] Know-How to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in Antibody Products in the Field in the Territory, solely in compliance with the terms and conditions of this Agreement. For the avoidance of doubt, the grant of a licence under [*] Patent Rights and [*] Know-How is not intended to require the transfer by Amgen to Celltech of Materials and Information beyond that explicitly set forth in this Agreement.
(b) Celltech hereby grants to Amgen (i) a sole royalty-free licence (co-exclusive with Celltech), under the [*] Patent Rights, [*] Patent Rights, [*]Patent Rights, [*] Know-How, [*] Know-How [*] and [*] Know-How; and (ii) a non-exclusive royalty-free licence under [*] Patent Rights and other [*] Know-How to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical
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possession of or otherwise transfer title in Antibody Products in the Field in the Territory, solely in compliance with the terms and conditions of this Agreement. For the avoidance of doubt, the grant of a licence under [*]Patent Rights and [*] Know-How is not intended to require the transfer by Celltech to Amgen of Materials and Information beyond that explicitly set forth in this Agreement.
(c)Certain licence rights granted to a Party under this Article 10.1 may include a sublicence of Patent Rights and/or know-how of Third Parties under Third Party licences. Notwithstanding anything to the contrary in this Agreement, the Party receiving a sublicence of such Third Party licences shall, in exercising such sublicence rights, subject to and so far as the terms are applicable to its activities, comply with the provisions of such Third Party licences relating to Antibody Products to the extent the granting Party has notified in writing the terms of such Third Party licence to the Party receiving a sublicence of such Third Party licences. Each Party shall promptly provide to the other Party a copy of any notice of breach received by it under any such Third Party licence.
10.2 Trademark; Copyright Licences.
(a) Amgen hereby grants to Celltech a non-exclusive, royalty-free licence to use and display the Amgen Trademarks (subject to the provisions of Article 5.11(h)) and a sole royalty-free licence (co-exclusive with Amgen), to use and display the Product Trademarks, in connection with Antibody Products in the Territory. Celltech hereby grants to Amgen a non-exclusive, royalty-free licence to use and display (subject to the provisions of Article 5.11(h)) the Celltech Trademarks and a sole royalty-free licence (co-exclusive with Amgen) to use and display Product Trademarks in connection with Antibody Products in the Territory. All licences granted under this Article 10.2(a) are sublicensable pursuant to the terms of Article 19.10.
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(b) Each Party hereby grants to the other Party a sole royalty-free licence (co-exclusive with the Party), with the right to sublicence solely pursuant to the terms of Article 19.10, under the Party’s entire right, title and interest in any intellectual property rights in Promotional Materials and additional Antibody Product-specific materials to reproduce, distribute copies of, prepare derivative works of and publicly perform and display such Promotional Materials or additional Antibody Product-specific materials solely in connection with Antibody Products in the Field in the Territory and in accordance with this Agreement.
(c)The Joint Commercialisation Committee shall determine a Product Trademark that shall be applied to each Antibody Product in the Territory. In the event that the Joint Commercialisation Committee is unable to agree on such a Product Trademark, and if the matter is not determined in accordance with Article 5.7, the Territorial Commercial Lead shall be free to choose and in any event the Territorial Commercial Lead shall own, the Product Trademark in its respective Lead Territory.
ARTICLE 11
INTELLECTUAL PROPERTY RIGHTS
INTELLECTUAL PROPERTY RIGHTS
11.1 Ownership.
11.1.1 As between the Parties, Amgen shall own all right, title and interest in and to all [*] Technology (other than [*] Know-How and all [*] Patent Rights), subject to the rights and licences granted to Celltech hereunder.
11.1.2 As between the Parties, Celltech shall own all right, title and interest in and to all [*] Technology (other than [*] Know-How and all [*] Patent Rights), subject to the rights and licences granted to Amgen hereunder.
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11.1.3 As between the Parties, all right, title and interest in and to all [*] Know-How and all [*] Patent Rights shall be [*] by [*]. Subject to the rights and licences granted hereunder, each Party shall have [*].
11.1.4 Other than as expressly set forth in this Agreement, neither Party shall have any right in and to any intellectual property owned or controlled by the other Party and neither Party shall have an obligation to grant the other Party any rights therein.
11.1.5 Other than as expressly set forth in Articles 11.2, 11.4 and 11.6, neither Party shall have the right to prepare, file, prosecute, maintain, defend, settle and/or enforce Patent Rights or Product Trademarks Controlled by the other Party, such activity being the exclusive right (but not the obligation) of the Party Controlling the same.
11.2 Prosecution and Defence.
11.2.1 Promptly after the Effective Date, Celltech shall provide Amgen with copies of all material documents in Celltech’s possession pertaining to [*] Patent Rights [*]. During the term of this Agreement, each Party shall as soon as practicable provide the other Party (as appropriate) with all material documents and any other document Controlled by a Party reasonably requested by the other Party (such request to identify the specific documents required), pertaining to [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and [*] Patent Rights.
11.2.2 (a) Amgen shall have the first right (but not the obligation) to have mutually acceptable outside counsel (i) at any time prepare, file, prosecute, maintain and defend the Product Trademarks in the Amgen Territory and [*] Patent Rights outside the Celltech Territory; (ii) prior to, on and following the Transition Date (as defined in Article 11.2.9 below) prepare, file, prosecute and maintain any [*] Patent Rights and the [*] Patent Rights that are [*] to any Antibody Products (“[*] Patent Rights”) in the Amgen Territory; (iii) on and following the Transition Date, defend any [*] Patent Rights and [*] Patent Rights in the Amgen Territory; and (iv) for the avoidance of doubt only, prior to the Transition Date
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defend any [*] Patent Rights that are [*]to any Antibody Products (“[*] Patent Rights”) in the Celltech Territory.
(b) Celltech shall have the right to review and comment on any papers pertaining to proposed applications, responses, interferences and oppositions before the filing thereof by such counsel with any patent or trademark office (e.g., national, regional or international) (“Consultation Rights”), regarding [*] Patent Rights, [*] Patent Rights and Product Trademarks in the Amgen Territory. Celltech shall also have Consultation Rights regarding [*] Patent Rights and [*] Patent Rights outside the Amgen Territory. If such outside counsel concludes that taking, or failing to take, any specific action(s) would be inconsistent with its instructions under Article 11.2.4, then Amgen shall not take, or shall take (as the case may be), such specific action(s) unless the prior express written consent of Celltech shall have been obtained. Amgen shall have the right to propose an alternative strategy for Celltech’s consideration. To that end, Amgen shall instruct such outside counsel to furnish Celltech with a reasonably complete draft of each submission to a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Celltech’s reasonably timely comments thereon. Additionally, Amgen shall instruct such outside counsel to provide Celltech with a copy of each submission made to and document received from a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks reasonably promptly after making such filing.
(c) Amgen shall have the right, at any time and at its sole option, to elect not to proceed with and/or to abandon the preparation, filing, prosecution, maintenance and/or defence of any Patent Right or any Product Trademark it is permitted to pursue under Article 11.2.2(a), provided that it shall give Celltech notice of such
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intention at least [*] before a final due date which would result in the abandonment, cancellation or lapse of an issued patent or pending patent application or abandonment, cancellation or lapse of such granted trademark or pending trademark application. In such case, Celltech, at its option, may assume the right to prepare, file prosecute, maintain and/or defend any such Patent Right or Product Trademark. Amgen shall have Consultation Rights in respect of any such Patent Right and Product Trademark and if such outside counsel concludes that taking, or failing to take, (as the case may be) any specific action(s) would be inconsistent with its instructions under Article 11.2.4, then Celltech shall not take, or shall take (as the case may be), such specific action(s) unless the prior express written consent of Amgen has been obtained. Celltech shall have the right to propose an alternative strategy for Amgen’s consideration. To that end, Celltech shall instruct such outside counsel to furnish Amgen with a reasonably complete draft of each submission to a patent or trademark authority regarding any such Patent Rights and Product Trademark no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Amgen’s reasonably timely comments thereon. Additionally, Celltech shall instruct such outside counsel to provide Amgen with a copy of each submission made to and document received from a patent or trademark authority regarding any such Patent Rights and Product Trademark reasonably promptly after making such filing.
(d) A decision by Amgen not to exercise its right pursuant to Article 11.2.2(a) to prepare, file, prosecute, maintain and/or defend any Patent Right or any Product Trademark as permitted by the terms of that Article shall not affect any of Amgen’s licence or other rights under this Agreement.
11.2.3 (a) Celltech shall have the first right (but not the obligation) to have mutually acceptable outside counsel (i) at any time prepare, file, prosecute, maintain and defend the Product Trademarks in the Celltech Territory and [*] Patent Rights in the Celltech Territory; (ii) prior to, on and following the Transition Date prepare,
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file, prosecute and maintain any [*] Patent Rights in the Celltech Territory; (iii) on and following the Transition Date, defend any [*] Patent Rights in the Celltech Territory; and (iv) for the avoidance of doubt only, prior to the Transition Date defend any [*] Patent Rights and [*] Patent Rights in the Amgen Territory.
(b) Amgen shall have Consultation Rights regarding [*] Patent Rights and [*] Patent Rights outside the Amgen Territory. Amgen shall also have Consultation Rights regarding [*] Patent Rights, [*] Patent Rights and Product Trademarks in the Celltech Territory. If such outside counsel concludes that taking, or failing to take, any specific action(s) would be inconsistent with its instructions under Article 11.2.4, then Celltech shall not take, or shall take, (as the case may be) such specific action(s) unless the prior express written consent of Amgen shall have been obtained. Celltech shall have the right to propose an alternative strategy for Amgen’s consideration. To that end, Celltech shall instruct such outside counsel to furnish Amgen with a reasonably complete draft of each submission to a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Amgen’s reasonably timely comments thereon. Additionally, Celltech shall instruct such outside counsel to provide Amgen with a copy of each submission made to and document received from a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks reasonably promptly after making such filing.
(c) Celltech shall have the right, at any time and at its sole option, to elect not to proceed with and/or to abandon the preparation, filing, prosecution, maintenance and/or defence of any Patent Right or Product Trademark it is permitted to pursue under Article 11.2.3(a), provided that it shall give Amgen notice of such intention at least [*] before a final due date which would result in the abandonment, cancellation or lapse of an issued patent or pending patent application or
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abandonment, cancellation or lapse of such granted trademark or pending trademark application. In such case Amgen, at its option, may assume the right to prepare, file, prosecute, maintain and/or defend any such Patent Right or Product Trademark. Celltech shall have Consultation Rights in respect of any such Patent Right and Product Trademark and if such outside counsel concludes that taking, or failing to take, any specific action(s) would be inconsistent with its instructions under Article 11.2.4, then Amgen shall not take, or shall take (as the case may be), such specific action(s) unless the prior express written consent of Celltech has been obtained. Amgen shall have the right to propose an alternative strategy for Celltech’s consideration. To that end, Amgen shall instruct such outside counsel to furnish Celltech with a reasonably complete draft of each submission to a patent or trademark authority regarding any such Patent Rights and Product Trademark no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Celltech’s reasonably timely comments thereon. Additionally, Amgen shall instruct such outside counsel to provide Celltech with a copy of each submission made to and document received from a patent or trademark authority regarding any such Patent Rights and Product Trademark reasonably promptly after making such filing.
(d) A decision by Celltech not to exercise its right pursuant to Article 11.2.3(a) to prepare, file, prosecute, maintain and/or defend any Patent Right or any Product Trademark as permitted by the terms of that Article shall not affect any of Celltech’s licence or other rights under this Agreement.
11.2.4 Outside counsel retained under this Article 11 shall be instructed to act in the best interests of both Parties under this Agreement and such counsel shall also be instructed to secure claims of the broadest possible scope without jeopardising validity.
11.2.5 The Parties shall closely co-ordinate the defence of any attack on the validity and/or any enforcement (against a Third Party developing or commercialising an Antibody that binds to BEER) of the [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and/or the [*]
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Patent Rights through the Collaboration Committee (including the right of the Party not responsible for such defence or enforcement to review and comment on any papers relating thereto which are material to the conduct of such defence or enforcement). Notwithstanding anything to the contrary in this Article 11, prior to the Transition Date, neither Party shall have any right to enforce or defend the validity of Patent Rights Controlled by the other Party, which right shall be exclusively that of the Party Controlling the Patent Rights. The Party responsible for such defence or enforcement shall not take (nor fail to take) any action with respect to any such defence and/or enforcement which would, in the opinion of the retained outside counsel, be inconsistent with the instructions given to outside counsel under Article 11.2.4.
11.2.6 Celltech agrees to use reasonable efforts to ensure that with respect to any patent application forming part of the [*] Patent Rights and [*] Patent Rights which it shall initially file in the Celltech Initial Countries in accordance with Article 11 will be filed in a form sufficient to establish the date of original filing as a priority date for the purposes of a subsequent filing in the Amgen Initial Countries. Amgen agrees to use reasonable efforts to ensure that with respect to any patent application forming part of the [*] Patent Rights and [*] Patent Rights which it shall initially file in the Amgen Initial Countries in accordance with Article 11 will be filed in a form sufficient to establish the date of original filing as a priority date for the purposes of a subsequent filing in the Celltech Initial Countries.
11.2.7 Each Party agrees to co-operate with the other Party in the preparation, filing, prosecution, maintenance and defence of intellectual property rights as set forth in this Article 11.2, including the signing of any necessary legal papers, and to provide the other Party with data or other information in support thereof, and to use best efforts to ensure the co-operation of any of their respective personnel as might reasonably be requested in any such matters.
11.2.8Notwithstanding any other provision of this Article 11, neither Party shall have an obligation, which is in violation of, or not permitted by, the terms of a Third Party agreement, to prosecute or maintain, or take or defend any action in respect of, nor shall
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either Party have any right, in violation of the terms of a Third Party agreement, to take or defend any action in respect of, any Patent Right which is owned by a Third Party and licensed to such Party under such Third Party agreement.
11.2.9 For the purposes of this Article 11, “Transition Date” means the date of [*].
11.3 Patent and Trademark Expenses.
11.3.1 Amgen shall have the right to charge (i) up to the date of Regulatory Approval to Commercialise the first Antibody Product, as a Research and Development Cost; and (ii) thereafter, to the Product Contribution account as a Commercialisation Expense; all of Amgen’s external costs, expenses and fees (as documented by written invoices for legal and expert services and receipts for filing and maintenance fees paid) to have outside counsel prepare, file, prosecute and maintain and/or defend [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks in accordance with Article 11 during the Term.
11.3.2 Celltech shall have the right to charge (i) up to the date of Regulatory Approval to Commercialise the first Antibody Product, as a Research and Development Cost; and (ii) thereafter, to the Product Contribution account as a Commercialisation Expense; all of Celltech’s external costs, expenses and fees (as documented by written invoices for legal and expert services and receipts for filing and maintenance fees paid) to have outside counsel prepare, file, prosecute and maintain, and/or defend [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks in accordance with Article 11 during the Term.
11.4 Enforcement.
11.4.1 Amgen shall have the sole right but not the obligation to bring any suit or action (or to otherwise seek payment and/or claim) against a Third Party developing or commercialising an Antibody product which binds BEER, and Celltech agrees to be
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joined as a plaintiff to any such suit or action if Amgen so requests: (i) for infringement of a claim within the [*] Patent Rights outside of the Celltech Territory; (ii) on or following the Transition Date, for infringement of a claim within the [*] Patent Rights and/or [*] Patent Rights in the Amgen Territory; and/or (iii) regarding any Product Trademark in the Amgen Territory. Amgen shall, subject to prior consultation with Celltech, have the right to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings including the right to settle or compromise such proceedings (by, for example, granting any such Third Party a sublicence, covenant not to sue or other rights to the Patent Rights or Product Trademark being enforced); provided however, that in any such settlement or compromise Amgen will not admit the invalidity of any claim within [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and/or [*] Patent Rights without the prior written approval of Celltech.
11.4.2 Celltech shall have the sole right but not the obligation to bring any suit or action (or to otherwise seek payment and/or claim) against a Third Party developing or commercialising an Antibody product which binds BEER, and Amgen agrees to be joined as a plaintiff to any such suit or action if Celltech so requests: (i) on or following the Transition Date, for infringement of a claim within the [*] Patent Rights in the Celltech Territory; (ii) for infringement of a claim within the [*] Patent Rights in the Celltech Territory; and/or (iii) regarding any Product Trademark in the Celltech Territory. Celltech shall, subject to prior consultation with Amgen, have the right to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings including the right to settle or compromise such proceedings (by, for example, granting any such Third Party a sublicence, covenant not to sue or other rights to the Patent Rights or Product Trademark being enforced); provided however, that in any such settlement or compromise Celltech will not admit the invalidity of any claim within [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and/or such [*] Patent Rights without the prior written approval of Amgen.
11.4.3 Neither Party shall bring any action in the Lead Territory of the other Party to enforce any Patent Rights Controlled by the non-lead Party against a Third Party in respect of
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such Third Party developing or commercialising an Antibody product which binds BEER, without the lead Party’s prior written consent.
11.4.4 Both Parties shall be entitled to charge to the Product Contribution account as a Commercialisation Expense all out-of-pocket costs and expenses (including outside attorneys’ fees) incurred by such Party in preparing for and/or enforcing Patent Rights or Product Trademarks Controlled by it against a Third Party in respect of the Development or Commercialisation of an Antibody product that binds BEER, and/or in bringing any suit under this Article 11.4. Recoveries in any actions under this Article 11.4 shall be credited to the Product Contribution account.
11.5 Infringement Defence.
(a) The Territorial Commercial Lead shall have the first right to defend any actual, alleged or threatened claim or action in its Lead Territory which names the Territorial Commercial Lead and/or the Territorial Commercial Lead and the other Party and which claims (i) the infringement of Third Party Patent Rights or know-how through Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to an Antibody Product or (ii) that any Product Trademark infringes any Third Party Trademark or its use constitutes any unfair trade practice, trade dress imitation, passing off of counterfeit goods or like offence. If the Territorial Commercial Lead shall decide not to defend such an action, the other Party, to the extent it is named, may defend any such claim or action. The Party defending such claim or action shall have the right to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings; provided however that the Party defending such claim or action shall not settle or compromise such proceedings that affect the other Party’s rights or interests, without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed). When named, the Party not defending such
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claim or action shall be entitled to participate in and to have counsel selected by it participate in any action in which the other Party is a named party.
(b) If either Party defends such claim or action, both Parties shall be entitled to charge if and to the extent the costs of such defence are incurred during Research or Development as a Research and Development Cost and if and to the extent the costs of such defence are incurred during Commercialisation to the Product Contribution account (as a Commercialisation Expense) all external costs and expenses (including outside attorneys’ fees) incurred in preparing for and/or carrying out the activities described in this Article 11.5. In addition, any payment that either or both Parties are obliged to make on past and/or future sales of Antibody Product(s) as a result of a settlement or judgment in such a suit shall also be treated as a Commercialisation Expense.
11.6 Trademarks. Each Territorial Commercial Lead may, but shall not be obligated to, elect to defend the Product Trademarks against any challenges in its applicable Lead Territory and to enforce the Product Trademarks against any actual, alleged or threatened infringement by Third Parties or against any unfair trade practices, trade dress imitation, passing off of counterfeit goods or like offences in the applicable Lead Territory. In the event the Territorial Commercial Lead shall so elect, the Territorial Commercial Lead shall determine the strategy and the other Party shall reasonably assist and co-operate in any such enforcement or defence. All out-of-pocket costs and expenses incurred by either Party in defending or taking any such action shall be charged to the Product Contribution account as a Commercialisation Expense.
11.7 Patent Markings. To the extent practical, each Territorial Commercial Lead shall mark the Antibody Product(s) sold in its Territory with all applicable patent numbers of Patent Rights of the Parties to the extent permitted by law in those countries of its Lead Territory in which such markings have notice value as against infringers of patents.
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11.8 Co-operation.
(a) Each Party shall promptly notify the other upon becoming aware of (i) any actual, alleged or threatened Third Party claim or action against Celltech and/or Amgen for infringement of any Third Party Trademark through the Development or Commercialisation of an Antibody Product; or of any Third Party Patent Rights through Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to Antibody Products in the Field in the Territory; or (ii) any Third Party infringement of the Product Trademarks, or any Patent Rights of either Party relating to an Antibody that binds to BEER, or (iii) in respect of any Antibody Product, any unfair trade practices, trade dress imitation, passing off of counterfeit goods or like offences.
(b) With respect to a Party bringing or defending a suit as permitted under this Article 11 the other Party shall assist and co-operate with the Party bringing or defending such suit, and if the Party bringing or defending such suit finds it necessary or desirable to join the other Party as a party in such suit, the other Party shall execute all papers or perform such other acts as may reasonably be required by the Party bringing or defending such suit.
(c) A Party bringing or defending suit as permitted under this Article 11 shall notify the other Party of all substantive developments with respect to such enforcement or defensive actions including, all material filings, court papers and other related documents, substantive settlement negotiations and offer of settlement.
(d) Without prejudice to the other terms of this Article 11, all actual, alleged or threatened claims, actions and defences referred to in this Article 11 (including any settlement and conduct of same) shall be co-ordinated through the Collaboration Committee.
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11.9Third Party Licences. The Parties acknowledge that they have entered into licence agreements with Third Party owners of potentially blocking intellectual property and that it may be necessary or desirable to enter into such further licences (individually herein called a “Third Party Licence Agreement”). The Parties agree to treat such Third Party Licence Agreements as follows:
(a) Following the Effective Date, if a Party desires to enter into a new Third Party Licence Agreement, it shall inform the Collaboration Committee and, prior to determining whether to enter into such Third Party Licence Agreement, shall give due consideration to any reasonable comments by the other Party relating thereto, including, comments that entering into such Third Party Licence Agreement [*] of the other Party. If the Collaboration Committee cannot unanimously agree whether or not such a Third Party Licence Agreement should be entered into, the matter shall be promptly submitted in writing to the [*] of both Parties. If following discussion between them, the [*] are unable to agree a resolution of the matter within [*] after the matter has been submitted to them the Territorial Commercial Lead may determine the matter for the countries within its Lead Territory.
(b) Any fees or other payments due Third Parties under Third Party Licence Agreements prior to the first Regulatory Approval for Commercialisation of an Antibody Product shall be Research and Development Costs, provided however, that if the rights under such Third Party Licence Agreement are also applicable to products other than Antibody Products, then only an equitable portion of such fees or other payments shall be allocated to the Antibody Product as Research and Development Costs.
(c) Any fees or other payments due to a Third Party under a Third Party Licence Agreement after the first Regulatory Approval of an Antibody Product shall be Licence Fees, provided however, that if the rights under such Third Party Licence Agreement are also applicable to products other than Antibody Products, then only an equitable portion of such fees or other payments shall be allocated to the Antibody Product as Licence Fees.
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ARTICLE 12
CONFIDENTIALITY AND NON-USE
CONFIDENTIALITY AND NON-USE
12.1 Confidential Information. Except as otherwise provided in this Article 12, (a) the Parties shall maintain in confidence and use only for purposes specifically authorised under this Agreement any Confidential Information of the other Party pursuant to this Agreement; (b) Celltech shall keep confidential all [*] Know-How which is [*] to [*], and/or which is [*] to [*] to [*]and all [*] Know-How and [*] Know-How which is [*] to Antibody Products and/or [*] (whether generated prior to or during the term of this Agreement) and, provided however, where such [*] Know-How may have [*] outside [*], or where such [*] Know-How or [*] Know-How may have [*] outside Antibody Products and/or [*], Celltech shall be free to use and exploit the same and to disclose the same to Third Parties subject always to obligations of confidentiality; and (c) Amgen shall keep confidential all [*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*], and all [*] Know-How and [*] Know-How which is [*] to Antibody Products and/or [*] (whether generated prior to or during the term of this Agreement) and, provided however, where such [*] Know-How may have [*] outside [*], or where such [*] Know-How or [*] Know-How may have [*] outside Antibody Products and/or [*], Amgen shall be free to use and exploit the same and to disclose the same to Third Parties subject always to obligations of confidentiality.
12.2 Disclosure.
12.2.1 To the extent it is reasonably necessary or appropriate to fulfil its obligations or exercise its rights under this Agreement, a Party may disclose such Confidential Information of the other Party as it is otherwise obliged under Article 12.1 not to disclose:
(a) to its Affiliates and to its (whether actual or potential) sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis and on the condition that such entities or persons agree to keep the Confidential Information
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confidential for the same time periods and to the same extent as such Party is required to keep such Confidential Information confidential;
(b) to Regulatory Authorities to the extent that such disclosure is reasonably necessary to obtain authorisations to conduct clinical studies or to file, obtain and maintain Regulatory Approvals and to Commercialise the Antibody Products;
(c) to the extent that such disclosure is reasonably necessary in connection with preparing, filing, prosecuting, defending and/or maintaining the other Party’s Patent Rights in accordance with Article 11; or
(d) in prosecuting or defending litigation as explicitly authorised under this Agreement; and in establishing rights or enforcing obligations under this Agreement; provided that it shall (i) give reasonable advance notice to the other Party of such disclosure requirement; (ii) provide a copy of the proposed disclosure to the other Party; and (iii) at the request of the other Party, use Commercially Reasonable Efforts in assisting the other Party to secure confidential treatment of such Confidential Information required to be disclosed, including co-operating with the other Party to obtain a protective order of the other Party’s Confidential Information.
12.2.2 Notwithstanding Article 12.1, Amgen may disclose [*] Know-How and [*] Know-How and Celltech may disclose [*] Know-How and [*] Know-How and each Party may disclose the [*] Know-How which is subject to an obligation of confidentiality under Article 12.1 in any of the following circumstances:
(a) where such disclosure would [*];
(b) to its Affiliates, and to its (whether actual or potential) sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis and on the condition that such entities or persons agree to keep the Confidential Information confidential for the same time periods and to the same extent as such Party is required to keep such Confidential Information confidential;
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(c) to Regulatory Authorities to the extent that such disclosure is reasonably necessary to obtain authorisations to conduct clinical studies or to file, obtain and maintain regulatory approvals and to commercialise products other than Antibody Products;
(d) without prejudice to Article 11, to the extent that such disclosure is reasonably necessary in connection with preparing, filing, prosecuting, maintaining and/or defending Patent Rights; or
(e) in prosecuting or defending litigation and in establishing rights or enforcing obligations under this Agreement or in complying with applicable laws, regulations, court or administrative orders, the rules of any relevant stock exchange or the U.S. Securities and Exchange; provided however, in the case of [*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*],[*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*],[*] Know-How and [*] Know-How only, to the extent practicable it shall (i) give reasonable advance notice to the other Party of such disclosure requirement; (ii) provide a copy of the proposed disclosure to the other Party; and (iii) at the request of the other Party, use Commercially Reasonable Efforts to secure confidential treatment of such [*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*],[*] Know-How which is [*] to BEER and/or which is [*] to Antibodies to [*],[*] Know-How and [*] Know-How required to be disclosed, including seeking a protective order of such [*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*],[*] Know-How which is [*] to [*] and/or which is [*] to Antibodies to [*],[*] Know-How and [*] Know-How.
12.3 Exceptions. The obligation not to disclose Confidential Information under this Article 12 shall not apply to any part of such Confidential Information that:
(a) is or becomes published or otherwise becomes publicly known other than by acts of the Party obligated not to disclose such Confidential Information or its
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Affiliates or permitted Third Parties pursuant to Article 12.2.1(a) or 12.2.2(b) in breach of this Agreement;
(b) was disclosed to the receiving Party or its Affiliates or sublicensees by a Third Party, provided that such Confidential Information was not obtained by such Third Party from the disclosing Party under an obligation of confidentiality;
(c) prior to disclosure under this Agreement, was already in the possession of the receiving Party or its Affiliates or sublicensees, provided that such Confidential Information was not obtained from the disclosing Party under an obligation of confidentiality;
(d) can be shown by written documents to have been independently developed by the receiving Party or its Affiliates without breach of any of the provisions of this Agreement or access to any Confidential Information provided by the disclosing Party; or
(e)is required to be disclosed by the receiving Party to comply with applicable laws, or with a court or administrative order or the rules of any relevant stock exchange, or the U.S. Securities and Exchange Commission provided however, that this Article 12.3(e) shall not permit a Party to disclose the other Party’s Confidential Information for the purpose of obtaining Patent Rights and, further provided however, the receiving Party shall, if practicable, notify the disclosing Party in writing (and if practicable provide a copy of the proposed disclosure) prior to any such disclosure and shall use reasonable efforts to secure confidential treatment thereof prior to its disclosure (whether by protective order or otherwise).
12.4 Terms of Agreement.
Except as permitted by the foregoing provisions or as otherwise required by law or the rules of any relevant stock exchange or the U.S. Securities and Exchange Commission, the Parties shall not disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other Party; provided however, that each Party shall be
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entitled to disclose the terms of this Agreement without such consent on a need-to-know basis to its financial and legal advisors and potential investors or other financing sources on the condition that such entities or persons agree to keep such terms confidential for the same time periods and to the same extent as such Party is required to keep such terms confidential. Each Party shall give the other Party a reasonable opportunity to review all filings with the United States Securities and Exchange Commission or any stock exchange describing the terms of this Agreement prior to submission of such filings, and shall give due consideration to any reasonable comments by the non-filing Party relating to such filing, including the provisions of this Agreement for which confidential treatment should be sought.
12.5 Public Announcements. Following the Effective Date, the Parties shall issue one or more press releases regarding this Agreement, the timing and content of which shall be mutually agreed. Except to the extent required by law or the rules of a relevant stock exchange or as otherwise permitted in accordance with this Article 12, neither Party shall make any further public announcements concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld or delayed. The Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of any press releases prior to the issuance thereof.
12.6 Residual Information. Each Party acknowledges that personnel of the Parties and their Affiliates who participate in the collaboration set forth in this Agreement also participate in the research, development and commercialisation of other pharmaceutical products unrelated to this Agreement and that each Party’s personnel shall have access to Confidential Information of the other Party. Each Party further acknowledges that such personnel will retain and use residual information derived from the collaboration and that use of such residual information by such personnel shall not constitute a breach of this Article 12 to the extent such personnel did not know (and could not reasonably be expected to know) it was the confidential Information of the other Party or otherwise subject to a confidentiality or restricted use obligation; provided however, that notwithstanding the above, no rights are granted to practice under the other Party’s Patent Rights and such personnel shall not use the written Confidential Information of the other
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Party. Each Party shall implement appropriate procedures to identify to its personnel Information which is the subject of confidentiality or restricted use obligations.
12.7 Third Party Obligations. Other than with respect to Article 16.4(e), neither Party is obliged to disclose to the other any Information if to do so would put the disclosing Party in breach of an existing or future obligation owed to a Third Party. Without limitation to the foregoing, Amgen acknowledges that Celltech is not obliged to disclose to Amgen, and will not disclose to Amgen, any Information, data or know-how concerning Celltech’s products [*] whether arising out of Celltech’s [*] or otherwise.
ARTICLE 13
PUBLICATIONS
PUBLICATIONS
13.1 Procedure. The Collaboration Committee (or its appropriate designees) shall determine the strategy for and co-ordinate the publication and presentation of results of studies of Antibody Products or which incorporates data generated under this Agreement. Each Party to this Agreement recognises that the publication of papers regarding results of and other information regarding activities under this Agreement, including oral presentations and abstracts, may be beneficial to both Parties provided such publications are subject to reasonable controls to protect Confidential Information. In particular, it is the intent of the Parties to maintain the confidentiality of any Confidential Information included in any patent application until such patent application has been published. Accordingly, each Party will have the right to review and approve any paper proposed for publication by the other Party, including oral presentations and abstracts, which incorporates data generated under this Agreement and/or includes Confidential Information of the other Party. Before any such paper is submitted for publication or an oral presentation is made, the publishing or presenting Party will deliver a complete copy of the paper or materials for oral presentation to the other Party at least [*] prior to submitting the paper to a publisher or making the presentation. The other Party will review any such paper and give its comments to the publishing Party within [*] of the delivery of such paper to the other Party. With respect to oral presentation materials and abstracts, the other Party will make
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reasonable efforts to expedite review of such materials and abstracts, and will return such items as soon as practicable to the publishing or presenting Party with appropriate comments, if any, but in no event later than [*] from the date of delivery to the other Party. Failure to respond within such [*] shall be deemed approval to publish or present. If approval is not given or deemed given, for publications or presentations of other than Marketing Clinical Studies, the matter shall be referred to the Collaboration Committee together with the reasons for withholding approval. Publications or presentations to the extent relating to Marketing Clinical Studies shall be determined by the Territorial Commercial Lead that conducted such Marketing Clinical Studies, having considered the comments of the other Party. Notwithstanding the foregoing, the publishing or presenting Party will comply with the other Party’s request to delete references to the other Party’s Confidential Information in any such paper and, with respect to Marketing Clinical Studies, will withhold publication of any such paper or any presentation of same for an additional [*] in order to permit the Parties to obtain patent protection, if either of the Parties deems it necessary, in accordance with the terms of this Agreement.
13.2 Credit. Any such publication will include recognition of the contributions of the other Party according to standard practice for assigning scientific credit, either through authorship or acknowledgement, as may be appropriate.
ARTICLE 14
TERM AND TERMINATION
TERM AND TERMINATION
14.1 Term. This Agreement shall become effective on the Effective Date and shall remain in full force and effect, unless earlier terminated pursuant to Article 3.4 or this Article 14, for such time as the Antibody Products are being Researched, Developed or Commercialised by the Parties.
14.2 Termination for Convenience.
14.2.1 Amgen may terminate this Agreement at any time following presentation of the [*] demonstrating an [*] in the [*] referred to in [*] of [*] but prior to the expiry of
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Celltech’s opt out right as set out in Article 3.4 by providing [*] prior written notice of termination to Celltech. Termination shall be effective upon the expiry of the [*] notice period. Should Amgen exercise (or be deemed to exercise) its right to terminate pursuant to Article 3.2.1(e), termination shall be effective upon the receipt of such notice by Celltech.
14.2.2
(a) After expiry of Celltech’s opt-out right as set out in Article 3.4(a), either Party may terminate this Agreement after completion of the first [*] of an Antibody Product by providing [*] prior written notice to the other Party. Termination shall be effective upon the expiry of the [*] notice period.
(b) Should a Party provide a notice pursuant to Article 2.7 (whether before or after the expiry of Celltech’s opt-out right or [*] of a [*]), such Party shall be deemed to have served a termination notice pursuant to this Article.
(c) Within [*] of receipt of a termination notice pursuant to this Article 14.2.2 the non-terminating Party shall provide a written response to the terminating Party, setting out in such written response whether:
(i) the non-terminating Party wishes to assume the Research, Development and/or Commercialisation of Antibody Products (as appropriate); or
(ii) the non-terminating Party does not wish to continue to pursue the Research, Development and/or Commercialisation of Antibody Products (as appropriate).
If the non-terminating Party does not send such a written response within the said [*], it shall be deemed to have made the election set out in 14.2.2(c)(ii).
14.3 Mutual Consent. This Agreement shall terminate upon the mutual written consent of the Parties. Termination shall be effective upon the date specified in such written consent.
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14.4 Termination for Default.
(a) In the event any material representation or warranty made hereunder by either Party shall have been untrue in any material respect and this has had a material and adverse effect on the other Party in relation to this Agreement (“Representation Default”), or upon any material breach or material default of a material obligation of this Agreement by a Party (“Performance Default”), the Party not in default (“Non-Defaulting Party”) must first give the other Party (“Defaulting Party”) written notice thereof (“Notice of Default”), which notice must state the nature of the Representation Default or Performance Default in reasonable detail and must request the Defaulting Party cure such Representation Default or Performance Default within [*], or if such Default cannot be cured, take such action as will substantially mitigate the material adverse effect of such Default on the other Party. During any such [*] period after receipt or delivery of a Notice of Default under this Article 14.4(a) for which termination of this Agreement is a remedy, all of each Party’s respective rights and obligations under this Agreement, including Research, Development, and Commercialisation, shall (to the extent applicable) remain in force and effect. If the Defaulting Party shall dispute the existence, extent or nature of any default set forth in a Notice of Default, the Parties shall use good faith efforts to resolve the dispute.
(b) In the event of a Representation Default or a Performance Default by Celltech that shall not have been cured or mitigated within the [*], as set forth in Article 14.4(a) above, Amgen, at its option, may immediately terminate this Agreement upon prior written notice to Celltech. Termination shall be effective upon the receipt of such notice by Celltech.
(c) In the event of a Representation Default or a Performance Default by Amgen that shall not have been cured or mitigated within the [*], as set forth in Article 14.4(a) above, Celltech, at its option, may immediately terminate this Agreement upon prior written notice to Amgen. Termination shall be effective upon the receipt of such notice by Amgen.
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14.5 Bankruptcy.
(a) All rights and licences granted under or pursuant to this Agreement by Amgen or Celltech are, and shall otherwise be deemed to be licences of rights to “intellectual property”. The Parties agree that the Continuing Party (as defined below) shall retain and may fully exercise all of its rights and elections under bankruptcy legislation in the Territory. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a bankrupt Party the other Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) any intellectual property which at that date is known to be necessary or useful to an Antibody Product (then the subject of Research or Development or Commercialisation) and all embodiments of such intellectual property; and same, if not already in the other Party’s possession, shall be promptly delivered to the other Party (a) upon any such commencement of a bankruptcy proceeding, upon the other Party’s written request therefor (which request must identify the specific intellectual property), unless the non-bankrupt Party (or a trustee on behalf of the bankrupt Party) elects within [*] to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the bankrupt Party, upon written request therefor by the other Party.
(b) Without prejudice to Article 14.5(a) this Agreement may be terminated by a Party upon prior written notice to the other in the event that (i) the other Party shall make an assignment for the benefit of its creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of custodian, receiver or any trustee for it or a substantial part of its assets, or shall commence any proceeding under any bankruptcy, reorganisation, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction (other than for the purposes of a solvent amalgamation or reconstruction), whether now or hereafter in effect; or (ii) if there shall have been filed against the other Party any such bona fide petition or application, or any such proceeding shall have been commenced against it, in which an order for relief is entered or which remains undismissed for
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a period of ninety (90) days or more; or (iii) if the other Party by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for it or any substantial part of its assets, and shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of ninety (90) days or more (each an “Insolvency Event”). Termination shall be effective upon the date specified in such notice. Notwithstanding the foregoing, this Agreement shall not be terminated pursuant to this Article 14.5(b) if, prior to the effective date of termination stated in the written notice from the Party desiring to terminate this Agreement, the Party experiencing the Insolvency Event demonstrates to the other Party that it is not insolvent.
14.6 Additional Termination Right of Celltech. If in any suit or proceeding where Celltech or any of its Affiliates is a named party Amgen or any of its Affiliates asserts, or Amgen or any of its Affiliates provides Confidential Information, financial assistance or technical assistance in collusion with a Third Party to assist such Third Party in asserting that any claim within the [*] Patent Rights or any [*] Patent Rights is invalid, Celltech, at its option, may, within [*] of such assertion, terminate this Agreement upon [*] prior written notice to Amgen (with termination being effective upon expiry of the [*] notice period); provided however, that nothing contained herein shall prohibit Amgen or any of its Affiliates from asserting the invalidity of any claim within the [*] Patent Rights or any [*] Patent Rights, where such assertion is raised as a defence against an assertion of such [*] Patent Rights or [*] Patent Rights in such suit or proceeding brought against Amgen or any of its Affiliates or any of its licensees (provided that such suit or proceeding relates to the licensed subject matter) or its intellectual property rights. If the inclusion of this Article 14.6 would make invalid or unenforceable any other provision of this Agreement, or any of the Patent Rights licensed pursuant to this Agreement, this Article 14.6 shall be automatically and without notice severed from this Agreement and the remaining provisions of this Agreement shall remain in force.
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14.7 Opt-Out by Celltech. In the event Celltech shall provide notice of its election to opt-out of this Agreement pursuant to Article 3.4, this Agreement shall automatically terminate in accordance with that Article 3.4.
14.8 Continuing Party; Effective Date of Termination.
(a) For the purposes of this Article 14:
(i) Celltech under Article 14.2.1;
(ii) the Party who wishes to assume, or has agreed to assume, Research, Development and/or Commercialisation of Antibody Product under Articles 14.2.2 or 14.3;
(iii) the Non-Defaulting Party under Article 14.4;
(iv) the terminating Party under Article 14.5 or Article 14.6; and
(v) Amgen under Article 14.7, with respect to each Antibody Product and Subsequent Products included within Celltech’s opt-out under Article 3.4;
shall be, in each case, the “Continuing Party”;
(b) The effective date of termination of this Agreement, as set forth in each instance in Articles 14.2 through 14.7, is hereby referred to as the “Termination Date”.
14.9 Effects of Termination. In addition to any other remedies which may be available at law or equity upon termination of this Agreement, the rights and obligations of the Parties shall be as set forth in this Article 14.9.
(a) Upon termination of this Agreement howsoever caused, the following rights and obligations shall apply:
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(i) The following provisions shall remain in full force and effect after the expiration or termination of this Agreement if there is a Continuing Party: Article 1, [*], Article 8 (in case of any payments relating to the period prior to the Termination Date), Article 11.1, Article 12 , this Article 14.9, Article 14.10, Article 16, Article 18, Article 19, Schedule E, and all ancillary provisions necessary for the implementation of this Article 14.9.
(ii) The following provisions shall remain in full force and effect after the expiration or termination of this Agreement if there is no Continuing Party: Article 1, [*], Article 8 (in case of any payments relating to the period prior to the Termination Date), Article 11.1, Article 11.5, Article 11.8 (in the case of any infringement defence pursuant to Article 11.5), Article 11.9(b), Article 11.9(c), Article 12 (in relation to the other Party's Confidential Information only), Article 13, this Article 14.9, Article 14.10, Article 18, Article 19, and all ancillary provisions necessary for the implementation of this Article 14.9. (iii)All other rights and obligations under this Agreement shall terminate.
(iv) By the [*] of the Termination Date, each Party (unless there is a Continuing Party, in which case only the non-Continuing Party) shall destroy, or at the other Party’s request return, all of the other Party’s Confidential Information (other than with respect to maintaining one (1) archival copy of Confidential Information related thereto for its legal files, for the sole purpose of determining its obligations under this Agreement) and Materials. In each instance where a Party is required to destroy or return the other Party’s Confidential Information under this Article 14.9(a)(iv), such Party shall provide the other Party with certification by an officer of such Party that all such Confidential Information and Materials have been destroyed or returned to the other Party, as appropriate.
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(b) Upon
(i) Receipt of a notice of termination of this Agreement pursuant to Article 14.2.2, where the Continuing Party has served notice under Article 14.2.2 indicating that it wishes to assume the Research, Development and/or Commercialisation of Antibody Product, or
(ii) Mutual consent of the Parties to terminate this Agreement, under Article 14.3, where the Parties have agreed for one Party to assume, the Research, Development and/or Commercialisation of Antibody Product, or
(iii) Termination of this Agreement pursuant to Article 14.2, Article 14.4, Article 14.5, Article 14.6 or Article 14.7; the Collaboration Committee shall promptly meet to devise a transition plan which provides for an orderly and cost-effective transition or winding down of, and which sets forth the responsibilities and a timetable for transferring or winding down (in each case as appropriate), Research, Development and Commercialisation responsibilities (“Transition Plan”). Where the Collaboration Committee cannot agree the timetable the [*] shall have [*]. Such transition shall be completed as soon as practicable and, in any event, shall be no later than the [*] of the Termination Date. Such Transition Plan shall provide for transferring or winding down (as appropriate) Research, Development and Commercialisation responsibilities as expeditiously as possible in accordance with this Article 14 while (in the case of transition) maintaining a supply of Antibody Product to meet the Development and/or Commercialisation requirements (as appropriate), and minimizing interruption of Research, Development and/or Commercialisation of the Antibody Product, including the following:
(1) Until the [*] of the Termination Date each Party shall make its personnel and other resources reasonably available to the other Party, as necessary, and shall by the [*] of the Termination Date
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transfer copies of all relevant information, files or data containing Information and transfer all Materials to the other Party.
(2) By the [*] of the Termination Date, the other Party shall transfer to the Continuing Party all Regulatory Filings and Regulatory Approvals then in its name for all Antibody Products and shall notify the appropriate Regulatory Authorities and take any other action reasonably necessary to effect such transfer.
(3) By the [*] of the Termination Date, the other Party shall assign its rights or grant sufficient sublicence rights to the Continuing Party under the other Party’s right, title and interest in the Product Trademarks (but otherwise not any of the other Party’s Trademarks). The Continuing Party shall also have the right, for a reasonable period not to exceed [*] from the Termination Date, to use the other Party’s Trademarks solely in the selling of any existing inventory of Antibody Products (and to use Promotional Materials it then has on hand), with no obligation of accounting to the other Party.
(4) By the [*] of the Termination Date, the other Party shall, at the request of the Continuing Party, assign its rights or grant sufficient sublicence rights to the Continuing Party, under all of the other Party’s rights (but only to the extent permitted by its terms and subject to the obligations) under any [*] to the extent the same relates to Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to Antibody Products and shall not (until receiving notice of whether or not the Continuing Party desires such an assignment or sublicence) terminate or amend any such [*].
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(5) To the extent the other Party is the Manufacturing Lead it shall remain responsible for supplying Antibody Raw Material (and if the Manufacturing Lead is a Third Party then Celltech shall remain responsible for fulfilling its obligations under Article 6.1(a)(iii)), and Amgen shall also remain responsible for supplying Antibody Product in Finished Form, in each case in the amount that it was supplying at the time of such termination (and in accordance with the terms of Articles 6.5, 6.6 and 6.8), for a reasonable period of time not to exceed [*] from the Termination Date, to allow the Continuing Party (or with respect to Antibody Product in Finished Form, Celltech) to obtain an alternate source of supply, if necessary. The other Party shall also assign its rights or grant sufficient sublicence rights (but only to the extent permitted by its terms and only to the extent the same relates to Antibody Raw Material and/or Antibody Product in Finished Form) under all Third Party manufacturing agreements relating to Antibody Product to the Continuing Party, if requested to do so by the Continuing Party. The other Party shall no longer be responsible for supplying Antibody Raw Material and/or Antibody Product in Finished Form, or for fulfilling its obligations under Article 6.1(a)(iii), (as appropriate) from the date of such assignment or sublicence or the rejection of a written offer of such assignment or sublicence (such rejection to be deemed to be given if the offer is not accepted in writing within [*] of receipt by the Continuing Party of such written offer from the other Party). In the event the other Party is obligated to continue to supply Antibody Products under this Article, the Continuing Party shall use Commercially Reasonable Efforts to identify one or more viable Third Party manufacturers in order to transfer manufacturing operations as soon as commercially reasonable.
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(6) By the [*] of the Termination Date, to the extent the other Party is the Manufacturing Lead it shall itself transfer any Information Controlled by it and, to the extent it is using a Third Party manufacturer(s), shall either use Commercially Reasonable Efforts to enforce or assign to the Continuing Party the right to enforce the terms and conditions of each Third Party Supply Agreement entered into by it including (but only to the extent permitted by each such Supply Agreement with the Third Party) the provision to the Continuing Party of any Information and assistance reasonably required by the Continuing Party from such Third Party pertaining to the manufacture and analysis of Antibody Raw Material with the objective of the Continuing Party being enabled to implement the [*] of [*], including Information contained in the [*] of any applicable Regulatory Filings and the results of any stability studies performed by or on behalf of the other Party.
(7) By the [*] of the Termination Date, to the extent Celltech is the Continuing Party, Amgen shall transfer any Information Controlled by it pertaining to the manufacture and analysis of Antibody Product in Finished Form, and to the extent it is using a Third Party manufacturer(s), shall either use Commercially Reasonable Efforts to enforce or assign to Celltech the right to enforce the terms and conditions of any Third Party supply agreement entered into relating to Antibody Product in Finished Form by it, including (but only to the extent permitted by any such supply agreement) the provision to Celltech of any Information and assistance reasonably required by Celltech from such Third Party pertaining to the manufacture and analysis of Antibody Product in Finished Form with the objective of Celltech being enabled to implement the [*] of [*], including Information contained in the [*] of any
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applicable Regulatory Filings and the results of any stability studies performed by or on behalf of Amgen.
(8) The other Party shall continue to use Commercially Reasonably Efforts to Promote, Detail and otherwise Commercialise the Antibody Product in those countries where it is the Territorial Commercial Lead, and shall if required to do so complete those [*] to which it has committed for the relevant time period in those countries where it is [*], as modified by the Transition Plan, to enable the Continuing Party to assume the Commercialisation responsibilities previously carried out by the other Party with a minimum of disruption.
(9) By the [*] of the Termination Date, the other Party shall (a) assign its rights or grant sufficient sublicence rights under all other Third Party agreements (but only to the extent permitted by their terms and subject to the obligations) to the extent the same relate to the Antibody Products and as requested to do so by the Continuing Party; and (b) shall provide reasonable assistance to the Continuing Party in assuming management of such agreements.
(c) Each Party shall assist (and, other than Wind Down Costs, be responsible for its own costs and expenses) in the transition or wind down of affairs as set forth in the Transition Plan in a timely, reasonable and businesslike manner. After completion of the responsibilities set forth in the Transition Plan the Parties shall have no further obligation to assist in such transition or winding down (as appropriate).
(d) If, under Article 14.2.2 the Continuing Party elects to cease Research, Development and Commercialisation of Antibody Products under this Agreement, the Collaboration Committee shall establish, by unanimous decision, a wind down plan which sets forth the responsibilities and timing for ceasing the Research,
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Development and/or Commercialisation of Antibody Product as expeditiously and cost effectively as possible. Both Parties shall co-operate to achieve this end, including complying with its obligations under the wind down plan.
(e) During any period after receipt or delivery of a notice of termination to the Termination Date the Parties’ respective rights and obligations under this Agreement shall (to the extent applicable) remain in full force and effect, including the sharing of the Product Contribution.
(f) In the event this Agreement is terminated by Celltech pursuant to Article 14.2.2 or by the Parties pursuant to Article 14.3 and Amgen shall have elected or agreed (as appropriate) to assume Research, Development and/or Commercialisation of Antibody Product, or if this Agreement terminates pursuant to Article 14.7, or if this Agreement is terminated by Amgen pursuant to Article 14.4 or 14.5, the Antibody Licence Agreement attached as Schedule G shall come into full force and effect immediately on termination of this Agreement. In the event this Agreement is terminated by Amgen pursuant to Article 14.2.2 or by the Parties pursuant to Article 14.3 and Celltech shall have elected or agreed (as appropriate) to assume Research, Development and/or Commercialisation of Antibody Product, or if this Agreement is terminated by Celltech pursuant to Article 14.4, 14.5 or 14.6, or if this Agreement is terminated pursuant to Article 14.2.1, [*] shall grant to [*] a [*] licence under any [*] Technology (including the Information and [*] Patent Rights pertaining to the [*] of the [*] of Antibody Products) to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to Antibody Products.
Such [*] licence shall be on substantially the same terms as the Antibody Licence Agreement attached as Schedule G (but with Amgen as licensor and Celltech as licensee) provided that no [*] shall be payable and the [*] payable by Celltech to Amgen shall:
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(i) be agreed by the Parties, or failing such agreement within [*] of the Termination Date;
(ii) be determined by an expert appointed by an independent accountant of internationally recognised standing reasonably acceptable to both Parties, taking into account:
(1) the value, if any, of any [*] Technology used or to be used by Celltech in connection with the Antibody Product(s) (then being [*] or then being [*] or [*]); and
(2) the value, if any, of the investment made by Amgen in the Antibody Product(s) (then being [*] or then being [*] or [*]), relative to the value of the investment made by Celltech in such Antibody Product(s); and
(3) the [*] on the Antibody Product(s) (then being [*] or then being [*] or [*]).
In any event, the [*] shall not be a [*] which would make Commercialisation of such Antibody Product(s) by Celltech [*].
(g) If a Party serves a notice pursuant to Article 2.7 after expiry of Celltech’s opt-out right as set out in Article 3.4, but before completion of the Pivotal Studies of an Antibody Product as set out in the Late Stage Development Plan in effect at the date of such notice, the Party serving such notice shall, notwithstanding such termination, bear its share of all Research and Development Costs of such Pivotal Studies in accordance with Article 3.6 as though the Agreement had not been terminated. This is without prejudice to the other provisions of this Article 14.
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(h) Termination of this Agreement by Celltech due to a notice served by it pursuant to Article 2.7 shall not relieve either Party of its obligations to share Research and Development Costs as set forth in Articles 3.6.1 and 3.6.2. Termination of this Agreement by Amgen due to a notice served by it pursuant to Article 2.7 shall not relieve either Party of its obligations to share Research and Development Costs as set forth in Articles 3.6.1 and 3.6.2 for a period of [*] from the date of Amgen’s notice.
14.10Accrued Rights. Termination, relinquishment or expiration of any licences under this Agreement or of this Agreement for any reason in accordance with this Article 14 shall be without prejudice to any rights which shall have accrued to the benefit of either Party or any liability incurred by either Party prior to such termination, relinquishment or expiration.
ARTICLE 15
DISPUTE RESOLUTION
DISPUTE RESOLUTION
15.1 Referral of Unresolved Matters to [*]. The Parties recognise that disputes as to certain matters may from time to time arise during the term of this Agreement which relate to either Party’s rights and/or obligations hereunder and which are not resolved by the Collaboration Committee. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising from, concerning or in any way relating to this Agreement in an expedient manner by mutual co-operation and without resort to litigation. If the Collaboration Committee is unable to resolve any matter falling within its authority, the matter shall be referred to the respective [*] of Research or Development of each Party (in the case of a dispute involving Research or Development respectively) or the respective [*] of Marketing of each Party (in the case of a dispute involving Commercialisation), or to such other senior officer of similar authority and standing as each Party may from time to time designate (collectively, the “[*]”), to be resolved by negotiation in good faith as soon as is practicable but in no event later than [*] after written request from either Party to the other Party for such a referral. If such
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[*] are unable to resolve the matter within the said [*] it shall be referred to the [*] (together, the [*] and [*], the “[*]”) as soon as practicable but in any event no later than [*] after a written request from either Party to the other Party for such a referral. Each [*]shall have the right to engage the services of any number of independent experts in the field in question (such independent expert(s) to be engaged under obligations of confidentiality and the expense of the Party so engaging such expert(s)) to assist the [*] in making a determination on the unresolved matter, and each [*] shall consider in good faith the analyses and opinions of any such independent experts engaged by either of them in making a determination. In the event that following discussions between the [*], the [*] are unable to resolve such dispute within such [*] of the matter being referred to them, then either Party may at any time thereafter pursue any legal or equitable remedy available to it. Notwithstanding the above, either Party shall be entitled at all times and without delay to seek equitable relief.
ARTICLE 16
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
16.1 Authority and Consents. Celltech and Amgen each represent and warrant to the other Party that as of the Effective Date (a) it has full right, power and authority to enter into this Agreement and perform its obligations hereunder and has taken all necessary corporate action on its part required to authorise the execution and delivery of the Agreement and the performance of its obligations hereunder; (b) this Agreement has been duly executed by such Party and so far as it is aware (not having made enquiry) constitutes a legal, valid and binding obligation of such Party that is enforceable against it in accordance with its terms subject to all limitations of bankruptcy, liquidation, principles of equity (including moratorium and enforcement of creditors’ rights generally), general principles of equity (including, those relating to specific performance, injunctions and other remedies) and public policy constraints (including those pertaining to limitations and/or exclusions of liability, competition law, penalties and jurisdictional issues including conflicts of law); and (c) the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (i) do not conflict with or
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violate such Party’s corporate charter and bylaws or so far as it is aware (not having made enquiry) any requirement of applicable laws or regulations of any court, governmental body or administrative or other agency having jurisdiction over it and (ii) do not and shall not conflict with, violate or breach or constitute a default or require any consent under any contractual obligation of such Party.
16.2 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party that as of the Effective Date: (a) it is aware of no action, suit, inquiry or investigation instituted by any Third Party which questions or threatens the validity of this Agreement and (b) it is not aware of any facts or circumstances, individually or in the aggregate, which it knows are reasonably likely to have a material adverse effect on its ability to perform its obligations under this Agreement; and (c) it has acted in good faith in providing Information to the other Party and has not wilfully misled the other Party with respect to any such Information.
16.3 Additional Representation and Warranty of Celltech.
Celltech further represents and warrants to Amgen that as of the Effective Date (a) it is the exclusive owner of the Patent Rights listed in Parts A, B and C of Schedule F and the owner, licensee or holder of option rights under the Patent Rights listed in Part D of Schedule F; (b) it has disclosed to Amgen in good faith all Information which Celltech has and which it reasonably believes to be material to the validity of the [*] Patent Rights, provided however, that nothing herein shall be construed as a warranty or representation by Celltech of the validity of such Patent Rights; (c) it has disclosed to Amgen in good faith all Information Celltech has and which it reasonably believes to be material to the safety of [*] Antibodies for therapeutic use and (d) it has not received a written notice that Celltech is in material breach or material default of the agreements listed in Part E of Schedule F and disclosed to Amgen prior to the Effective Date.
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16.4 Mutual Covenants. Each Party hereby covenants to the other Party as follows:
(a) No Misappropriation. It shall not knowingly misappropriate the trade secret of a Third Party in its activities to Research, Develop or Commercialise Antibody Products.
(b) No Debarment. In the course of the Development of Antibody Products and during the Term, such Party shall not knowingly use and shall not have knowingly used any employee or consultant who is or has been debarred by a Regulatory Authority or, to the best of such Party’s knowledge (not having made enquiry), who is or has been the subject of debarment proceedings by a Regulatory Authority.
(c) No Conflict. It will not enter into any agreement with a Third Party that is in conflict with this Agreement, and will not take any action that would in any way prevent it from assuming its obligations or granting the rights granted to the other Party under this Agreement or that would otherwise materially conflict with or adversely affect its obligations or its assumption of the rights granted to the other Party under this Agreement.
(d) [*]. It shall work [*] with the other Party with respect to [*], and it shall not during the term of this Agreement grant any right, licence, consent or privilege to any Third Party(ies) in the Territory which would conflict with the rights granted to the other Party under this Agreement.
(e) Compliance. Notwithstanding anything to the contrary in this Agreement, each Party shall comply with all applicable statutes and regulations of Regulatory Authorities in carrying out its respective activities regarding the Research, Development and Commercialisation of Antibody Products in the Field in the Territory.
(f) Workmanship. Each Party shall commit the personnel, facilities and other resources reasonably necessary to conduct its obligations under this Agreement,
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and shall conduct its Research and/or Development obligations using the same standard of skill and care which it applies to its other products, but in no event less than commonly accepted good professional standards of workmanship.
16.5 Disclaimer of Representation and Warranty.
(a) Nothing in this Agreement shall be construed as a warranty or representation by either Party (i) that the Research, Development, Commercialisation, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in any Antibody Products under, or in connection with, this Agreement are or will be free from infringement of, or that the activities conducted pursuant to this Agreement will not infringe, Patents Rights, copyrights, Trademarks, industrial design or other intellectual property rights of any Third Party or (ii) that any Antibody Product Researched, Developed, Commercialised, made, have made, used, sold, have sold, offered to sell or resell, imported, exported, distributed or in which physical possession or title is transferred under this Agreement is or will be effective, valuable, safe, non-toxic or patentable. Each Party explicitly accepts all of the same, and accepts that the activities conducted and the Antibody Products are experimental as at the Effective Date. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF EFFICACY, SAFETY, SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.
(b) Notwithstanding Articles 16.5(a) and 19.14, nothing in this Agreement limits or excludes any Party’s liability for fraud or for death or personal injury caused by that Party’s own negligence.
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ARTICLE 17
CHANGE OF CONTROL
CHANGE OF CONTROL
17.1 Change of Control. In the event that, during the term of this Agreement, a Third Party (the “Acquiring Party”) shall acquire, directly or indirectly: (i) fifty percent (50%) or more of the shares of a Party’s stock entitled to vote for the election of directors of a Party, or (ii) a substantial equity interest in, together with the power to direct the management and policies of, a Party; the other Party (the “non-Acquired Party”) shall have the right, within [*] of such acquisition, to terminate the Acquired Party’s right to [*] with its [*] right to [*] in accordance with Article 5.2. If such a termination notice is served, the Parties shall co-operate to ensure an orderly wind down of all [*] throughout the Territory as soon as practicable.
ARTICLE 18
INDEMNIFICATION; INSURANCE
INDEMNIFICATION; INSURANCE
18.1 Indemnification by Amgen. Amgen hereby agrees to defend, hold harmless and indemnify (collectively “Indemnify”) Celltech and its Affiliates, agents, directors, officers and employees (the “Celltech Indemnitees”) from and against any and all Third Party claims, suits, actions or demands and all out-of-pocket liabilities, damages, costs, settlements, expenses and/or losses paid to any Third Party bringing any such Third Party claim, as well as reasonable legal expenses and attorney and expert fees incurred in defending and/or compromising the same, (“Celltech Loss(es)”) arising out of any of (a) Amgen’s representations or warranties set forth in this Agreement being untrue in any material respect when made; (b) any material breach or material default by Amgen of its material covenants and material obligations under this Agreement; (c) Amgen’s negligence or intentional misconduct in carrying out its activities set forth in this Agreement; and (d) any Trademark infringement claim, lawsuit or other action, resulting solely from Celltech’s proper use of Amgen Trademarks in connection with an Antibody Product in accordance with the terms of this Agreement. Celltech shall provide Amgen with prompt written notice of any claim (with a description of the claim and the nature
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and amount (if determinable) of any such Celltech Loss) giving rise to the indemnification obligation pursuant to this Article 18.1 and the exclusive ability to defend such Third Party claim; provided however, that Amgen shall be relieved of its obligations only to the extent the failure to be provided prompt written notice shall have been prejudicial to its ability to defend such action. Celltech shall co-operate as reasonably requested in the defence of the claim; provided however, that Celltech shall have the right to retain its own counsel, at its own expense, if representation of the counsel of Amgen would be inappropriate due to actual or potential differing interests between the Parties. Celltech shall not settle any claim for Celltech Losses for which any Celltech Indemnitee is seeking to be Indemnified by Amgen, without Amgen’s prior written consent. Amgen’s obligation to Indemnify the Celltech Indemnitees pursuant to this Article 18.1 shall not apply to the extent any Celltech Losses (i) arise from the negligence or intentional misconduct of any Celltech Indemnitee; (ii) arise from any material breach by Celltech of this Agreement; or (iii) for which Celltech is obligated to Indemnify the Amgen Indemnitees pursuant to Article 18.2 of this Agreement.
18.2 Indemnification by Celltech. Celltech hereby agrees to Indemnify Amgen and its Affiliates, agents, directors, officers and employees (the “Amgen Indemnitees”) from and against any and all Third Party claims, suits, actions or demands and all out-of-pocket liabilities, costs, settlements, damages, expenses and/or losses paid to any Third Party bringing any such Third Party claim, as well as reasonable legal expenses and attorney and expert fees incurred in defending and/or compromising the same, (“Amgen Loss(es)”) arising out of any of (a) Celltech’s representations or warranties set forth in this Agreement being untrue in any material respect when made; (b) any material breach or material default by Celltech of its material covenants and material obligations under this Agreement; (c) Celltech’s negligence or intentional misconduct in carrying out its activities set forth in this Agreement; and (d) any Trademark infringement claim, lawsuit or other action, resulting solely from Amgen’s proper use of Celltech Trademarks in connection with an Antibody Product in accordance with the terms of this Agreement. Amgen shall provide Celltech with prompt written notice of any claim (with a description of the claim and the nature and amount (if determinable) of any such Amgen Loss) giving
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rise to the indemnification obligation pursuant to this Article 18.2 and the exclusive ability to defend such Third Party claim; provided however, that Celltech shall be relieved of its obligations only to the extent the failure to be provided prompt written notice shall have been prejudicial to its ability to defend such action. Amgen shall co-operate as reasonably requested in the defence of the claim; provided however, that Amgen shall have the right to retain its own counsel, at its own expense, if representation of the counsel of Celltech would be inappropriate due to actual or potential differing interests between the Parties. Amgen shall not settle any claim for Amgen Losses for which any Amgen Indemnitee is seeking to be Indemnified by Celltech, without Celltech’s prior written consent. Celltech’s obligation to Indemnify the Amgen Indemnitees pursuant to this Article 18.2 shall not apply to the extent any Amgen Losses (i) arise from the negligence or intentional misconduct of any Amgen Indemnitee; (ii) arise from any material breach by Amgen of this Agreement; or (iii) for which Amgen is obligated to Indemnify the Celltech Indemnitees pursuant to Article 18.1 of this Agreement.
18.3 Joint Liability. Any and all liabilities, damages, costs, settlements expenses and/or losses (“Joint Loss(es)”) arising from Third Party claims, suits, actions or demands (other than those subject to indemnification pursuant to Article 18.1 or 18.2) resulting directly or indirectly out of Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to Antibody Products (including a claim that an Antibody Product caused death or personal injury of any kind) shall be charged to the Product Contribution account as a Commercialisation Expense at the time such claim is finally determined. In the event a Party becomes aware of a claim which, if resulting in a Joint Loss, it intends to charge to the Product Contribution account, such Party shall inform the other Party of such claim as soon as reasonably practicable after it receives notice thereof. Amgen shall have the right to assume direction and control of the defence of any claim alleging a date of injury (or in the event of a continuing injury alleging the then-most recent date of injury) to be prior to the completion of the first [*] for an Antibody Product; and, with respect to Third Party
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claims in a country, each Territorial Commercial Lead in such country shall have the right to assume direction and control of the defence of any claim alleging a date of injury (or in the event of a continuing injury alleging the then-most recent date of injury) to be upon or after completion of the first [*] for such Antibody Product. The Party not in control of such defence shall co-operate as reasonably requested in the defence of the claim; provided however, that such Party shall have the right to retain its own counsel (at its own expense) if representation of the counsel of the Party in control would be inappropriate due to actual or potential differing interests between the Parties. The Party in control shall not settle any such claim without the other Party’s prior written consent, such consent not to be unreasonably withheld or delayed.
18.4Insurance. Each Party shall maintain (through a captive insurer or Third Party insurer) appropriate product liability insurance with respect to Antibody Products and appropriate
comprehensive general liability insurance to cover its obligations hereunder and which is/are consistent with normal business practices of prudent companies similarly situated. Each Party shall use reasonable endeavours to ensure that any insurance policy required by, and procured under, this Article 18.4 by a Party shall name the other Party as an additional insured. Such insurance shall not be construed to create a limit of the insuring Party’s liability with respect to its indemnification obligations under this Article 18. Each Party shall furnish the other Party with a certificate(s) or other evidence from an insurance carrier showing all such insurance. Each Party shall diligently pursue recovery of insurance proceeds when a claim arises. The Parties acknowledge that it is the normal business practice of prudent companies similarly situated to have a reasonable level of uninsured loss.
18.5 No Liability. Without prejudice to each Party’s obligations as specified in this Agreement, a Party shall have no liability to the other Party with respect to (a) the results obtained in the Research, Development and Commercialisation of Antibody Product; or (b) [*], or any agreement relating thereto; or (c) the results obtained in the filing, prosecution, enforcement, maintenance or defence of any intellectual property; in each
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case when conducted in accordance with this Agreement. The Parties agree that the risks, liabilities and benefits relating to the Research, Development and Commercialisation of Antibody Product, including [*], and including the filing, prosecution, enforcement, maintenance or defence of any intellectual property, in each case when conducted, in accordance with this Agreement, is [*].
18.6 Pre-Effective Date Losses. In connection with this Agreement, neither Party shall assume or be liable for any liabilities, damages, expenses and/or losses resulting from or arising in connection with activities of the other Party which occurred on or prior to the Effective Date.
ARTICLE 19
MISCELLANEOUS
MISCELLANEOUS
19.1 Amendments. This Agreement may not be modified or supplemented by any purchase order, change order, acknowledgement, order acceptance, standard terms of sale, invoice or the like. Any amendment or modification to this Agreement shall be made in a writing expressly stated for such purpose and signed by an authorised officer of each Party; except that the Research Plan and the Commercialisation Plan may be amended or updated by the Joint Research Committee and the Joint Commercialisation Committee, respectively, as expressly permitted hereby.
19.2Notices. Any consent or notice required or permitted to be given or made under this Agreement by one of the Parties to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier), by a next business day delivery service of a nationally recognised overnight courier service or by courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor in accordance with this Article 19.2 and shall be effective upon receipt by the addressee.
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If to Celltech: Celltech R&D Limited
208 Bath Road
Slough SL1 3WE
Berkshire, England
Attention: Company Secretary
Facsimile: (XXX) (XX) XXXX XXXXXX
If to Amgen: Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1799 U.S.A.
Attention: Vice President, Licensing
Marked to be copied to: Corporate Secretary
Facsimile: (XXX) (XXX) XXX-XXXX
19.3 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement to the extent such failure or delay is caused by or results from Force Majeure, provided however, that the Party so affected shall use Commercially Reasonable Efforts to avoid, remove or mitigate such causes of non-performance and shall continue performance with reasonable dispatch wherever such causes are removed. Each Party shall provide the other Party with prompt written notice of any delay or failure to perform that occurs by reason of Force Majeure. Such excuse shall be continued so long as the condition constituting Force Majeure continues. The Parties shall mutually seek in good faith a resolution of the delay or failure to perform.
19.4 Use of Names, Logos or Symbols. Subject to Articles 5.11(h), 10.2 and 12.5, no Party hereto shall use and no rights are granted to the Trademarks (including the names “[*]” and “[*]”), physical likeness, employee names or owner symbol of the other Party for any purpose (including private or public securities placements) without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed so
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long as use of such name is limited to objective statement of fact rather than for endorsement purposes. Neither Party shall use any Trademark or domain name in connection with the subject matter of this Agreement which either substantially resembles or is confusingly similar to, misleading or deceptive with respect to, or which dilutes any of the other Party’s Trademarks or domain names, other than its own Product Trademark or domain names actually used in connection with an Antibody Product.
19.5 Governing Law; Jurisdiction.
(a) This Agreement shall be governed and interpreted in all respects under the substantive laws of the State of New York, United States, as applied to agreements executed and performed entirely in the State of New York by residents of the State of New York, without regard to conflicts of law rules and without regard to the United Nations Convention on International Contracts for the Sales of Goods.
(b) Each Party consents to the exclusive jurisdiction of the federal or state courts in the State of New York for any suit, action or other proceeding arising out of or relating to this Agreement whether denominated or arising in contract, tort or otherwise, and further agrees that any process, notice of motion or other application to either such court or judge thereof may be served outside of New York City, New York by personal service, provided that a reasonable time for appearance is allowed. Each Party hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement whether denominated or arising in contract, tort or otherwise, in the federal or state courts in the State of New York. Each Party hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any action, suit or proceeding brought in any such court has been brought in inconvenient forum. As between the Parties, any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patent Rights claiming the use or sale of any Antibody Product or of any Trademark rights relating to an Antibody Product shall be submitted to a court of
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competent jurisdiction in the Territory in which such Patent Rights or Trademark rights were granted or arose which in the case of any United States Patent Rights and Trademark rights shall be a court of competent jurisdiction in the State of New York.
(c) Each Party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of or relating to this Agreement.
19.6 Performance by Affiliates.
(a) Each of Amgen and Celltech acknowledge that obligations under this Agreement may be performed on a subcontracting basis by Affiliates of Amgen and Celltech. Each of Amgen and Celltech remain responsible for the acts and omissions in the performance of this Agreement, by its Affiliates, notwithstanding any assignment to Affiliates in accordance with Article 19.7 of this Agreement. Wherever in this Agreement the Parties delegate responsibility to Affiliates, the Parties agree that such entities may not make decisions inconsistent with this Agreement, nor amend the terms of this Agreement or act contrary to its terms in any way.
(b) Each Party agrees that any information or material provided by the other Party’s Affiliates or subcontractors shall be deemed to be the Information or Material of the other Party.
19.7 Assignment.
(a) This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Party not to be unnecessarily withheld or delayed; provided however, that either Celltech or Amgen may, without such consent, assign its rights and obligations under this Agreement (i) to any Affiliate, provided such interest shall be retransferred to the relevant Party if such entity ceases to be an Affiliate of such Party, and provided further that the assigning Party shall remain responsible for the acts and omissions in the performance of
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this Agreement, by its Affiliate, (ii) in connection with a merger, consolidation or sale of substantially all of the business to which this Agreement relates to an unrelated Third Party of [*], provided that the other Party shall have the right, within [*] of such acquisition, to terminate the assigning Party’s right to [*] with its [*]right to [*] in accordance with Article 5.2. If such termination notice is served, the Parties shall co-operate to ensure an orderly wind down of all [*] throughout the Territory as soon as practicable.
(b) Except as aforesaid, any permitted assignee shall assume all rights and obligations of its assignor under this Agreement; accordingly, all references to the assigning Party shall be deemed references to the assignee to whom the Agreement is so assigned. The assigning Party shall forward to the other Party a copy of those portions of each such fully executed assignment agreement which relate to the assumption of the rights and responsibilities of the assigning Party, within [*] of the execution of such assignment agreements.
(c) Any assignment or attempted assignment by either Party in violation of the terms of this Article 19.7 shall be null and void and of no legal effect.
19.8 [*]. [*].
19.9 Joint Committees. Members of the Collaboration Committee, Joint Research Committee, Joint Development Committee, the Joint Commercialisation Committee and any subcommittees thereof shall be, and shall remain, employees of Celltech or Amgen, as the case may be. No Party shall incur any liability to the other Party for any act or failure to act by members of the Collaboration Committee, Joint Research Committee, Joint Development Committee, the Joint Commercialisation Committee and any subcommittees thereof who are employees of the other Party.
19.10 Subcontracting. The Parties acknowledge and agree that, notwithstanding anything to the contrary in this Agreement, elements of the work involved in Research, Development and Commercialisation of Antibody Products may be subcontracted to a Third Party by
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the responsible Party and that the Party entering into such subcontract may, as part of such subcontract, grant to such Third Party a licence or sublicence to [*] Technology or to [*] Technology, as applicable, only to the extent and only for so long as such licence or sublicence is necessary for such Third Party to perform such tasks; provided however, that the responsible Party shall remain responsible for the acts and omissions in the performance of such work by its subcontractors pursuant to the terms and conditions of this Agreement, and that each subcontractor shall enter into a written agreement binding such subcontractor to the obligations the responsible Party has to the other Party (and containing any other provisions normal and customary for similar types of agreements) including: (a) Amgen may, [*], subcontract to a Third Party various preclinical activities referred to in Article 3.2.1(c); (b) each Party may, [*], contract with / establish clinical sites, investigators and CROs pursuant to Article 3.2.2; (c) each Party may subcontract to a Third Party manufacturer pursuant to Article 6.4; and (d) each Territorial Commercialisation Lead may enter into agreements with distributors or agents for commercial distribution of Antibody Products pursuant to Article 5.3. The subcontracting Party shall use Commercially Reasonable Efforts to enter into an Agreement with the bidder that is best able to meet the Parties’ mutual requirements, taking into consideration such factors as price, quality, capacity, quantity, reliability and reputation.
19.11 No Strict Construction. This Agreement has been prepared jointly and shall not be strictly construed against either Party.
19.12 Interpretation and Schedules. (a) The captions or headings of the Articles or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof. (b) Unless otherwise specified, (i) references in this Agreement to any Article, or Schedule shall mean references to such Article, or Schedule of this Agreement; and (ii) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently varied, replaced or supplemented from time to time, as so varied, replaced or supplemented and in effect at the relevant
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time of reference thereto. (c) Any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns. (d) All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalised terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. (e) Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
19.13 Severability. If any provision hereof should be held invalid, illegal or unenforceable from which no appeal can be or is taken, in any respect in any jurisdiction, the invalidity, illegality or unenforceability of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole. The Parties shall make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the objectives contemplated by the Parties as evidenced by the terms and conditions of this Agreement when entering into such invalid or unenforceable one.
19.14No Consequential Damages. NEITHER PARTY HERETO WILL BE LIABLE (WHETHER UNDER AN INDEMNITY OR OTHERWISE) FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS, ANTICIPATED PROFITS, LOST GOODWILL, LOST REVENUE, LOST PRODUCTION, LOST CONTRACTS AND LOST OPPORTUNITY, ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, WHETHER DENOMINATED IN OR ARISING IN CONTRACT, TORT OR OTHERWISE REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS ARTICLE 19.14 IS INTENDED TO LIMIT OR RESTRICT ANY PAYMENT OBLIGATION EXPLICITLY SET FORTH UNDER THIS AGREEMENT.
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19.15 General Provisions.
(a) The representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and a person who is not a Party to this Agreement may not enforce any of its terms.
(b) A waiver (whether express or implied) by one of the Parties of any of the provisions of this Agreement or of any breach of or default by the other Party in performing any of those provisions must be in writing executed by a responsible officer of the Party providing the waiver and expressly waiving such provisions or breach or default by reference to this Agreement, and any waiver shall not constitute a continuing waiver, and that waiver shall not prevent the waiving Party from subsequently enforcing any of the provisions of this Agreement not waived or from acting on any subsequent breach of or default by the other Party under any of the provisions of this Agreement.
(c) Each Party undertakes to execute all documents which may be reasonably necessary to give full effect to this Agreement.
(d) Each Party shall pay its costs and expenses incurred by it in connection with negotiation and execution of this Agreement.
It is expressly agreed that for tax, legal or all other purposes (i) this Agreement or any portion of this Agreement shall not be considered to be a partnership agreement, and (ii) the relationship between the two Parties shall not constitute an employee-employer, partnership, joint venture, agency or similar business relationship between the Parties. Neither Celltech nor Amgen shall have the authority to make any statements, representations, warranty, guarantee or commitments (express or implied) of any kind or to take any action which shall bind the other Party to a Third Party, without the prior consent of the other Party to do so. Each Party shall use its own discretion, shall have complete and authoritative control over its employees and the methods and means by which it
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performs its activities under this Agreement (including the management of permitted subcontractors).
(e) This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19.16Whole Agreement. This Agreement and the Schedules referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous understandings, arrangements and agreements with respect to the subject matter hereof, whether written or oral. Each Party acknowledges that in entering into this Agreement it has not relied on any representation, warranty, collateral contract or other assurance (except those expressly set out in this Agreement together with the Schedules) made by or on behalf of any other Party before the signature of this Agreement. Each Party waives all rights and remedies which, but for this Article 19.16, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance. As of the Effective Date, the Confidential Disclosure Agreement dated [*] (Amgen Reference No. XXXXXXXX) and amended on [*] (Amgen Reference No. XXXXXXXX-XXX) is hereby superseded, provided that all Proprietary Information as defined in and disclosed pursuant to or covered by such Confidential Disclosure Agreement and its Amendment shall be treated as Confidential Information as if disclosed under, and shall be subject to the terms of, this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.
AMGEN INC. CELLTECH R & D LIMITED
By: /s/ R.M. Perlmutter______________ By: /s/ P.V. Allen___________________
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Name: R.M. Perlmutter______________ Name: P.V. Allen__________________
Title: EVP, R&D___________________ Title: CFO_________________________
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SCHEDULE A
Research Plan
The primary objective of the Research Plan is the [*] that has suitable [*] attributes to designate it as a clinical development candidate. To accomplish this, there will be [*] major [*] work streams. The objective of the [*] workstream is to identify [*] that will be used to validate the [*], the [*] representing the most likely initial [*] for the corresponding [*]. The work includes, but may not be limited to, characterizing [*] in a number of [*] and [*] and then [*] of [*] to identify [*]. A reasonable number of [*] will then be profiled in both [*] and [*]. It is recognised that aspects of this program are iterative by their very nature and that revisions to plan may need to occur based on experimental results. This phase would be considered successful if a [*] proved to be [*].
In parallel with this [*], a [*] workstream will be engaged around generating [*] suitable for clinical testing. Similar to the activities above, [*] will be characterized in a number of [*] and then by [*] of [*] to identify [*]. The [*] will serve as the basis for the generation of [*] which at the present time are envisioned to represent the [*]. The choice of [*], as opposed to a [*], as a clinical candidate will be decided based on the properties of the [*] and also on background data provided by [*] on clinical experience with these [*], especially their [*]. As the [*] are converted to [*], the [*] of the newly generated [*] will be tested against appropriate [*] and [*]. The selection of the [*] candidate will be based on a number of criteria. At the end of this workstream, sufficient material to initiate [*] and perform [*] will be produced. It is recognised that [*] of the [*] workstream would interrupt this plan. In that case, an alternative research plan would be identified through discussions at the Joint Research Committee.
A1
In the event that the [*] workstreams are successful and a clinical candidate is put forward, a [*] program will be engaged to identify additional clinical candidates should the first [*] for any reason. Additionally, it is recognised that additional work directed against understanding the [*] will take place. Such activities could include [*] studies, [*] identification and so forth.
On selection of a clinical candidate, [*] will start work on development of a suitable [*] for both [*] studies and ultimately for clinical evaluation. [*] will expect advice from [*] on the [*] of such a [*] based on [*]’s previous experience with such products. [*] will need sufficient quantities of [*] to enable it to start such studies. A preliminary estimate is [*] for these [*] studies. [*] will expect this material to be supplied by [*] according to a timeline that will be agreed at the Joint Research Committee. Similarly, [*] will require suitable quantities of [*] to enable it to conduct [*] studies. The time line for this will also be agreed by the Joint Research Committee.
The initial work plan, which shall be agreed by the Joint Research Committee at their first meeting, is as follows:
BEER Draft Timeline
[*] [2 pages of redactions]
A2
Milestone definitions
Milestone 1.
[*]:
a) [*] and
b) [*].
In addition, these [*] shall [*]. “[*]” and “[*]” shall mean [*].
Milestone 1 shall also be considered to have been met if [*].
Milestone 2.
[*]:
1. [*]. [*]. And,
2. [*], and
3. [*], and
4. [*].
Milestone 2 will also be considered to have been met upon [*].
Milestone 3.
[*].
Milestone 3 will also be considered to have been met if the [*].
A5
SCHEDULE B
Costs and Calculation of Product Contribution
“Product Contribution” shall be calculated for each Calendar Quarter by subtracting the sum of (a) Other Expense, (b) Cost of Goods of Antibody Product sold, (c) Commercialisation Expense, and (d) Licence Fees, (in each case, incurred in that quarter) from Net Sales of Antibody Products and recoveries from legal actions pursuant to Articles 6 and 11 and from insurance claims referenced in Article 18 (in each case as recognised in that quarter). Definitions of capitalised terms used for the purposes of calculating Product Contribution are set forth below in this Schedule B:
Commercialisation Expense means the sum of (a) Promotion Expense, (b) Marketing Expense, (c) Marketing Personnel Costs, (d) Drug Regulatory Expense, (e) Medical Affairs Expense, (f) Direct Sales Force Expense, (g) any out-of-pocket costs incurred in filing, prosecuting and maintaining applications and registrations for Antibody Product Trademarks in any country and (h) the costs of filing suit against or defending against infringers of Patent Rights pursuant to Article 11; (i) Distribution Costs; and (j) any other cost or expense expressly stated to be a Commercialisation Expense in this Agreement. Commercialisation Expense may occur prior to and subsequent to Regulatory Approval and First Commercial Sale.
Cost of Goods means the FAMC for an Antibody Product as determined by reference to Schedule E.
Detail Shall have the meaning set forth in Article 1.
B1
Detail Cost means the cost of a sales force Detailing Antibody Product calculated in accordance with the principles outlined in Schedule C.
Direct Sales Force Expense means, for each country, the sum of :
(a) the Detail Cost of each sales force; and
(b) out-of-pocket costs and expenses paid to Third Parties for Details provided by such Third Parties.
Distribution Costs means all out-of-pocket costs, expenses, and Personnel Costs incurred in the distribution of Antibody Products, including, without limitation, freight, insurance, warehousing, order entry, billing, credit and collection of debt to the extent that such costs are not included in the calculation of Net Sales or Cost of Goods.
Drug Regulatory Expense means Personnel Costs, out-of-pocket costs and expenses (e.g., filing fees, user fees, annual product registration fees and the like) incurred for obtaining or maintaining Regulatory Approvals for an Antibody Product in a country and all out-of-pocket costs incurred in satisfying all registration and other requirements of Regulatory Authorities (including for example adverse event reporting) including costs associated with a change of site manufacture or change of container.
Licence Fees means all upfront payments, milestone payments, licence fees, royalties or other payments, payable to any Third Party under any Third Party Licence Agreement following the first Regulatory Approval of an Antibody Product to the extent such payments are attributable to such Antibody Product. If the rights under any Third Party Licence
B2
Agreement are also attributable to products other than Antibody Products then only an equitable portion of any amounts payable under it shall be allocated to Antibody Products as Licence Fees.
Marketing Expense means all out-of-pocket costs and expenses incurred (i.e., paid to Third Parties or accrued therefor) by Amgen or Celltech for the following functions to the extent directly attributable to the Antibody Product (a) market research on Antibody Product, (b) marketing communications, (c) corporate accounts, (d) managed care, (e) sales force training, (f) product hotlines, (g) reimbursement support, (h) contracting, (i) pricing, (j) conducting compassionate use programs for Antibody Products (including without limitation FAMC for any Antibody Product utilized in such compassionate use programs) and (k) telemarketing services.
Marketing Personnel Costs means the Personnel Costs of marketing personnel and support staff working directly (either full time or part of the time) on the Commercialisation of Antibody Products. Examples of functions that would be included in the marketing headcount cost are: Marketing, marketing communications, clinical research and educational managers (CREMS), clinical support managers (CSS), corporate accounts, managed care, product hotlines, reimbursement support (Government economic managers), marketing research, contracting, pricing, regulatory, adverse event reporting, sales force training, and sales force operations, including dedicated IT support.
B3
Medical Affairs Expense means, for all Marketing Clinical Studies (a) all out-of-pocket costs and expenses incurred (i.e., paid to Third Parties or accrued therefor) by Amgen or Celltech for such studies, (b) Personnel Cost of personnel working directly on Marketing Clinical Studies Antibody Products and the Medical Affairs Supply Cost of such studies and (c) other out-of-pocket expenses directly attributable to Marketing Clinical Studies on Antibody Product but not included in (a) or (b).
Medical Affairs Supply Cost means the sum of (a) the Cost of Goods of Antibody Product (as determined in accordance with Schedule D) utilized in performing Marketing Clinical Studies, and (b) out-of-pocket costs and expenses incurred in purchasing comparator and in packaging comparator and/or Antibody Product, shipping clinical supplies to centers or disposal of clinical supplies.
Other Expense means the sum of all out-of-pocket costs and expenses incurred in processing and destroying of returns of Antibody Product.
Personnel Costs means the costs of employment of personnel employed by or under contract to a Party, including, but not limited to, salaries, benefits (including the costs of cars or allowances therefor), travel, lodging, meals and entertainment, office and computing supplies, space costs, recruiting, relocation and subscriptions.
Promotion Expense means all out-of-pocket costs and expenses incurred (i.e., paid to Third Parties or accrued therefor) by Amgen or Celltech for the Promotion of an Antibody Product
B4
including, but not limited to (i) marketing, advertising and promoting of Antibody Products (including, without limitation, educational expenses, advocate development programs and symposia, sales meetings, direct to consumer/patient advertising, samples, agency fees for the development of promotional materials and printing of promotional materials), (ii) FAMC for samples of Antibody Product distributed free of charge and (iii) training and communication materials for the Antibody Products.
Representative means an individual (i) employed and trained by Amgen or Celltech or (ii) employed by a Third Party or self-employed and trained by or on behalf of Amgen or Celltech, in either case, to Detail an Antibody Product.
Sales Force Cost means the Personnel Costs of Representatives and their support staff in a sales force engaged in the Detailing of Antibody Products, including training costs.
In calculating the Product Contribution the following shall apply:
1. There shall be no double counting of any costs or expenses or of any revenues, and to the extent a cost or expense has been included in one category or sub-category, it shall not be included in another; similarly, to the extent any revenue has been taken into account in one category or sub-category it shall not be taken into account in another.
2. When allocating costs and expenses under this Agreement, each Party shall utilise the same policies and principles as it utilises consistently within its group and business units when making internal cost allocations.
3. Each Party shall bear its own out-of pocket costs (without limitation, travel costs, meals and accommodation) associated with attendance at meetings of the Joint Research Committee, Joint Development Committee, Joint Commercialisation Committee,
B5
Collaboration Committee or such other joint meetings that the Parties agree shall be held in the furtherance of the Research, Development or Commercialisation of Antibody Products.
4. To the extent an item of income or revenue is received by a Party or a cost or expense is incurred by a Party, and is necessary and specifically and directly identifiable, attributable and allocable to the Commercialisation of Antibody Product and is not otherwise accounted for in the calculation of Product Contribution, such Party shall credit such income or revenue and shall be permitted to charge such cost or expense to the Product Contribution.
B6
SCHEDULE C
Principles for Detail Cost
Each Party shall determine the Sales Force Costs for each Calendar Quarter for each sales force Detailing Antibody Products.
Each Party shall undertake to promote Antibody Product as a Primary Detail, Secondary Detail or Tertiary Detail throughout a Calendar Quarter.
The Detail Cost for each sales force in each country for each Party for each Calendar Quarter shall be calculated by multiplying the Sales Force Costs for that sales force in that country by [*]% when Antibody Product has been promoted as Primary Detail in that Calendar Quarter, and by [*]% when Antibody Product has been promoted as Secondary Detail in that Calendar Quarter and [*]% where Antibody Product has been promoted as Tertiary Detail in that Calendar Quarter, provided that a Party may not charge for a Tertiary Detail for Antibody Product in a country during the [*] following the date of First Commercial Sale of such Antibody Product in a country. For a period not to exceed [*] from the date of First Commercial Sale of an Antibody Product in any country and when a sales force has promoted only an Antibody Product and no other product in a Calendar Quarter in that country, the Detail Cost shall be [*]% of the Sales Force Cost, excluding extraordinary bonuses and the like.
C1
SCHEDULE D
Net Sales Definition
Net Sales means with respect to any Antibody Product, all revenues recognised in accordance with GAAP, consistently applied as between the Parties, from sales of an Antibody Product by a Party, its Affiliate, sublicensees, and agents, to Third Parties (but not including sales relating to transactions between a Party, its Affiliates, and their respective sublicensees and agents), less the total of the following (if not already deducted in the amount invoiced or not otherwise accounted for in Commercialisation Expenses or Cost of Goods):
1.Normal or customary trade, cash, prompt payment and/or quantity discounts actually allowed and taken;
2.Returns, allowances, free goods, rebates, chargebacks, other allowances or payments to government agencies actually allowed and taken;
3.Retroactive price reductions applicable to sales of such product actually allowed and taken;
4.Fees paid to distributors, selling agents (excluding any sales representatives of a Party or any of its Affiliates), group purchasing organisations and managed care entities;
5.Credits or allowances (actively paid or allowed) for wastage replacement, whether cash or trade;
6.Non-recoverable sales taxes, excise taxes, tariffs and duties (excluding taxes when assessed on income derived from sales); and
7.[*] percent of the amount invoiced to cover bad debt, freight or other transportation charges, insurance charges, additional special packaging, and other governmental charges.
D1
In the case of any sale of an Antibody Product between or among a Party and its Affiliates or sublicensees for resale, Net Sales shall be calculated as above only on the first arm’s length sale by any such Party, Affiliate or sublicensee to a Third Party.
Upon any sale or other disposal of any Antibody Product for any consideration other than an exclusively monetary consideration on bona fide arm’s length terms then for the purposes of calculating the Net Sales under this Agreement, such Antibody Product shall be deemed to be sold exclusively for money at the average sales price during the applicable reporting period generally achieved for such Antibody Product in the country in which such sale or other disposal occurred when such Antibody Product is sold alone and not with other products.
Where an Antibody Product is sold together with other pharmaceutical products for a single price (whether sold together in the same package, or merely price bundled), then for the purposes of calculating the Product Contribution payable under this Agreement such Antibody Product shall be deemed sold for an amount equal to the following:
(X divided by Y) multiplied by Z
where X is the average sales price during the applicable reporting period generally achieved for such Antibody Product in the country in which such sale or other disposal occurred when such Antibody Product is sold alone and not with other pharmaceutical products; Y is the sum of the average sales price during the applicable reporting period generally achieved in that country when sold alone by each product (including the Antibody Product) included in the bundle of pharmaceutical products that is sold for the single price; and Z equals the single price at which the bundle of pharmaceutical products represented in Y was actually sold. In the event one or more of the products in the bundled product are not sold separately, the parties shall confer in good faith to determine a fair market price that shall equitably compensate the Product Contribution for the value of the Antibody Product(s) within the bundled product.
D2
SCHEDULE E
Calculation of Fully Absorbed Manufacturing Cost
DEFINITION OF FULLY ABSORBED MANUFACTURING COSTS (“FAMC”)
I. FAMC includes the costs of all [*] consumed, provided or procured by manufacturing facilities in the manufacture of Antibody Product in Finished Form, together with (i) [*], (ii) [*] and (iii) [*].
A. [*] costs are:
1. The cost of [*] materials used in production.
2.[*] materials, [*] ([*] of [*]in excess of a [*] limits).
3. Other costs of materials used in the manufacture of Antibody Products not included in the preceding two paragraphs.
B. [*] costs are:
The [*] involved in the manufacture of Antibody Products, but excluding such costs to the extent that they are included within [*].
C. [*] costs are:
The amounts paid or payable to [*] for the manufacture of Antibody Product in Finished Form or any component thereof ([*] of Antibody Products).
D. [*] are all [*] and [*] manufacturing costs that [*] with [*] and, therefore, cannot be included in [*] FAMC as [*]. Such [*] costs are:
1. [*], including, but not limited to, [*].
E1
2. [*], which reflects on a [*] basis, the [*] used for manufacturing the Antibody Product.
3.The [*] allocations from [*], including [*] and other services required to be performed in connection with the manufacturing of the Antibody Product.
4. The [*] allocations for [*] services used at the [*] including [*].
5. [*] and other [*] costs on Antibody Raw Materials and Antibody Product, [*], [*] Antibody Raw Material or Antibody Product in Finished Form.
6. [*] and other costs allocable to the [*] used to manufacture the Antibody Product.
7. [*] cost incurred for [*] or otherwise in connection with compliance with [*] as a [*] of the manufacture of the Antibody Product.
E. Allowances for [*] include [*] variances within [*] and [*].
F. Allowances for [*] to [*] include [*] charges for [*] charges.
II. FAMC does not include:
A. [*], except the [*] allowance included under item IA.2.
B. The value of [*] in the manufacturing operation (other than [*] as stated above).
C. [*] on [*] shipment.
E2
D. [*].
E. Costs associated with the [*] and the [*], including without limitation the costs of [*], to the extent that such costs are included under other elements of [*].
F. Any [*] on [*] manufacturing plants or [*].
G. [*] related to [*].
H. [*] categorized separately in Schedule A.
I. [*] expenses.
III. Calculation of FAMC
FAMC will be calculated in accordance with GAAP, applied on a consistent basis as between the Parties. Such calculations shall allocate to Antibody Products a fair and reasonable portion of manufacturing overhead consistent with the allocation of such manufacturing overheads to all products manufactured at the relevant facility. Actual FAMC incurred will be charged against Product Contribution as Antibody Product is sold on a first in-first out basis. FAMC incurred for launch inventory build up shall be [*] as Antibody Product is [*]. Such FAMC shall include, without limitation, costs incurred in [*] of Antibody Products in Finished Form.
E3
SCHEDULE F
PART A
[*] PATENT RIGHTS
| a) Product | ||||||||||||||
| [*] Ref. No. | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
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| Earliest Publication Date/No. | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
F1
SCHEDULE F
PART B
[*] PATENT RIGHTS
| b) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
F2
SCHEDULE F
PART B
[*] PATENT RIGHTS
| b) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
F3
SCHEDULE F
PART B
[*] PATENT RIGHTS
| c) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
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| [*] | [*] | [*] | [*] | [*] | ||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
F4
SCHEDULE F
PART B
[*] PATENT RIGHTS
| c) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
F5
SCHEDULE F
PART C
[*] PATENT RIGHTS ([*])
| d) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| [*] | ||||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
F6
SCHEDULE F
PART C
[*] PATENT RIGHTS ([*])
| d) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
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| [*] | [*] | [*] | [*] | [*] | ||||||||||
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| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
F7
SCHEDULE F
PART C
[*] PATENT RIGHTS ([*])
| d) [*] | ||||||||||||||
| [*] Ref. No: | [*] | |||||||||||||
| Subject Matter: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| [*] | ||||||||||||||
| [*] | ||||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
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*[*]
F8
SCHEDULE F
PART D
[*] PATENT RIGHTS ([*])
| [*] | ||||||||||||||
| Applicants: | [*] | |||||||||||||
| Inventors: | [*] | |||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
Whether or not the above Patent Rights fall within the [*] Patent Rights is determined by the [*] relating to these Patent Rights as such [*] have been disclosed to [*] prior to [*].
F9
SCHEDULE F
PART D
[*] PATENT RIGHTS ([*])
| [*] | ||||||||||||||
| Applicants: | [*] | |||||||||||||
| Inventors: | [*], | [*], | [*] | |||||||||||
| [*], | [*] | |||||||||||||
| Priority Application Date: | [*] | |||||||||||||
| Earliest Publication Date/No: | [*] | |||||||||||||
| Title: | [*] | |||||||||||||
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*[*]
Whether or not the above Patent Rights fall within the [*] Patent Rights is determined by the [*] relating to these Patent Rights as such [*] have been disclosed to [*] prior to [*].
F10
SCHEDULE F
PART D
[*] PATENT RIGHTS ([*])
| [*] | |||||||||||||||||
| Applicants: | [*] | ||||||||||||||||
| Inventors: | [*], | [*], | [*], | [*] | |||||||||||||
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| Priority Application Date: | [*] | ||||||||||||||||
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*[*]
Whether or not the above Patent Rights fall within the [*] Patent Rights is determined by the [*] relating to these Patent Rights as such [*] have been disclosed to [*] prior to [*].
F11
SCHEDULE G
ANTIBODY LICENCE AGREEMENT
ANTIBODY LICENCE AGREEMENT
BY AND BETWEEN
AMGEN INC.
AND
CELLTECH R&D LIMITED
ANTIBODY LICENCE AGREEMENT
INDEX
Article | Description | Page | ||||||||||||
Recitals | 1 | |||||||||||||
1 | Definitions | 2 | ||||||||||||
2 | Grant of Licences and Other Rights 2.1 Patent Licences 2.2 Trademark; Copyright Licences 2.3 Sublicensing | 2 2 3 4 | ||||||||||||
3 | Research, Development, Commercialisation 3.1 Diligence 3.2 Research, Development and Commercialisation 3.3 Regulatory Filings and Regulatory Approvals 3.4 Notification due to Regulatory Obligation | 4 4 6 6 6 | ||||||||||||
4 | Consideration 4.1 Milestones 4.2 Royalties 4.3 FAMC Cost 4.4 Third Party Licences 4.5 Royalty Reduction 4.6 Competition Reduction 4.7 No Competition Reduction 4.8 Term of Royalties 4.9 Revival of Royalty Where Patent Becomes a Valid Claim | 7 7 8 10 10 11 12 12 14 14 | ||||||||||||
i
5 | Intellectual Property 5.1 Technology Ownership 5.2 Prosecution 5.3 Enforcement 5.4 Infringement Defence 5.5 Patent Marking 5.6 Co-operation | 15 15 15 19 21 21 21 | ||||||||||||
6 | Payments; Records; Audits 6.1 Payments 6.2 Records; Audit | 22 22 24 | ||||||||||||
7 | Publications 7.1 Procedure 7.2 Credit | 26 26 27 | ||||||||||||
8 | Confidentiality 8.1 Confidential Information 8.2 Authorised Disclosure 8.3 Exceptions 8.4 Materials 8.5 Terms of Agreement 8.6 Public Announcements 8.7 Third Party Obligations | 27 27 28 30 31 31 32 32 | ||||||||||||
9 | Covenants 9.1 Mutual Covenants 9.2 Covenants of Amgen 9.3 Disclaimers | 32 32 33 34 | ||||||||||||
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10 | Indemnification 10.1 Indemnification by Celltech 10.2 Indemnification by Amgen 10.3 Insurance 10.4 Pre-Effective Date Losses 10.5 Limitation of Liability | 34 34 35 36 37 37 | ||||||||||||
11 | Term and Termination 11.1 Term 11.2 Termination for Convenience 11.3 Termination for Default 11.4 Bankruptcy 11.5 Additional Termination Rights of Celltech 11.6 Termination Date 11.7 Effects of Termination 11.8 No Transition 11.9 Accrued Rights | 37 37 38 39 40 41 42 42 48 48 | ||||||||||||
12 | Dispute Resolution 12.1 Disputes | 48 48 | ||||||||||||
iii
13 | General 13.1 Amendments 13.2 Notices 13.3 Force Majeure 13.4 Use of Names, Logos or Symbols 13.5 No Strict Constriction 13.6 Assignment 13.7 Severability 13.8 Interpretation and Schedules 13.9 No Consequential Damages 13.10 Governing Law; Jurisdiction 13.11 General Provisions 13.12 Whole Agreement | 49 49 50 50 51 51 51 52 52 53 53 55 56 | ||||||||||||
Schedule One | Defined Terms | S1-1 thru S1-14 | ||||||||||||
Schedule Two | Patent Rights | S2-1 thru S2-5 | ||||||||||||
iv
ANTIBODY LICENCE AGREEMENT
This Antibody Licence Agreement (the “Licence Agreement”) is made effective as of the Effective Date of Termination of the Collaboration Agreement (as defined in Schedule One) (the “Licence Agreement Effective Date”) by and between Amgen Inc., a corporation organised and existing under the laws of the State of Delaware and having its principal place of business at One Amgen Center Drive, Thousand Oaks, California 91320-1799 (“Amgen”) and Celltech R & D Limited, a company organised and existing under the laws of England and having its principal office at 208 Bath Road, Slough, Berkshire SL1 3WE, United Kingdom (“Celltech”).
Recitals
Whereas, Celltech and Amgen, under the terms and conditions of the Collaboration Agreement, as defined in Schedule One attached hereto, have been collaborating in the Joint development and commercialisation of certain Antibody Products (as defined therein;)
Whereas, pursuant to Article 14 of the Collaboration Agreement, the Collaboration Agreement is now terminated, in whole or part, and Amgen is the Continuing Party as defined in the Collaboration Agreement.
Whereas, in accordance with Article 14 of the Collaboration Agreement, Celltech now wishes to grant to Amgen and Amgen wishes to obtain from Celltech a license under certain Celltech rights to Research, Develop, and Commercialise such certain Antibody Products (for purposes of this Licence Agreement termed “Licensed Antibody Products”, all terms as hereinafter defined in the attached Schedule One), on the terms and conditions herein;
Now Therefore, based on the foregoing premises and the mutual covenants and obligations set forth below, the Parties agree as follows:
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ARTICLE 1
DEFINITIONS
DEFINITIONS
Capitalised terms used but not otherwise defined herein have the meanings provided in Schedule One hereto.
ARTICLE 2
GRANT OF LICENCES AND OTHER RIGHTS
GRANT OF LICENCES AND OTHER RIGHTS
2.1 Patent Licences.
(a) Celltech hereby grants to Amgen:
(i) an exclusive licence even as to Celltech under the [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, [*] Know-How [*],[*] Know-How and [*] Know-How, with the right to sublicense in accordance with Article 2.3; and
(ii) a non-exclusive licence to all other [*] Technology, with the right to sublicense in accordance with Article 2.3;
to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to Licensed Antibody Products in the Field in the Territory, solely in compliance with the terms and conditions of this Licence Agreement.
(b) Certain licence rights granted to Amgen under this Article 2 may include a sublicence of Patent Rights and/or know-how of Third Parties under Third Party licences. Notwithstanding anything to the contrary in this Licence Agreement, Amgen shall, in exercising such sublicence rights be subject to and so far as the terms are applicable to its activities, comply with the provisions of such Third Party licences relating to Licensed Antibody Products to the extent Celltech has notified in writing the terms of such Third Party licence to Amgen. Celltech shall
2
promptly provide to Amgen a copy of any notice of breach received by it under such Third Party licence.
2.2 Trademark; Copyright Licences.
(a) Celltech hereby grants to Amgen an exclusive royalty-free licence, with the right to grant sublicences (subject to Amgen’s compliance with Article 2.3 of this Licence Agreement), under Celltech’s entire right, title and interest in and to the Product Trademarks, to use and display the Product Trademarks in connection with relevant Licensed Antibody Products in the Territory; provided however, that Amgen shall not have any licence to use and display Celltech Trademarks other than as set forth in Article 14.9(b)(iii)(3) of the Collaboration Agreement (sale of then-existing inventory). For the avoidance of doubt, Amgen shall have the right to select for and use and display with Licensed Antibody Products such Trademarks as it desires.
(b) Celltech hereby grants to Amgen a royalty-free licence under Celltech’s entire right, title and interest in any copyrights in and to Promotional Materials, with the right to grant sublicences (subject to Amgen’s compliance with Article 2.3 of this Licence Agreement), to reproduce, distribute copies of, prepare derivative works of and publicly perform and display such Promotional Materials in connection with Licensed Antibody Products in the Territory solely in compliance with the terms and conditions of this Licence Agreement; provided however, that Amgen shall not have any licence to use and display Celltech Trademarks other than as set forth in Article 14.9(b)(iii)(3) of the Collaboration Agreement (sale of then-existing inventory). Such licence shall be exclusive to the extent the Promotional Materials are exclusive to Licensed Antibody Products and otherwise shall be non-exclusive.
2.3 Sublicensing.
(a) Amgen shall have the sole right to determine whether to sublicense any or all of its rights under Article 2.1 or Article 2.2. Any such sublicence shall require the
3
Sublicensee to comply with the obligations of Amgen as contained herein. Any such sublicence shall provide for the termination of such sublicence, or the conversion to (with respect to [*] Technology) a licence directly between such Sublicensee and Celltech, [*], upon termination of this Licence Agreement.
(b) Notwithstanding the sublicensing of all or part of Amgen’s rights and obligations hereunder, Amgen shall remain responsible for the actions and omissions of its Sublicensees and for the full and complete performance of all of Amgen’s obligations and duties under this Licence Agreement.
ARTICLE 3
RESEARCH, DEVELOPMENT AND COMMERCIALISATION
RESEARCH, DEVELOPMENT AND COMMERCIALISATION
3.1 Diligence.
3.1.1 From and after the Licence Agreement Effective Date Amgen shall:
(a) use diligent and timely efforts to satisfactorily complete Research of Licensed Antibody Products and obtain in [*] for a Licensed Antibody Product an IND. For the avoidance of doubt, nothing in this Licence Agreement shall preclude Amgen from filing INDs in [*];
(b) use Commercially Reasonable Efforts to satisfactorily complete all Development activities with respect to a Licensed Antibody Product; and
(c) use Commercially Reasonable Efforts to obtain Regulatory Approval to Commercialise a Licensed Antibody Product;
in each case for the [*] or if the [*] is dropped, [*]; and
(d) use Commercially Reasonable Efforts to maximise Net Sales of each Licensed Antibody Product in the Territory.
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For the avoidance of doubt, the Parties acknowledge that the diligence obligations may have been met, in whole or in part, by activity conducted under the Collaboration Agreement.
3.1.2 Amgen acknowledges that using Commercially Reasonable Efforts requires it to take ongoing actions that are consistent with a good faith intention to achieve the objective of Developing a Licensed Antibody Product and obtaining Regulatory Approvals to Commercialise such Licensed Antibody Product for the [*] (or if the [*] is dropped, [*]) in the Field, and to Commercialise such Licensed Antibody Product [*]. For the avoidance of doubt, Development and Commercialisation in each instance includes the manufacture and supply of Licensed Antibody Product. If Amgen decides that deployment of Commercially Reasonable Efforts does not justify it making continued, ongoing efforts towards this objective it shall promptly notify Celltech in writing.
3.1.3 Amgen shall not be in breach of any obligation under this Licence Agreement to the extent its inability to perform such obligation is caused by Celltech’s failure to perform any of its obligations under this Licence Agreement or under Article 14.9 of the Collaboration Agreement. Celltech acknowledges that in applying the Commercially Reasonable Efforts standard to Amgen’s obligation pursuant to Article 3.1.1, a relevant factor to be taken into account shall be [*].
3.1.4 Amgen acknowledges that the obligations it undertakes pursuant to this Article 3.1 are [*].
3.2 Research, Development and Commercialisation. Subject to and consistent with its obligations set out in this Licence Agreement, as between the Parties, Amgen shall have sole and full control, discretion, authority and right for conducting, funding and pursuing all aspects of Research, Development and Commercialisation (including the manufacture and supply for Research, Development and Commercialisation) of Licensed Antibody Products in the Territory. Amgen shall conduct its Research activities and Development activities in compliance with all laws, regulations and guidelines that are applicable to the particular stage of Research or Development for the Licensed Antibody Product,
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including, GLP, GCP and GMP, of the relevant jurisdiction as the same may be amended from time to time.
3.3 Regulatory Filings and Regulatory Approvals. With respect to each Licensed Antibody Product, in a manner consistent with its obligations set out in this Licence Agreement, Amgen shall have the sole and full control, discretion authority and right to prepare, file and pursue and shall own all right, title and interest in Regulatory Filings and Regulatory Approvals relating to each said Licensed Antibody Product in the Territory.
3.4 Notification Due to Regulatory Obligation. Notwithstanding any other term of this Agreement, if any other Antibody being developed by Celltech is [*] by a Regulatory Authority for reasons which Celltech believes are attributable to [*] rather than to [*], Celltech shall notify Amgen of this as soon as reasonably practicable after receipt of written notice of [*] from the Regulatory Authority.
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ARTICLE 4
CONSIDERATION
CONSIDERATION
4.1 Milestones.
(a) Within [*] following the first achievement or occurrence with the first Licensed Antibody Product(s) of each of the following milestone events by performance of Amgen or an Affiliate or Sublicensee of Amgen (“Milestone Event(s)”), Amgen shall pay to Celltech the corresponding non-creditable, non-refundable milestone payments set forth herein (“Milestone Payment(s)”):
| Milestone Event | Milestone Payment | ||||
(i) [*] | $[*] | ||||
(ii) [*] | $[*] | ||||
(iii) [*] | $[*] | ||||
Total | $[*] | ||||
(b) Subject to Article 4.1(c) below, if any Milestone Event set forth above is achieved prior to or in the absence of the achievement of any preceding Milestone Event then, effective upon achievement of any such Milestone Event, all previously unpaid Milestone Payments set forth in Article 4.1(a) shall also become due and payable. Each Milestone Payment shall be payable only once, no matter how many times achieved by one or more Licensed Antibody Product(s). Each Milestone Payment shall be non-refundable and non-creditable whether against Royalties payable pursuant to Article 4.2, any other fees, other Milestone
7
Payments, or any other payments due to Celltech with respect to Licensed Antibody Product(s) under this Licence Agreement, or any other amounts accrued and owed prior to termination of the Collaboration Agreement or otherwise.
(c) If the Licence Agreement Effective Date is after the date of achievement of any Milestone Event(s) set forth in Articles 4.1(a)(i)-(iii), then the Milestone Payment(s) payable in respect of such Milestone Event(s) shall be deemed waived and not payable to Celltech (but without prejudice to any amounts accrued and owed prior to termination of the Collaboration Agreement, and without prejudice to any Milestone Payment payable in respect of a Milestone Event occurring after the Licence Agreement Effective Date).
4.2 Royalties.
(a) Subject to Articles 4.4 and 4.5 below, if the FAMC of the Antibody Raw Material is more than [*] ($[*]) [*], Amgen shall pay to Celltech a Royalty, based on the following Royalty rates, for annual Net Sales of each Licensed Antibody Product (on a Licensed Antibody Product-by-Licensed Antibody Product basis of cumulative Net Sales in those countries for which a Royalty is due in accordance with Article 4.8) by Amgen, its Affiliates, and its Sublicensees in the Territory:
(i) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is less than [*] ($[*]);
(ii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is equal to or greater than [*] ($[*]) and less than or equal to [*] ($[*]); and
(iii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is greater than [*] ($[*]).
8
(b) Subject to Articles 4.4 and 4.5, below, if the FAMC of the Antibody Raw Material is less than or equal to [*] Dollars ($[*]) [*] and greater than [*] Dollars ($[*]) [*], Amgen shall pay to Celltech a Royalty based on the following Royalty rates for annual Net Sales of each Licensed Antibody Product (on a Licensed Antibody Product-by-Licensed Antibody Product basis of cumulative Net Sales in those countries for which a Royalty is due in accordance with Article 4.8) by Amgen, its Affiliates, and its Sublicensees in the Territory:
(i) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is less than [*] Dollars ($[*]);
(ii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is equal to or greater than [*] Dollars ($[*]) and less than or equal to [*] Dollars ($[*]); and
(iii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is greater than [*] Dollars ($[*]).
(c) Subject to Articles 4.4 and 4.5 below, if the FAMC of the Antibody Raw Material is less than or equal to [*] Dollars ($[*])[*], Amgen shall pay to Celltech a Royalty based on the following Royalty rates for annual Net Sales of each Licensed Antibody Product (on a Licensed Antibody Product-by-Licensed Antibody Product basis of cumulative Net Sales in those countries for which a Royalty is due in accordance with Article 4.8) by Amgen, its Affiliates, and its Sublicensees in the Territory:
(i) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is less than [*] Dollars ($[*]);
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(ii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is equal to or greater than [*] Dollars ($[*]) and less than or equal to [*] Dollars ($[*]); and
(iii) a Royalty rate of [*] ([*]%) of that portion of annual Net Sales in the Territory of each such Licensed Antibody Product that is greater than [*] Dollars ($[*]).
(d) In the event that the Antibody Raw Material is not a [*] Antibody, the Royalty rates set forth in Article 4.2 (a) (i), (ii) and (iii) shall apply regardless of the FAMC of the Antibody Raw Material.
4.3 FAMC. Amgen shall use Commercially Reasonable Efforts to ensure that the FAMC of the Antibody Raw Material is an FAMC that [*].
4.4 Third Party Licences. To the extent not sublicensed by Celltech hereunder, Amgen shall be responsible for obtaining any licences for rights to any Third Party intellectual property required to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to, a Licensed Antibody Product in one or more countries in the Territory. Amgen shall be responsible for making all Third Party Payments for rights to any Third Party intellectual property (when licensed directly by Amgen) required to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to, a Licensed Antibody Product in one or more countries in the Territory. Where Celltech has sublicensed Third Party intellectual property rights to Amgen pursuant to this Licence Agreement, in addition to the Royalties payable by Amgen under Article 4.2, but subject to Article 4.5, Amgen shall pay Celltech against invoice for, and Celltech shall be responsible for making, all Third Party Payments in connection with the rights sublicensed to Amgen pursuant to this Licence
10
Agreement, unless the Parties agree that such Third Party Payments shall be made by Amgen directly to such Third Party.
4.5 Royalty Reduction. If, and for so long as Amgen is required to pay Third Party Payments, as set forth in Article 4.4, as royalties for such licence in respect of sale or other disposal of a Licensed Antibody Product in a country in the Territory, such royalties shall be creditable by Amgen against any Royalties due to Celltech under Article 4.2 above for the Net Sales of such Licensed Antibody Product in such country as follows:
(a) [*] ([*]%) of Third Party royalties payable by Amgen equal to or less than [*] ([*]%) in aggregate of Net Sales of such Licensed Antibody Product in such country shall be creditable against Royalties payable to Celltech
(b) [*] ([*]%) of Third Party royalties payable by Amgen greater than [*] ([*]%) in aggregate of Net Sales of such Licensed Antibody Product in such country shall be creditable against Royalties payable to Celltech
provided however, that on a Licensed Antibody Product-by-Licensed Antibody Product basis, the Royalty rate payable by Amgen pursuant to this Licence Agreement in any given Calendar Year shall not be less than [*] ([*]%) of Net Sales of such Licensed Antibody Product in such country. Subject to the foregoing, Amgen shall have sole discretion, authority and right with respect to determining whether to enter into an agreement for a licence (or to accept, pursuant to Article 3, a sublicence) or other rights and to incur an obligation for any Third Party Payments.
4.6 Competition Reduction. Upon [*], Amgen shall have the immediate and continuing right to reduce the Royalty rates set forth in Article 4.2 on Net Sales of each such Licensed Antibody Product(s) in such country to:
(a) [*] ([*]%) during the first [*] period following such sale of commercial quantities and thereafter; and
(b) [*] ([*]%) for each [*] period thereafter until expiration of the obligation to pay a Royalty for such Licensed Antibody Product under Article 4.8;
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4.7 No Competition Reduction. With respect to a Competitive Product, in any country in the Territory where such Competitive Product either is being or has been sold:
(a) If
(i) Celltech provides a written request pursuant to Article 5.3.2 and Amgen does not bring suit or action within the time frame for bringing suit in accordance with Article 5.3.2 or,
(ii) Amgen having brought a suit or action described in Article 5.3.1, ceases to progress it and Celltech then requests Amgen in writing to progress such suit or action;
and Amgen elects, at its option, (or is deemed to have so elected by failing to respond to Celltech’s written notice pursuant to Article 5.3.2 or within [*] of Celltech’s written request pursuant to Article 4.7(a)(ii)) that Celltech shall not have the right to bring any such suit or action, then the Royalty reduction to which Amgen is entitled under Article 4.6 (the “Royalty Reduction”) shall not apply with respect to that Competitive Product in that country for the period from the date of expiry of the relevant time frame under (i) above or the date Amgen ceases to progress such suit or action under (ii) above, as appropriate.
(b) If Celltech provides a written request pursuant to Article 5.3.2 or Article 4.7(a)(ii) and Amgen, within the time frame for bringing suit in accordance with Article 5.3.2 (or within [*] of Celltech’s written request pursuant to Article 4.7(a)(ii)), provides Celltech with written notice of Amgen’s election, at its option, that Celltech shall have the right to bring any suit or action described in Article 5.3.2, then the Royalty Reduction shall not apply for the period commencing on the date of Celltech's written notice and ending [*] after the date Amgen notifies Celltech in writing of Amgen’s election that Celltech shall have such right to bring such suit or action with respect to such Competitive Product in such country.
(c) If Celltech provides a written request pursuant to Article 5.3.2 or Article 4.7(a)(ii) and Amgen, within the time frame for bringing suit in accordance with Article
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5.3.2, or within [*] of Celltech’s written request pursuant to Article 4.7(a)(ii), elects, at its option (as notified to Celltech in writing), that Celltech shall have the right to bring any suit or action described in Article 5.3.2 and
(i) Celltech exercises such right; and
(ii) the court concludes that Celltech has been prejudiced in obtaining a preliminary injunction by the delay from Celltech’s written request to the date of Amgen’s election to allow Celltech to exercise such right, or by Amgen failing to progress such action, then
the Royalty Reduction shall not apply and Amgen shall pay Celltech all Royalties Celltech would otherwise have been entitled to receive plus interest (at the rate provided in Article 6.1(d)) on such sum for the period from the later of Celltech’s written request or the date of first commercial sale of such Competitive Product in such country up to the date of the final court decision, such sum plus interest to be paid within [*] of such final court decision.
(d) From such time as a Competitive Product is ordered to be withdrawn from sale or otherwise ceases to be sold as a result of any suit or action brought by Celltech or by Amgen, the Royalty Reduction set forth in Article 4.6 shall not apply.
4.8 Term of Royalties. Amgen’s obligations to pay Royalties under Article 4.2 shall expire, on a Licensed Antibody Product-by-Licensed Antibody Product and country-by-country basis, upon the later of: (a) the expiration of the last-to-expire of the [*] Patent Rights, the [*] Patent Rights, [*] Patent Rights and/or [*] Patent Rights containing a Valid Claim that, but for the licence granted by Celltech to Amgen, would be [*] in such country; or (b) [*] after the [*] of the first Licensed Antibody Product in such country.
4.9 Revival of Royalty Where Patent Application Becomes a Valid Claim. If, in respect of any Licensed Antibody Product in any country, (a) Amgen’s obligation to pay Royalties under Article 4.2 has expired, in accordance with Article 4.7 and (b) after such expiry the use, manufacture, sale or other disposal of such Licensed Antibody Product in such country would, but for this licence, [*] of any [*] Patent Right, [*] Patent Right, [*]
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Patent Right and/or [*] Patent Right, Amgen shall pay to Celltech: (i) within [*] of receipt of invoice a sum equal to the Royalties set out in Article 4.2 calculated from the date such claim published to the date such claim issued (and became a Valid Claim) together with interest at the rate set out in Article 6.1(d) on such sum from the date such claim published until the date of payment and (ii) the Royalties set out in Article 4.2 until expiry of such Valid Claim as set out in Article 4.8.
ARTICLE 5
INTELLECTUAL PROPERTY
INTELLECTUAL PROPERTY
5.1 Technology Ownership.
5.1.1 As between the Parties, [*] shall own all right, title and interest in and to all [*] Technologies, subject to the rights and licenses granted to Amgen hereunder.
5.1.2 Other than as expressly set forth in this Licence Agreement, neither Party shall have any right in and to any intellectual property owned or controlled by the other Party and neither Party shall have an obligation to grant the other Party any rights therein.
5.1.3 Other than as expressly set forth in Articles 5.2, 5.3 and 5.4, neither Party shall have the right to prepare, file, prosecute, maintain, defend, settle and/or enforce Patent Rights or Trademarks Controlled by the other Party, such activity being the exclusive right (but not the obligation) of the Party Controlling the same.
5.2 Prosecution.
5.2.1 Promptly after the Licence Agreement Effective Date, and to the extent not already provided under the Collaboration Agreement, Celltech shall provide Amgen with copies of all material documents in Celltech’s possession pertaining to [*] Patent Rights existing as of the Licence Agreement Effective Date. During the term of this Agreement, each Party shall as soon as practicable provide the other Party (as appropriate) with all material documents and any other document Controlled by a Party reasonably requested by the
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other Party (such request to identify the specific documents required), pertaining to [*] Patent Rights and [*] Patent Rights.
5.2.2 (a) Amgen shall have the first right (but not the obligation) at its expense to have mutually acceptable outside counsel (i) at any time prepare, file, prosecute, maintain and defend the Product Trademarks and [*] Patent Rights throughout the Territory; (ii) prior to, on and following the Transition Date (as defined in Article 5.2.7 below) prepare, file, prosecute and maintain any [*] Patent Rights and the [*] Patent Rights that are [*] to any Antibody Products (“[*] Patent Rights”); and (iii) on and following the Transition Date, defend any [*] Patent Rights and [*] Patent Rights throughout the Territory.
(b) Celltech shall have the right to review and comment on any papers pertaining to proposed applications, responses, interferences and oppositions before the filing thereof by such counsel with any patent or trademark office (e.g., national, regional or international) (“Consultation Rights”), regarding [*] Patent Rights, [*] Patent Rights and [*] Patent Rights. If such outside counsel concludes that taking, or failing to take, any specific action(s) would be inconsistent with its instructions under Article 5.2.4, then Amgen shall not take, or shall take (as the case may be), such specific action(s) unless the prior express written consent of Celltech shall have been obtained. Amgen shall have the right to propose an alternative strategy for Celltech’s consideration. To that end, Amgen shall instruct such outside counsel to furnish Celltech with a reasonably complete draft of each submission to a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Celltech’s reasonably timely comments thereon. Additionally, Amgen shall instruct such outside counsel to provide Celltech with a copy of each submission made to and document received from a patent or trademark authority regarding any such [*] Patent Rights, [*] Patent Rights, [*] Patent Rights and Product Trademarks reasonably promptly after making such filing.
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(c) Amgen shall have the right, at any time and at its sole option, to elect not to proceed with and/or to abandon the preparation, filing, prosecution, maintenance and/or defence of any Patent Right or any Product Trademark it is permitted to pursue under Article 5.2.2(a), provided that it shall give Celltech notice of such intention at least [*] before a final due date which would result in the abandonment, cancellation or lapse of an issued patent or pending patent application or abandonment, cancellation or lapse of such granted trademark or pending trademark application. In such case, Celltech, at its option, may assume the right to prepare, file, prosecute, maintain and/or defend any such Patent Right or Product Trademark. Amgen shall have Consultation Rights in respect of any such Patent Right and Product Trademark and if such outside counsel concludes that taking, or failing to take (as the case may be), any specific action(s) would be inconsistent with its instructions under Article 5.2.4, then Celltech shall not take, or shall take (as the case may be), such specific action(s) unless the prior express written consent of Amgen has been obtained. Celltech shall have the right to propose an alternative strategy for Amgen’s consideration. To that end, Celltech shall instruct such outside counsel to furnish Amgen with a reasonably complete draft of each submission to a patent or trademark authority regarding any such Patent Rights and Product Trademark no later than [*] prior to the date such submission is proposed to be made, or if given less than [*] to respond as soon as practicable, and will consider any of Amgen’s reasonably timely comments thereon. Additionally, Celltech shall instruct such outside counsel to provide Amgen with a copy of each submission made to and document received from a patent or trademark authority regarding any such Patent Rights and Product Trademark reasonably promptly after making such filing.
(d) A decision by Amgen not to exercise its right pursuant to Article 5.2.2(a) to prepare, file, prosecute, maintain and/or defend any Patent Right or any Product Trademark as permitted by the terms of that Article shall not affect any of Amgen’s licence or other rights under this Licence Agreement.
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5.2.3 (a) Celltech shall have the first right (but not the obligation), at its expense, to have mutually acceptable outside counsel prior to the Transition Date defend any [*] Patent Rights and [*] Patent Rights.
(b)Celltech shall have the right, at any time and at its sole option, to elect not to proceed with and/or to abandon the defence of any Patent Right it is permitted to pursue under Article 5.2.3(a). In such case Amgen, at its option, may assume the right to have mutually acceptable outside counsel defend any such Patent Right.
(c)A decision by Celltech or Amgen not to exercise its right pursuant to Article 5.2 to defend any Patent Right as permitted by the terms of that Article shall not affect any of its licence or other rights under this Licence Agreement.
5.2.4Outside counsel retained under this Article 5 shall be instructed to act in the best interests of both Parties under this Licence Agreement and such counsel shall also be instructed to secure claims of the broadest possible scope without jeopardising validity.
5.2.5The Parties shall closely co-ordinate the defence of any attack on the validity and/or any enforcement (against a Third Party developing or commercialising an Antibody that [*]) of the [*] Patent Rights, [*] Patent Rights, and/or the [*] Patent Rights (including the right of the Party not responsible for such defence or enforcement to review and comment on any papers relating thereto which are material to the conduct of such defence or enforcement). Notwithstanding anything to the contrary in this Article 5, prior to the Transition Date, Amgen shall not have any right to enforce or defend the validity of Patent Rights Controlled by Celltech, which right shall be exclusively that of Celltech. The Party responsible for such defence or enforcement shall not take (nor fail to take) any action with respect to any such defence and/or enforcement which would, in the opinion of the retained outside counsel, be inconsistent with the instructions given to outside counsel under Article 5.2.4.
5.2.6 Notwithstanding any other provision of this Article 5, neither Party shall have an obligation, which is in violation of, or not permitted by, the terms of a Third Party agreement, to prosecute or maintain, or take or defend any action in respect of, nor shall
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either Party have any right, in violation of the terms of a Third Party agreement, to take or defend any action in respect of, any Patent Right which is owned by a Third Party and licensed to such Party under such Third Party agreement.
5.2.7 For purposes of this Article 5, “Transition Date” means the date of [*].
5.3 Enforcement.
5.3.1 Amgen, at its expense, shall have the first right but not the obligation to bring any suit or action (or to otherwise seek payment and/or claim) against a Third Party developing or commercialising an Antibody product which [*], and Celltech agrees to be joined as a plaintiff to any such suit or action if Amgen so requests, at Amgen’s expense:
(a) after the Transition Date, for infringement of a claim within the [*] Patent Rights, [*] Patent Rights and/or [*] Patent Rights, in each case in the Territory; and/or
(b) regarding any Product Trademark in the Territory.
Amgen shall, subject to prior consultation with Celltech, have the right to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings including the right to settle or compromise such proceedings (by, for example, granting any such Third Party a sublicence, covenant not to sue, or other rights to the Patent Rights or Trademarks being enforced); provided however, that in any such settlement or compromise Amgen will not admit the invalidity of any claim within [*] Patent Rights, [*] Patent Rights, and/or [*] Patent Rights without the prior written approval of Celltech. Any amount recovered by Amgen by way of costs and damages pursuant to any such claim or action shall be:
(i) [*]; and
(ii) [*].
5.3.2 If Celltech provides Amgen with a written request for Amgen to bring a suit or action described in Article 5.3.1, and Amgen does not, within [*] after receipt of such written request from Celltech to do so (provided however, Celltech may only make a written
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request to bring a suit or action in any country after a Third Party has filed for Regulatory Approval for an Antibody that [*] in that country and [*] that such Antibody falls within the scope of one or more claims of any of the Patent Rights referred to in Article 5.3.1(a)), bring a suit or action described in Article 5.3.1, then, at Amgen’s option (to be notified in writing to Celltech prior to the expiry of the [*] period), Celltech shall have the right but not the obligation within [*] after Amgen’s written notification to Celltech to bring any such suit or action (or to otherwise seek payment and/or claim) against any such Third Party, and Amgen agrees to be joined as a plaintiff to any such suit or action if Celltech so requests, at Celltech’s expense. Celltech shall, subject to prior consultation with Amgen, have the right to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings, including the right to settle or compromise such proceedings (by, for example, granting any such Third Party a licence, a covenant not to sue, or other rights to the Patent Rights being enforced); provided however that in any such settlement or compromise Celltech will not admit the invalidity of any claim within the [*] Patent Rights, [*] Patent Rights and/or [*] Patent Rights without the prior written approval of Amgen. Any amount recovered by Celltech by way of costs and damages pursuant to any such claim or action shall be:
(a) [*]; and
(b) [*].
5.3.3 Amgen may, but shall not be obligated to, elect to defend the Product Trademarks against any challenges in the Territory and/or to enforce the Product Trademarks against any actual, alleged or threatened infringement by Third Parties or against any unfair trade practices, trade dress imitation, passing off of counterfeit goods or like offences in the Territory. In the event it elects such defence or enforcement action, Amgen shall determine the strategy.
5.4 Infringement Defence. Amgen, at its own expense, shall subject to prior consultation with Celltech where Celltech is a named party, have the first right to defend any actual, alleged or threatened claim or action in the Territory which names Amgen and/or Amgen
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and Celltech and which claims (a) the infringement of Third Party Patent Rights or know-how through Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to a Licensed Antibody Product or (b) that any Product Trademark infringes any Third Party Trademark or its use constitutes any unfair trade practice, trade dress imitation, passing off of counterfeit goods or like offence. If Amgen shall decide not to defend such an action, Celltech (to the extent it is named) may, at its own expense, defend any such claim or action. The Party defending such claim or action shall have the right, subject to prior consultation with the other Party where both Parties are named, to determine the strategy and to exclusively control the conduct and all aspects of any such proceedings; provided however that the Party defending such claim or action shall not settle or compromise such proceedings that affect the other Party’s rights or interests, without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed). When named, the Party not defending such claim or action shall be entitled, at its own expense, to participate in and to have counsel selected by it participate in any action in which the other Party is a named party.
5.5 Patent Marking. To the extent practical, Amgen will mark the Licensed Antibody Product(s) sold in its Territory with all applicable patent numbers of Patent Rights of Celltech to the extent permitted by law in the Territory in which such markings have notice value as against infringers of patents.
5.6 Co-operation.
(a) Each Party agrees to co-operate with the other Party in the preparation, filing, prosecution, maintenance and defence of intellectual property rights as set forth in this Article 5.6, including the signing of any necessary legal papers, and to provide the other Party with data or other information in support thereof, and to use best efforts to ensure the co-operation of any of their respective personnel as might reasonably be requested in any such matters.
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(b) Each Party shall promptly notify the other Party upon becoming aware of (i) any actual, alleged or threatened Third Party claim or action against Celltech and/or Amgen for infringement of any Third Party Trademark through the Development or Commercialisation of a Licensed Antibody Product; or of any Third Party Patent Rights through Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to Licensed Antibody Products in the Field in the Territory; or (ii) any Third Party infringement of the Product Trademarks or any Patent Rights of either Party relating to an Antibody that [*]; or (iii) in respect of any Licensed Antibody Product, any unfair trade practices, trade dress imitation, passing off of counterfeit goods or like offences.
(c) The other Party shall assist and cooperate with the Party bringing or defending such suit, and if the Party bringing or defending such suit finds it necessary or desirable to join the other Party in such suit, the other Party shall execute all papers or perform such other acts as may reasonably be required by the Party bringing or defending such suit. The Party bringing or defending such suit shall notify the other Party of all substantive developments with respect to such enforcement or defensive actions including all material filings, court papers and other related documents, substantive settlement negotiations and offer of settlement.
ARTICLE 6
PAYMENTS; RECORDS; AUDIT
PAYMENTS; RECORDS; AUDIT
6.1 Payments.
(a) No later than [*] after the conclusion of each Calendar Quarter after First Commercial Sale of a Licensed Antibody Product in each country and extending until the Calendar Quarter during which Amgen’s obligation to pay Royalties for all Licensed Antibody Product(s) expires under Article 4.8, Amgen shall submit
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to Celltech a report setting forth (i) the Net Sales of each Licensed Antibody Product sold by Amgen, and its Affiliates and/or Sublicensees during the previous Calendar Quarter [*]; (ii) any Third Party royalties payable in respect of such Net Sales ([*]) and (iii) the amount of Royalty due hereunder. The report shall be accompanied by a remittance of the corresponding Royalty payment.
(b) All payments to be made under this Licence Agreement shall be made in U.S. Dollars by bank wire transfer in immediately available funds to a bank account designated from time to time in writing by Celltech.
(c) Net Sales or other revenues received or payments due in currencies other than Dollars shall first be calculated in the relevant foreign currency and then converted to Dollars against the currency in question on the rate of exchange applicable on the last Business Day of the Calendar Quarter in respect of which the funds are payable using the currency exchange rates quoted by Bloomberg Professional, a service of Bloomberg L.P., during the period of such Net Sales, or in the event Bloomberg Professional is not available then The Wall Street Journal.
(d) Any payment of any amount under this Licence Agreement not received by the due date specified herein shall accrue interest thereafter on the sum due and owing from the date payment is due until the date payment is received at the rate equal to [*] ([*]%) [*].
(e) All amounts due under this Licence Agreement shall be paid in full without deduction for any applicable taxes, levies, imposts, duties and fees of whatever nature imposed by or under the authority of any government or public authority, except for tax legally required to be deducted or withheld. Where any sum due to be paid to Celltech is subject to any withholding or similar or other tax, the Parties shall take all reasonable steps to do all such acts and things and to sign all such deeds and documents as will enable them to take advantage of any applicable double taxation agreements to reduce the rate of withholding or similar taxes with the object of paying the sums due under deduction of a reduced rate of
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withholding tax or on a gross basis. In the event there is no double taxation agreement or the reduced rate of withholding tax under the relevant double taxation agreement is greater than [*] ([*]%), the Party making payment shall pay such withholding or similar tax, deduct the relevant amount from the payment due to the other Party, and secure and send to the other Party proof of such withholding or similar tax in a form in accordance with the relevant taxation authority as evidence of such payments. Each Party agrees to inform the other Party forthwith if it concludes that there is any law or practice or any change in such law or practice which requires it to deduct or withhold tax in respect of any payments due pursuant to this Licence Agreement at any time after the Licence Agreement Effective Date with a view to the Parties using their best endeavours to agree on the manner in which subsequent payments shall be made to reduce or eliminate the liability of both Parties to deduct or withhold any amount on account of tax.
(f) All amounts due under this Licence Agreement shall be paid exclusive of any Value Added Tax (which, if applicable shall be payable by a Party in addition upon receipt of a valid Value Added Tax invoice). Each Party agrees to inform the other Party forthwith if it concludes that there is a Value Added Tax law or practice, or a change in such law or practice, which requires it to account for Value Added Tax on any payments due pursuant to this Licence Agreement at any time after the Licence Agreement Effective Date, with a view to the Parties using their best endeavours to agree on the manner in which subsequent payments shall be made to reduce or eliminate the liability of the Parties to pay Value Added Tax.
6.2 Records; Audit. Amgen and its Affiliates shall keep and maintain complete and accurate records and books of account documenting in a detail sufficient to track and determine, in a manner consistent with GAAP, all revenues, expenses and Royalties due or other sums payable pursuant to this Licence Agreement and in compliance with the terms of this Licence Agreement. Such records shall be retained for a period of the later of (a) a [*] following the year in which any payments were made hereunder; (b) the
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expiration of the applicable tax statute of limitations (or any extensions thereof); or (c) such longer period as may be required by law. Amgen and its respective Affiliates shall permit independent accountants of internationally recognised standing retained by Celltech and reasonably acceptable to Amgen, upon reasonable prior written notice, to have access to its and its Affiliates’ records and books and premises for the sole purpose of determining the correctness of any payment of Royalties and other amounts due and payable under this Licence Agreement for any year ending no more than [*] prior to the date of such request; provided however, that the books and records for any particular Calendar Year shall only be subject to one audit. Such examination shall be conducted during regular business hours and no more than once in each Calendar Year. The report of such accountant shall be limited to a certificate verifying (or not verifying, as the case may be) any report made or payment submitted by Amgen during such period. In the event the accountant shall be unable to verify the correctness of any such payment, the accountant’s report shall specify why such payment is unverifiable and the amount of any discrepancy. Amgen shall receive a copy of each such report concurrently with receipt by Celltech, and the Parties shall use good faith efforts to resolve any discrepancies. All information contained in any such report shall be deemed Confidential Information hereunder. If such examination reveals that such costs or payments have been misstated, any adjustment shall be promptly refunded or paid, as appropriate. Celltech shall pay the fees and expenses of the accountant engaged to perform the audit, unless such audit reveals a net discrepancy of [*] ([*]%) or more for the period examined which is to the disadvantage of Celltech, in which case Amgen shall pay all reasonable costs and expenses incurred by Celltech in the course of making such determination. Upon the expiration of [*] following the end of any Calendar Year, the calculation of any such amounts payable with respect to such year shall be binding and conclusive upon Celltech and Amgen shall be released from any liability or accountability with respect to such amounts for such year.
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ARTICLE 7
PUBLICATIONS
PUBLICATIONS
7.1 Procedure. Each Party (or its appropriate designees) shall determine the strategy for and co-ordinate the publication and presentation of results of studies of Licensed Antibody Products carried out under the Collaboration Agreement or which incorporate data generated under the Collaboration Agreement. Each Party to this Licence Agreement recognises that the publication of papers regarding results of and other information regarding activities under the Collaboration Agreement, including oral presentations and abstracts, may be beneficial to both Parties provided such publications are subject to reasonable controls to protect Confidential Information. In particular, it is the intent of the Parties to maintain the confidentiality of any Confidential Information included in any patent application until such patent application has been published. Accordingly, each Party will have the right to review and approve any paper proposed for publication by the other Party, including oral presentations and abstracts, which incorporates data generated under the Collaboration Agreement and/or includes Confidential Information of the other Party. Before any such paper is submitted for publication or an oral presentation is made, the publishing or presenting Party will deliver a complete copy of the paper or materials for oral presentation to the other Party at least [*] prior to submitting the paper to a publisher or making the presentation. The other Party will review any such paper and give its comments to the publishing Party within [*] of the delivery of such paper to the other Party. With respect to oral presentation materials and abstracts, the other Party will make reasonable efforts to expedite review of such materials and abstracts, and will return such items as soon as practicable to the publishing or presenting Party with appropriate comments, if any, but in no event later than [*] from the date of delivery to the other Party. Failure to respond within such [*] shall be deemed approval to publish or present. Celltech may withhold approval of any proposed Amgen publication or presentation to the extent such publication or presentation contains the Confidential Information of Celltech. Amgen may withhold approval of any proposed Celltech publication or presentation to the extent such publication or presentation is contrary to Amgen’s publication strategy. The publishing or presenting Party will comply with the
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other Party’s request to delete references to the other Party’s Confidential Information in any such paper and agrees to withhold publication of same for an additional [*] in order to permit the Parties to obtain patent protection, if either of the Parties deems it necessary, in accordance with the terms of this Licence Agreement. [*].
7.2 Credit. Any such publication will include recognition of the contributions of the other Party according to standard practice for assigning scientific credit, either through authorship or acknowledgement, as may be appropriate.
ARTICLE 8
CONFIDENTIALITY
CONFIDENTIALITY
8.1 Confidential Information. Except as otherwise provided in this Article 8, (a) the Parties shall maintain in confidence and use only for purposes specifically authorised under this Licence Agreement any Confidential Information of the other Party; (b) Celltech shall keep confidential all [*] Know-How which is [*] to [*] and/or which is [*] to [*] to [*], and all [*] Know-How and [*] Know-How which is [*] to Licensed Antibody Products and/or [*] (whether generated prior to or during the term of this Licence Agreement), provided however, where such [*]Know-How may have [*] outside [*], or where such [*] Know-How or [*] Know-How may have [*] outside Licensed Antibody Products and/or [*], Celltech shall be free to use and exploit the same and to disclose the same to Third Parties subject always to obligations of confidentiality; and (c) Amgen shall keep confidential all [*] Know-How which is [*] to Licensed Antibody Products and/or [*] (whether generated prior to or during the term of this Licence Agreement) and, provided however, where such [*] Know-How may have [*] outside Licensed Antibody Products and/or [*], Amgen shall be free to use and exploit the same and to disclose the same to Third Parties subject always to obligations of confidentiality.
8.2 Authorised Disclosure.
8.2.1 To the extent it is reasonably necessary or appropriate to fulfil its obligations or exercise its rights under this Licence Agreement, a Party may disclose such Confidential Information of the other Party as it is obliged under Article 8.1 not to disclose as follows:
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(a)Each Party may disclose such Confidential Information of the other Party, to its Affiliates, consultants and outside contractors and Amgen may disclose such Confidential Information to its (whether actual or potential) Sublicensees and clinical investigators, in each case on a need-to-know basis and on the condition that such entities or persons agree to keep the Confidential Information confidential for the same time periods and to the same extent as each Party is required to keep such Confidential Information confidential;
(b)Amgen may disclose such Confidential Information of Celltech, as it is otherwise obliged not to disclose under Article 8.1, to Regulatory Authorities to the extent that such disclosure is reasonably necessary to obtain authorisations to conduct clinical studies or to file, obtain and maintain Regulatory Approvals and to Commercialise the Licensed Antibody Products;
(c)Each Party may disclose such Confidential Information of the other Party, as it is otherwise obliged not to disclose under Article 8.1, to the extent that such disclosure is reasonably necessary in connection with preparing, filing, prosecuting, defending or maintaining and/or enforcing Patent Rights in accordance with Article 5; and
(d)Either Party may disclose such Confidential Information of the other Party, as it is otherwise obliged not to disclose under Article 8.1, in prosecuting or defending litigation as explicitly authorised under this Licence Agreement; and in establishing rights or enforcing obligations under this Licence Agreement or in complying with applicable laws, regulations and/or court orders, other than as set forth in Article 8.2.1(b); provided that it shall (i) give reasonable advance notice to the other Party of such disclosure requirement; (ii) provide a copy of the proposed disclosure to the other Party; and (iii) at the request of the other Party, use Commercially Reasonable Efforts in assisting the other Party to secure confidential treatment of such Confidential Information required to be disclosed, including cooperating with the other Party to obtain a protective order of the other Party’s Confidential Information.
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8.2.2 Notwithstanding Article 8.1, Celltech may disclose [*] Know-How, [*] Know-How and [*] Know-How and Amgen may disclose [*] Know-How which is subject to an obligation of confidentiality under Article 8.1 in any of the following circumstances:
(a)where such disclosure would [*];
(b)to its Affiliates and with respect to products other than Licensed Antibody Products, to its (whether actual or potential) sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis and on the condition that such entities or persons agree to keep the Know-How confidential for the same time periods and to the same extent as such Party is required to keep such Know-How confidential;
(c)to Regulatory Authorities to the extent that such disclosure is reasonably necessary to obtain authorisations to conduct clinical studies or to file, obtain and maintain regulatory approvals and to commercialise products other than Licensed Antibody Products;
(d)without prejudice to Article 5 to the extent that such disclosure is reasonably necessary in connection with preparing, filing, prosecuting, maintaining and/or defending and/or enforcing Patent Rights; or
(e)in prosecuting or defending litigation and in establishing rights or enforcing obligations under this Licence Agreement or in complying with applicable laws, regulations, court or administrative orders, the rules of any relevant stock exchange or the U.S. Securities and Exchange Commission; provided however, in the case of [*] Know-How which is [*] and/or which is [*] to Antibodies to [*],[*] Know-How and [*] Know-How only, to the extent practicable it shall (i) give reasonable advance notice to the other Party of such disclosure requirement; (ii) provide a copy of the proposed disclosure to the other Party; and (iii) at the request of the other Party, use Commercially Reasonable Efforts to secure confidential treatment of such [*] Know-How which is [*] to [*] and/or which is exclusive to Antibodies to [*],[*] Know-How and [*] Know-How required to be
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disclosed, including seeking a protective order of such [*] Know-How which is [*] to [*]and/or which is [*] to Antibodies to [*],[*] Know-How and [*] Know How.
8.3 Exceptions. The obligation not to disclose Confidential Information under this Article 8 shall not apply to any part of such Confidential Information that:
(a) is or becomes published or otherwise becomes publicly known other than by acts of the Party obligated not to disclose such Confidential Information or its Affiliates or permitted Third Parties pursuant to Article 8.2.1(a) or 8.2.2(b) in breach of this Licence Agreement;
(b) was disclosed to the receiving Party or its Affiliates or sublicensees by a Third Party, provided that such Confidential Information was not obtained by such Third Party from the disclosing Party under an obligation of confidentiality;
(c) prior to disclosure under the Collaboration Agreement or this Licence Agreement, was already in the possession of the receiving Party or its Affiliates or sublicensees, provided that such Confidential Information was not obtained from the disclosing Party under an obligation of confidentiality;
(d) can be shown by written documents to have been independently developed by the receiving Party or its Affiliates without breach of any of the provisions of this Licence Agreement or the Collaboration Agreement or access to any Confidential Information provided by the disclosing Party; or
(e) is required to be disclosed by the receiving Party to comply with applicable laws, or with a court or administrative order or the rules of any relevant stock exchange, or the U.S. Securities and Exchange Commission; provided however, that this Article 8.3(e) shall not permit a Party to disclose the other Party’s Confidential Information for the purpose of obtaining Patent Rights and, further provided however, the receiving Party shall, if practicable, notify the disclosing Party in writing (and if practicable provide a copy of the proposed disclosure) prior to any
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such disclosure and shall use reasonable efforts to secure confidential treatment thereof prior to its disclosure (whether by protective order or otherwise).
8.4 Materials. The Parties anticipate that Celltech may transfer certain of its Materials to Amgen. Amgen agrees that it will use such Materials of Celltech only in accordance with the terms and conditions of, and solely for the purposes of the activities conducted pursuant to, this Licence Agreement, and will not transfer such Materials of Celltech to any Third Party without the consent of Celltech, except as expressly permitted under and subject to the terms of this Licence Agreement.
8.5 Terms of Agreement. Except as permitted by the foregoing provisions or as otherwise required by law or the rules of any relevant stock exchange or the U.S. Securities and Exchange Commission, the Parties shall not disclose any terms or conditions of this Licence Agreement to any Third Party without the prior consent of the other Party; provided however, that each Party shall be entitled to disclose the terms of this Licence Agreement without such consent on a need-to-know basis to its financial and legal advisors and potential investors or other financing sources on the condition that such entities or persons agree to keep such terms confidential for the same time periods and to the same extent as such Party is required to keep such terms confidential. Each Party shall give the other Party a reasonable opportunity to review all filings with the United States Securities and Exchange Commission or any stock exchange describing the terms of this Licence Agreement prior to submission of such filings, and shall give due consideration to any reasonable comments by the non-filing Party relating to such filing, including the provisions of this Licence Agreement for which confidential treatment should be sought.
8.6 Public Announcements. Except to the extent required by law or the rules of a relevant stock exchange or as otherwise permitted in accordance with this Article 8, neither Party shall make any further public announcements concerning this Licence Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld or delayed. The Parties agree to consult with each other
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reasonably and in good faith with respect to the text and timing of any press releases prior to the issuance thereof.
8.7 Third Party Obligations. Other than with respect to Article 9.2(b), neither Party is obliged to disclose to the other any Information if to do so would put the disclosing Party in breach of an existing or future obligation owed to a Third Party. Without limitation to the foregoing, Amgen acknowledges that Celltech is not obliged to disclose to Amgen, and will not disclose to Amgen, any Information, data or know-how concerning Celltech’s products [*] whether arising out of Celltech’s [*] or otherwise.
ARTICLE 9
COVENANTS
COVENANTS
9.1 Mutual Covenants. Each Party hereby covenants to the other Party as follows:
(a) No Misappropriation. It shall not knowingly misappropriate the trade secret of a Third Party in its activities to Research, Develop or Commercialise Licensed Antibody Product.
(b) No Conflict. It will not enter into any agreement with a Third Party that is in conflict with this Licence Agreement, and will not take any action that would in any way prevent it from assuming its obligations or granting the rights granted to the other Party under this Licence Agreement or that would otherwise materially conflict with or adversely affect its obligations or its assumption of the rights granted to the other Party under this Licence Agreement.
(c) [*]. It shall work [*] with the other Party with respect to [*], and it shall not during the term of this Licence Agreement grant any right, licence, consent or privilege to any Third Party(ies) in the Territory which would conflict with the rights granted to the other Party under this Licence Agreement.
9.2 Covenants of Amgen.
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(a) No Debarment. In the course of the Development of Licensed Antibody Products and during the Term, Amgen shall not knowingly use and shall not have knowingly used any employee or consultant who is or has been debarred by a Regulatory Authority or, to the best of Amgen’s knowledge (not having made enquiry), who is or has been the subject of debarment proceedings by a Regulatory Authority.
(b) Compliance. Amgen shall comply with all applicable statutes and regulations of Regulatory Authorities in carrying out its activities regarding the Research, Development, and Commercialisation of Licensed Antibody Products in the Field in the Territory.
(c) Workmanship. Amgen shall commit the personnel, facilities and other resources reasonably necessary to conduct its obligations under this Licence Agreement, and shall conduct its Research and/or Development obligations using the same standard of skill and care which it applies to its other products, but in no event less than commonly accepted good professional standards of workmanship.
9.3 Disclaimers.
(a) Nothing in this Licence Agreement shall be construed as a warranty or representation by either Party (i) that the Research, Development, Commercialisation, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in any Licensed Antibody Products under or in connection with this Licence Agreement are or will be free from infringement of, or that the activities conducted pursuant to this Licence Agreement will not infringe, Patents Rights, copyrights, Trademarks, industrial design or other intellectual property rights of any Third Party or (ii) that any Licensed Antibody Product Researched, Developed, Commercialised, made, have made, used, sold, have sold, offered to sell or resell, imported, exported, distributed or in which physical possession or title is transferred under this Licence Agreement is or will be effective, valuable, safe, non-toxic or patentable.
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EXCEPT AS EXPRESSLY SET FORTH IN THIS LICENCE AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF EFFICACY, SAFETY, SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.
(a)(b) Notwithstanding Articles 9.3(a) and 13.9, nothing in this Licence Agreement limits or excludes any Party’s liability for fraud or for death or personal injury caused by that Party’s own negligence.
ARTICLE 10
INDEMNIFICATION
INDEMNIFICATION
10.1 Indemnification by Celltech. Celltech hereby agrees to defend, hold harmless and indemnify (collectively, “Indemnify”) Amgen and its Affiliates, agents, directors, officers and employees (the “Amgen Indemnitees”) from and against any and all Third Party claims, suits, actions or demands and all out-of-pocket liabilities, costs, settlements, damages, expenses and/or losses paid to any Third Party bringing any such Third Party claim, as well as reasonable legal expenses and attorney and expert fees incurred in defending and/or compromising the same (“Amgen Loss(es)”) arising out of any of (a) any material breach or material default by Celltech of its material covenants and material obligations under this Licence Agreement; and (b) Celltech’s negligence or intentional misconduct in carrying out its activities set forth in this Licence Agreement. Amgen shall provide Celltech with prompt written notice of any claim (with a description of the claim and the nature and amount, if determinable, of any such Amgen Loss) giving rise to the indemnification obligation pursuant to this Article 10.1 and the exclusive ability to defend such Third Party claim; provided however, that Celltech shall be relieved of its obligations only to the extent the failure to be provided prompt written notice shall have been prejudicial to its ability to defend such action. Amgen shall co-operate as reasonably requested in the defence of the claim; provided however, that Amgen shall have the right to retain its own counsel, at its own expense, if representation of the counsel of Celltech would be inappropriate due to actual or potential differing interests
33
between the Parties. Amgen shall not settle any claim for Amgen Losses for which any Amgen Indemnitee is seeking to be Indemnified by Celltech, without Celltech’s prior written consent. Celltech’s obligation to Indemnify the Amgen Indemnitees pursuant to this Article 10.1 shall not apply to the extent any Amgen Losses (i) arise from the negligence or intentional misconduct of any Amgen Indemnitee; (ii) arise from any material breach by Amgen of this Licence Agreement; or (iii) for which Amgen is obligated to Indemnify the Celltech Indemnitees pursuant to Article 10.2 of this Licence Agreement.
10.2 Indemnification by Amgen. Amgen hereby agrees to Indemnify Celltech and its Affiliates, agents, directors, officers and employees (the “Celltech Indemnitees”) from and against any and all Third Party claims, suits, actions or demands and all out-of-pocket liabilities, damages, costs, settlements, expenses and/or losses paid to any Third Party bringing any such Third Party claim, as well as reasonable legal expenses and attorney and expert fees incurred in defending and/or compromising the same (“Celltech Loss(es)”) arising out of any of (a) any material breach or material default by Amgen of its material covenants and material obligations under this Licence Agreement; (b) Amgen’s negligence or intentional misconduct in carrying out its activities set forth in this Licence Agreement; and (c) the exercise of any rights by Amgen, its Affiliates, Sublicensees or any of their agents or distributors pursuant to this Licence Agreement (including any product liability claim). Celltech shall provide Amgen with prompt written notice of any claim (with a description of the claim and the nature and amount, if determinable, of any such Celltech Loss) giving rise to the indemnification obligation pursuant to this Article 10.2 and the exclusive ability to defend such Third Party claim; provided however, that Amgen shall be relieved of its obligations only to the extent the failure to be provided prompt written notice shall have been prejudicial to its ability to defend such action. Celltech shall co-operate as reasonably requested in the defence of the claim; provided however, that Celltech shall have the right to retain its own counsel, at its own expense, if representation of the counsel of Amgen would be inappropriate due to actual or potential differing interests between the Parties. Celltech shall not settle any claim for Celltech Losses for which any Celltech Indemnitee is seeking to be Indemnified
34
by Amgen, without Amgen’s prior written consent. Amgen’s obligation to Indemnify the Celltech Indemnitees pursuant to this Article 10.2 shall not apply to the extent any Celltech Losses (i) arise from the negligence or intentional misconduct of any Celltech Indemnitee; (ii) arise from any material breach by Celltech of this Licence Agreement; or (iii) for which Celltech is obligated to Indemnify the Amgen Indemnitees pursuant to Article 10.1 of this Licence Agreement.
10.3 Insurance. Amgen shall maintain (through a captive insurer or Third Party insurer) appropriate product liability insurance with respect to Licensed Antibody Products and appropriate comprehensive general liability insurance to cover its obligations hereunder and which is/are consistent with normal business practices of prudent companies similarly situated. Amgen shall use reasonable endeavours to ensure that any insurance policy required by, and procured under, this Article 10.3 shall name Celltech as an additional insured. Such insurance shall not be construed to create a limit of the insuring Party’s liability with respect to its indemnification obligations under this Article 10. Amgen shall furnish Celltech with a certificate(s) or other evidence from an insurance carrier showing all such insurance. Amgen shall diligently pursue recovery of insurance
proceeds when a claim arises. The Parties acknowledge that it is the normal business practice of prudent companies similarly situated to have a reasonable level of uninsured loss.
proceeds when a claim arises. The Parties acknowledge that it is the normal business practice of prudent companies similarly situated to have a reasonable level of uninsured loss.
10.4 Pre-Effective Date Losses. In accordance with Article 14.10 of the Collaboration Agreement, each Party shall retain its obligations for any liabilities, damages, expenses and/or losses accrued under the Collaboration Agreement prior to the Effective Date of Termination of the Collaboration Agreement (“Pre-Effective Date Losses”), and this Licence Agreement shall not release, waive, alter or otherwise modify the Parties’ respective obligations thereunder. Other than with respect to its obligation for any Pre-Effective Date Losses under and prior to the termination of the Collaboration Agreement, neither Party shall assume or be liable for (pursuant to this Licence Agreement) any liabilities, damages, expenses and/or losses resulting from or arising in connection with
35
activities of the other Party which occurred on or prior to the Licence Agreement Effective Date.
10.5 Limitation of Liability. Without prejudice to either Party’s obligations, as specified in this Licence Agreement, a Party shall have no liability with respect to (a) the results obtained in the Research, Development and Commercialisation of Licensed Antibody Product or (b) the results obtained in the prosecution, enforcement or defence of any intellectual property in accordance with Article 5.
ARTICLE 11
TERM AND TERMINATION
TERM AND TERMINATION
11.1 Term. This Licence Agreement shall become effective on the Licence Agreement Effective Date and shall remain in full force and effect, unless earlier terminated pursuant to this Article 11, on a country-by-country basis until there is no remaining payment obligation in any country. Upon the fulfilment of Amgen’s obligation to pay Royalties under this Licence Agreement for a given Licensed Antibody Product in a country, Amgen’s licence under the [*]Know-How, [*]Know-How and [*] Know-How to make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to such given Licensed Antibody Product in such country shall become fully paid and compensation free, provided that Amgen shall continue to be responsible for any Third Party Payments in accordance with Article 4.4 of this Licence Agreement.
11.2Termination for Convenience.
(a)Amgen may terminate this Licence Agreement in its entirety at any time by providing [*] prior written notice of termination to Celltech. Termination shall be effective upon expiry of the [*] notice period.
(b)Celltech may terminate this Licence Agreement by providing [*] prior written notice of termination to Amgen if Amgen indicates in a document it provides in accordance with Article 3.4(d) of the Collaboration Agreement that any of the
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written representations and warranties of Amgen set out in Articles 16.1 and 16.2 of the Collaboration Agreement are not true and correct as of the date of such document (as if referring to this Licence Agreement and not the Collaboration Agreement) and that this has a material and adverse effect on Celltech in relation to this Licence Agreement. Termination shall be effective upon expiry of the [*] notice period.
(c) If Amgen fails to provide a document in accordance with Article 3.4(d) of the Collaboration Agreement in a timely manner as required by that Article 3.4(d), Celltech may (within [*] of the date on which Amgen was due to provide such document) request in writing that Amgen provide such document. If Amgen fails to provide such document within [*] of receipt of such request, Celltech may terminate this Licence Agreement by providing Amgen with written notice thereof within [*] after expiry of such [*] period. Termination shall be effective upon receipt of such notice by Amgen.
(d) Should Amgen provide a notice pursuant to Article 3.1.2 of this Licence Agreement Amgen shall be deemed to have served a termination notice pursuant to this Article 11.2(d). Termination shall be effective on Celltech’s receipt of such notice.
11.3 Termination for Default.
(a) In the event any material representation or warranty made under the Collaboration Agreement by either Party shall have been untrue in any material respect and this has had a material and adverse effect on the other Party in relation to this Licence Agreement (“Representation Default”) or upon any material breach or material default of a material obligation of this Licence Agreement by a Party (“Performance Default”), the Party not in default (“Non-Defaulting Party”) must first give the other Party (“Defaulting Party”) written notice thereof (“Notice of Default”), which notice must state the nature of the Representation Default or Performance Default in reasonable detail and must request the Defaulting Party cure such Representation Default or Performance Default within [*], or if such
37
Default cannot be cured, take such action as will substantially mitigate the material adverse effect of such Default on the other Party. During any such [*] period after receipt or delivery of a Notice of Default under this Article 11.3(a) for which termination of this Licence Agreement is a remedy, all of each Party’s respective rights and obligations under this Licence Agreement (to the extent applicable) shall remain in force and effect. If the Defaulting Party shall dispute the existence, extent or nature of any default set forth in a Notice of Default, the Parties shall use good faith efforts to resolve the dispute.
(b) In the event of a Representation Default or a Performance Default by Celltech that shall not have been cured or mitigated within the [*] period, as set forth in Article 11.3(a) above, Amgen, at its option, may immediately terminate this License Agreement upon prior written notice to Celltech. Termination shall be effective upon the receipt of such notice by Celltech.
(c) In the event of a Representation Default or a Performance Default by Amgen that shall not have been cured or mitigated within the [*] period, all as set forth in Article 11.3(a) above, Celltech, at its option, may immediately terminate this Licence Agreement upon prior written notice to Amgen. Termination shall be effective upon the receipt of such notice by Amgen.
11.4 Bankruptcy.
(a) All rights and licences granted under or pursuant to this Licence Agreement by Celltech are, and shall otherwise be deemed to be licences of rights to “intellectual property”. The Parties agree that Amgen shall retain and may fully exercise all of its rights and elections under bankruptcy legislation in the Territory. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against Celltech, Amgen shall be entitled to a complete duplicate of (or complete access to, as appropriate) any intellectual property which at that date is known to be necessary or useful to a Licensed Antibody Product (then the subject of Research, Development or Commercialisation) and all embodiments of such intellectual property; and same,
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if not already in Amgen’s possession, shall be promptly delivered to Amgen (i) upon any such commencement of a bankruptcy proceeding, upon Amgen’s written request therefor (which request must identify the specific intellectual property), unless Celltech (or a trustee on behalf of Celltech) elects within [*] to continue to perform all of its obligations under this Licence Agreement or (ii) if not delivered under (i) above, upon the rejection of this Licence Agreement by or on behalf of Celltech, upon written request therefor by Amgen.
(b) Without prejudice to Article 11.4(a), this Licence Agreement may be terminated by Celltech upon written notice to Amgen in the event that (i) Amgen shall make an assignment for the benefit of its creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or any trustee for it or a substantial part of its assets, or shall commence any proceeding under any bankruptcy, reorganisation, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction (other than for the purposes of a solvent amalgamation or reconstruction) whether now or hereafter in effect; or (ii) if there shall have been filed against Amgen any such bona fide petition or application, or any such proceeding shall have been commenced against it in which an order for relief is entered or which remains undismissed for a period of ninety (90) days or more; or (iii) if Amgen by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for it or any substantial part of its assets, and shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of ninety (90) days or more. Termination shall be effective upon the date specified in such notice. Notwithstanding the foregoing, this Licence Agreement shall not be terminated pursuant to this Article 11.4(b) if, prior to the effective date of termination stated in the written notice from Celltech, Amgen demonstrates to Celltech that it is not insolvent.
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11.5 Additional Termination Right of Celltech.
If in any suit or proceeding where Celltech or any of its Affiliates is a named party Amgen or any of its Affiliates asserts, or Amgen or any of its Affiliates provides Confidential Information, financial assistance or technical assistance in collusion with a Third Party to assist such Third Party in asserting that any claim within the [*] Patent Rights or any [*] Patent Rights is invalid, Celltech, at its option, may, within [*] of such assertion, terminate this Agreement in its entirety upon [*] prior written notice to Amgen (with termination being effective upon expiry of the [*] notice period); provided however, that nothing contained herein shall prohibit Amgen or any of its Affiliates from asserting the invalidity of any claim within the [*] Patent Rights or any [*] Patent Rights, where such assertion is raised as a defence against an assertion of such [*] Patent Rights or [*] Patent Rights in such suit or proceeding brought against Amgen or any of its Affiliates or any of its licensees (provided such suit or proceeding relates to the licensed subject matter) or its intellectual property rights. If the inclusion of this Article 11.5 would make invalid or unenforceable any other provision of this Agreement, or any of the Patent Rights licensed pursuant to this Agreement, this Article 11.5 shall be automatically and without notice severed from this Agreement and the remaining provisions of this Agreement shall remain in force.
11.6 Termination Date. The effective date of termination of this Agreement, as set forth in each instance in Articles 11.2 through 11.5, is hereby referred to as the “Termination Date”.
11.7 Effects of Termination. In addition to any other remedies which may be available at law or equity upon termination of this Licence Agreement, the rights and obligations of the Parties shall be as set forth in this Article 11.7.
(a) Upon termination of this License Agreement, howsoever caused, the following rights and obligations shall apply:
(i) The following provisions shall remain in full force and effect after the expiration or termination of this Licence Agreement if Amgen is obliged
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to transfer to Celltech the Research, Development and Commercialisation responsibilities in accordance with Article 11.7(b) below: Article 1, Articles 4 and 6 (in case of any payments relating to the period prior to the Termination Date), Article 5.1, Article 8 (in relation to the other Party’s Confidential Information only), Article 9.3, Article 10, this Article 11.7, Article 11.9 and Article 13, and all ancillary provisions necessary for the implementation of this Article 11.7.
(ii) The following provisions shall remain in full force and effect after the expiration or termination of this Licence Agreement if Amgen is not obliged to transfer to Celltech the Research, Development and Commercialisation responsibilities in accordance with Article 11.7(b) below: Article 1, Articles 4 and 6 (in the case of any payments relating to the period prior to the Termination Date), Article 5.1, Article 8 (in relation to the other Party’s Confidential Information only), Article 9.3, Article 10, this Article 11.7, Article 11.9, and Article 13, and all ancillary provisions necessary for the implementation of this Article 11.7.
(iii) All other rights and obligations under this Licence Agreement shall terminate.
(iv) By the [*] of the Termination Date, each Party (unless Amgen is obliged to transfer to Celltech the Research, Development and Commercialisation responsibilities in accordance with Article 11.7(b) below, in which case only Amgen) shall destroy, or at the other Party’s request return, all of the other Party’s Confidential Information (other than with respect to maintaining one (1) archival copy of Confidential Information related thereto for its legal files, for the sole purpose of determining its obligations under this Licence Agreement) and Materials. In each instance where a Party is required to destroy or return the other Party’s Confidential Information under this Article 11.7(a)(iv), such Party shall provide the other Party with certification by an officer of such Party that all such
41
Confidential Information and Materials have been destroyed or returned to the other Party, as appropriate.
(b) Subject to Article 11.8 below, where Amgen has terminated this Agreement pursuant to Article 11.2(a) or Article 11.2(d), or where Celltech has terminated this Agreement pursuant to Article 11.2 (b) or Article 11.2(c), Article 11.3, Article 11.4 or Article 11.5, the Parties shall promptly meet to devise a transition plan which provides for an orderly and cost-effective transition of, and which sets forth the responsibilities and a timetable for transferring to Celltech the Research, Development and Commercialisation responsibilities (“Transition Plan”). Where the Parties cannot agree the timetable Celltech shall determine the same. Such transition shall be completed as soon as practicable and, in any event, shall be no later than the [*] of the Termination Date. Such Transition Plan shall provide for transferring to Celltech the Research, Development and Commercialisation responsibilities as expeditiously as possible in accordance with this Article 11 while maintaining a supply of Licensed Antibody Products to meet the Development and/or Commercialisation requirements (as appropriate), and minimizing interruption of Research, Development and/or Commercialisation of the Licensed Antibody Products, including the following:
(i) Until the [*] of the Termination Date Amgen shall make its personnel and other resources reasonably available to Celltech, as necessary, and shall by the [*] of the Termination Date transfer copies of all relevant information, files or data containing Information and transfer all Materials to Celltech.
(ii) By the [*] of the Termination Date, Amgen shall transfer to Celltech all Regulatory Filings and Regulatory Approvals then in its name for all Licensed Antibody Products and shall notify the appropriate Regulatory Authorities and take any other action reasonably necessary to effect such transfer.
(iii) By the [*] of the Termination Date, Amgen shall assign its rights or grant sufficient sublicence rights to Celltech under Amgen’s right, title and
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interest in the Product Trademarks (but otherwise not any of Amgen’s Trademarks). Celltech shall also have the right, for a reasonable period not to exceed [*] from the Termination Date, to use Amgen’s Trademarks solely in the selling of any existing inventory of Licensed Antibody Products (and to use Promotional Materials it then has on hand), with no obligation of accounting to Amgen.
(iv) By the [*] of the Termination Date, Amgen shall, at the request of Celltech, assign its rights or grant sufficient sublicence rights to Celltech, under all of Amgen’s rights (but only to the extent permitted by its terms and subject to the obligations) under any [*] to the extent the same relates to Researching, Developing, Commercialising, making, having made, using, selling, having sold, offering to sell or resell, importing, exporting, distributing or otherwise transferring physical possession of or otherwise transferring title in or to Licensed Antibody Products and shall not (until receiving notice of whether or not Celltech desires such an assignment or sublicence) terminate or amend any such [*].
(v) Amgen shall be responsible for supplying to Celltech the amounts of Licensed Antibody Product that it was supplying at the time of such termination for a reasonable period of time not to exceed [*] from the Termination Date, to allow Celltech to obtain an alternate source of supply, if necessary. Amgen shall also assign its rights or grant sufficient sublicence rights (but only to the extent permitted by its terms and only to the extent the same relates to Licensed Antibody Product) under all Third Party manufacturing agreements relating to Licensed Antibody Product to Celltech, if requested to do so by Celltech. Amgen shall no longer be responsible for supplying Licensed Antibody Product from the date of such assignment or sublicence or the rejection of a written offer of such assignment (such rejection to be deemed to be given if not accepted within [*] of receipt by Celltech of such written offer from Amgen) in writing by Celltech. In the event Amgen is obligated to continue to supply Licensed
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Antibody Products to the extent covered by such agreements, Celltech shall use Commercially Reasonable Efforts to identify one or more viable Third Party manufacturers in order to transfer manufacturing operations as soon as commercially reasonable.
(vi) By the [*] of the Termination Date, Amgen shall itself transfer any Information Controlled by it and, to the extent it is using a Third Party manufacturer(s), shall either use Commercially Reasonable Efforts to enforce or assign to Celltech the right to enforce the terms and conditions of each Third Party supply agreement entered into by it including (but only to the extent permitted by each such supply agreement with the Third Party) the provision to Celltech of any Information and assistance reasonably required by Celltech from such Third Party pertaining to the manufacture and analysis of Licensed Antibody Product, with the objective of Celltech being enabled to implement the [*] of [*], including Information contained in the [*] of any applicable Regulatory Filings and the results of any stability studies performed by or on behalf of Celltech.
(vii) Amgen shall continue to use Commercially Reasonably Efforts to promote, detail and otherwise Commercialise the Licensed Antibody Product and shall, if required to do so, complete [*], as modified by the Transition Plan, to enable Celltech to assume the Commercialisation responsibilities previously carried out by Amgen with a minimum of disruption.
(viii) By the [*] of the Termination Date, Amgen shall (1) assign its rights or grant sufficient sublicense rights under all other Third Party agreements (but only to the extent permitted by their terms and subject to the obligations) to the extent the same relate to the Licensed Antibody Products and as requested to do so by Celltech; and (2) shall provide reasonable assistance to Celltech in assuming management of such agreements.
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(ix) Amgen shall grant to Celltech a [*] licence under any [*] Technology ([*]) to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to Licensed Antibody Products.
Such [*] licence shall be [*] (but with Amgen as licensor and Celltech as licensee) provided that such licence shall not [*]:
(1) [*];
(2) [*]:
A. [*]; and
B. [*]; and
C. [*].
[*].
(c) Each Party shall assist in the transition as set forth in the Transition Plan in a timely, reasonable and businesslike manner. After completion of the responsibilities set forth in the Transition Plan, the Parties shall have no further obligation to assist in such transition.
(d) During any period after receipt or delivery of a notice of termination to the Termination Date, the Parties’ respective rights and obligations under this Agreement shall (to the extent applicable) remain in full force and effect.
(e) If this Licence Agreement is terminated by [*] pursuant to Article 11.4, [*]. If this Licence Agreement is terminated by [*] pursuant to Articles 11.2(b), 11.2(c), 11.3
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or 11.5, [*]. Where this Licence Agreement is terminated pursuant to Article 11.2(a) or 11.2(d), the Parties’ reasonable out-of-pocket costs in implementing the transition provisions Article 11.7(b) shall be [*] (subject to each Party providing the other Party with reasonable supporting evidence of such costs).
11.8 No Transition. Articles 11.7(b), (c) and (e) shall not apply where this Licence Agreement has come into force as a result of termination of the Collaboration Agreement by Amgen pursuant to Article 14.4(b) (Default of Celltech) or Article 14.5(b) (Bankruptcy of Celltech) or by Celltech pursuant to Article 14.2.2(b) (No Parking) of the Collaboration Agreement.
11.9 Accrued Rights. Termination, relinquishment or expiration of any licences under this Licence Agreement or of this Licence Agreement for any reason in accordance with this Article 11 shall be without prejudice to any rights which shall have accrued to the benefit of either Party or any liability incurred by either Party prior to such termination, relinquishment or expiration.
ARTICLE 12
DISPUTE RESOLUTION
DISPUTE RESOLUTION
12.1 Disputes. The Parties recognise that disputes as to certain matters may from time to time arise during the term of this Licence Agreement which relate to either Party’s rights and/or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising from, concerning or in any way relating to this Licence Agreement in an expedient manner by mutual co-operation and without resort to litigation. In the event of a dispute, it shall be referred to the [*] of Celltech and the [*] of Amgen, or their respective officer designees (all such individuals being referred to herein as the “[*]”), as soon as practicable but in any event no later than [*] after a written request from either Party to the other Party for such a referral. If delegated by the [*] to other [*] and such other [*] are unable to resolve the matter within said [*], it shall be referred back to the [*] as soon as practicable but in any event no later than [*] after a written request from either Party to the other Party for such referral. Each [*] shall have
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the right to engage the services of any number of independent experts in the field in question (such independent expert(s) to be engaged under obligations of confidentiality and the expense of the Party so engaging such expert(s)) to assist the [*] in making a determination on the unresolved matter, and each [*] shall consider in good faith the analyses and opinions of any such independent experts engaged by either of them in making a determination. In the event that following discussions between the [*], the [*] are unable to resolve such dispute within such [*] of the matter being referred to them, then either Party may at any time thereafter pursue any legal or equitable remedy available to it. Notwithstanding the above, either Party shall be entitled at all times and without delay to seek equitable relief.
ARTICLE 13
GENERAL
GENERAL
13.1 Amendments. This Licence Agreement may not be modified or supplemented by any purchase order, change order, acknowledgement, order acceptance, standard terms of sale, invoice or the like. Any amendment or modification to this Licence Agreement shall be made in a writing expressly stated for such purpose and signed by an authorised officer of each Party.
13.2 Notices. Any consent or notice required or permitted to be given or made under this Licence Agreement by one of the Parties to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier), by a next business day delivery service of a nationally recognised overnight courier service or by courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor in accordance with this Article 13.2 and shall be effective upon receipt by the addressee.
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If to Celltech: Celltech R&D Limited
208 Bath Road
Slough SL1 3WE
Berkshire, England
Attention: Company Secretary
Facsimile: (XXX) (XX) XXXX XXXXXX
If to Amgen: Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1799 U.S.A.
Attention: Vice President, Licensing
Marked to be copied to: Corporate Secretary
Facsimile: (XXX) (XXX) XXX-XXXX
13.3 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Licence Agreement for failure or delay in fulfilling or performing any term of this Licence Agreement to the extent such failure or delay is caused by or results from Force Majeure; provided however, that the Party so affected shall use Commercially Reasonable Efforts to avoid, remove or mitigate such causes of non-performance and shall continue performance with reasonable dispatch wherever such causes are removed. Each Party shall provide the other Party with prompt written notice of any delay or failure to perform that occurs by reason of Force Majeure. Such excuse shall be continued so long as the condition constituting Force Majeure continues. The Parties shall mutually seek in good faith a resolution of the delay or failure to perform.
13.4 Use of Names, Logos or Symbols. Subject to Article 2.2, Article 8.6 and Article 11.7(b)(iii), no Party hereto shall use and no rights are granted to the Trademarks (including the names “[*]” and “[*]”), physical likeness, employee names or owner symbol of the other Party for any purpose (including private or public securities placements) without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed so long as use of such name is limited to objective
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statement of fact rather than for endorsement purposes. Neither Party shall use any Trademark or domain name in connection with the subject matter of this Licence Agreement which either substantially resembles or is confusingly similar to, misleading or deceptive with respect to, or which dilutes any of the other Party’s Trademarks or domain names, other than its own Product Trademark or domain names actually used in connection with a Licensed Antibody Product.
13.5 No Strict Construction. This Licence Agreement has been prepared Jointly and shall not be strictly construed against either Party.
13.6 Assignment.
(a) This Licence Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Party, not to be unnecessarily withheld or delayed; provided however, that either Celltech or Amgen may, without such consent, assign its rights and obligations under this Licence Agreement (i) to any Affiliate, provided such interest shall be retransferred to the relevant Party if such entity ceases to be an Affiliate of such Party, and provided further that the assigning Party shall remain responsible for the acts and omissions in the performance of this Licence Agreement, by its Affiliate or (ii) in connection with a merger, consolidation or sale of substantially all of the business to which this Licence Agreement relates to an unrelated Third Party of [*].
(b) Except as aforesaid, any permitted assignee shall assume all rights and obligations of its assignor under this Licence Agreement; accordingly, all references to the assigning Party shall be deemed references to the assignee to whom the Licence Agreement is so assigned. The assigning Party shall forward to the other Party a copy of those portions of each such fully executed assignment agreement which relate to the assumption of the rights and responsibilities of the assigning Party, within [*] of the execution of such assignment agreements.
(c) Any assignment or attempted assignment by either Party in violation of the terms of this Article 13.6 shall be null and void and of no legal effect.
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13.7 Severability. If any provision hereof should be held invalid, illegal or unenforceable from which no appeal can be or is taken, in any respect in any jurisdiction, the invalidity, illegality or unenforceability of one or several provisions of this Licence Agreement shall not affect the validity of this Licence Agreement as a whole. The Parties shall make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the objectives contemplated by the Parties as evidenced by the terms and conditions of this Licence Agreement when entering into such invalid or unenforceable one.
13.8 Interpretation and Schedules.
(a) The captions or headings of the Articles or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.
(b) Unless otherwise specified, (i) references in this Licence Agreement to any Article, or Schedule shall mean references to such Article or Schedule of this Licence Agreement; and (ii) references to any agreement, instrument or other document in this Licence Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently varied, replaced or supplemented from time to time, as so varied, replaced or supplemented and in effect at the relevant time of reference thereto.
(c) Any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns.
(d) All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Licence Agreement as if set forth in full herein. Any capitalised terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Licence Agreement.
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(e) Whenever the words “include”, “includes” or “including” are used in this Licence Agreement, they shall be deemed to be followed by the words “without limitation”.
13.9 No Consequential Damages. NEITHER PARTY HERETO WILL BE LIABLE (WHETHER UNDER AN INDEMNITY OR OTHERWISE) FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO THIS LICENCE AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS, ANTICIPATED PROFITS, LOST GOODWILL, LOST REVENUE, LOST PRODUCTION, LOST CONTRACTS AND LOST OPPORTUNITY, ARISING FROM OR RELATING TO ANY BREACH OF THIS LICENCE AGREEMENT, WHETHER DENOMINATED IN OR ARISING IN CONTRACT, TORT OR OTHERWISE REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS ARTICLE 13.9 IS INTENDED TO LIMIT OR RESTRICT ANY PAYMENT OBLIGATION EXPLICITLY SET FORTH UNDER THIS LICENCE AGREEMENT.
13.10 Governing Law; Jurisdiction.
(a) This Licence Agreement shall be governed and interpreted in all respects under the substantive laws of the State of New York, United States, as applied to agreements executed and performed entirely in the State of New York by residents of the State of New York, without regard to conflicts of law rules and without regard to the United Nations Convention on International Contracts for the Sales of Goods.
(b) Each Party consents to the exclusive jurisdiction of the federal or state courts in the State of New York for any suit, action or other proceeding arising out of or relating to this Licence Agreement whether denominated or arising in contract, tort or otherwise, and further agrees that any process, notice of motion or other application to either such court or judge thereof may be served outside of New York City, New York by personal service, provided that a reasonable time for appearance is allowed. Each Party hereby irrevocably and unconditionally waives
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any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Licence Agreement whether denominated or arising in contract, tort or otherwise, in the federal or state courts in the State of New York. Each Party hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any action, suit or proceeding brought in any such court has been brought in inconvenient forum. As between the Parties, any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patent Rights claiming the use or sale of any Antibody Product or of any Trademark rights relating to an Antibody Product shall be submitted to a court of competent jurisdiction in the Territory in which such Patent Rights or Trademark rights were granted or arose, which in the case of any United States Patent Rights or Trademark rights shall be a court of competent jurisdiction in the State of New York.
(c) Each Party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of or relating to this Licence Agreement.
13.11 General Provisions.
(a) The covenants and agreements set forth in this Licence Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and a person who is not a Party to this Licence Agreement may not enforce any of its terms.
(b)A waiver (whether express or implied) by one of the Parties of any of the provisions of this Licence Agreement or of any breach of or default by the other Party in performing any of those provisions must be in writing executed by a responsible officer of the Party providing the waiver and expressly waiving such provisions or breach or default by reference to this Licence Agreement, and any waiver shall not constitute a continuing waiver, and that waiver shall not prevent the waiving Party from subsequently enforcing any of the provisions of this
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Licence Agreement not waived or from acting on any subsequent breach of or default by the other Party under any of the provisions of this Licence Agreement.
(c)Each Party undertakes to execute all documents which may be reasonably necessary to give full effect to this Licence Agreement.
(d)Each Party shall pay its costs and expenses incurred by it in connection with negotiation and execution of this Licence Agreement.
(e)It is expressly agreed that for tax, legal or all other purposes (i) this Licence Agreement or any portion of this Licence Agreement shall not be considered to be a partnership agreement, and (ii) the relationship between the two Parties shall not constitute an employee-employer, partnership, Joint venture, agency or similar business relationship between the Parties. Neither Celltech nor Amgen shall have the authority to make any statements, representations, warranty, guarantee or commitments (express or implied) of any kind or to take any action which shall bind the other Party to a Third Party, without the prior consent of the other Party to do so. Each Party shall use its own discretion, shall have complete and authoritative control over its employees and the methods and means by which it performs its activities under this Licence Agreement (including the management of permitted subcontractors).
(f)This Licence Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
13.12 Whole Agreement. This Licence Agreement and the Schedules referred to in this Licence Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous understandings, arrangements and agreements with respect to the subject matter hereof, whether written or oral. Each Party acknowledges that in entering into this Licence Agreement it has not relied on any representation, warranty, collateral contract or other assurance (except those expressly set out in this Licence Agreement, together with its Schedules) made by or on behalf of any
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other Party. Each Party waives all rights and remedies which, but for this Article 13.12, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance. As of the Licence Agreement Effective Date, with respect to the subject matter licensed hereunder the terms and conditions of this Licence Agreement shall apply and the terms and conditions of the Collaboration Agreement (other than with respect to accrued or surviving obligations under the Collaboration Agreement) are hereby superseded.
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SCHEDULE ONE
Defined Terms
“Affiliate” means any corporation, company, partnership, Joint venture and/or firm which controls, is controlled by, or is under common control with a Party. For purposes of this definition, “control” shall be presumed to exist if one of the following conditions is met: (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. The Parties acknowledge that in the case of certain entities organised under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity.
“Amgen Know-How” means, other than [*] Know-How and [*]Know-How, all Information and Materials which are [*] for the [*] of Licensed Antibody Products to the extent the same are [*] as existing on the Licence Agreement Effective Date or during its Term.
“Amgen Patent Rights” means, other than [*] Patent Rights and [*] Patent Rights, (i) all Patent Rights to the extent the same are [*] and which claim [*] Know-How and (ii) all Patent Rights [*] to the extent the same are [*]; and in each case which would be infringed by [*] Licensed Antibody Products.
“Amgen [*] Know-How” means all Information and Materials characterised, conceived, developed, derived, discovered, generated or identified solely by employees of or consultants to Amgen in the course of the [*] of Antibody Products [*] and, in each case, [*] of [*].
“Amgen [*] Patent Rights” means those Patent Rights of [*] which specifically disclose and claim [*] Know-How.
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“Amgen Technology” means, collectively, [*] Know-How, [*] Know-How, [*] Patent Rights, [*] Patent Rights, and Amgen’s interest in [*] Know-How and Amgen’s interest in [*] Patent Rights.
“Antibody” means a polyclonal or monoclonal antibody, whether multiple or single chain, recombinant or naturally-occurring or a combination of the foregoing, whole or fragment, monospecific or multi-specific, and any analogs, constructs, conjugates, fusions or chemical or other modifications and/or attachments thereof.
“Antibody Raw Material” means the bulk Licensed Antibody Product (including, if appropriate, [*] suitable for use in the manufacture of Licensed Antibody Product in Finished Form.
“BEER” means any protein or a portion thereof comprising the polypeptide sequence of [*] and any polypeptide sequence having [*] ([*]%) [*] and any [*].
“Business Day” means a day on which banking institutions in both New York, New York, USA, and London, England are open for business.
“Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on either March 31, June 30, September 30, or December 31 for so long as this Licence Agreement is in effect.
“Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.
“Celltech [*] Patent Rights” means the patent applications and patents set forth in Part A of Schedule Two and all Patent Rights that issue from or claim priority from those Patent Rights and foreign counterparts thereof.
“Celltech [*] Patent Rights” means the Patent Rights set forth in Part B of Schedule Two (and all Patent Rights that issue from or claim priority from those Patent Rights and foreign counterparts thereof); provided that if Amgen has exercised rights under Section 3.2.1€ of the Collaboration Agreement, unless otherwise agreed in writing the [*] Patent Rights shall be
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excluded from this Licence Agreement. For the avoidance of doubt, [*] Patent Rights shall not include [*] Patent Rights.
“Celltech Know-How” means, other than [*] Know-How and [*] Know-How, all Information and Materials relating to Antibodies, which are [*] for the [*] of Licensed Antibody Products to the extent the same are [*] as in each case [*]; provided that if Amgen has exercised rights under Section 3.2.1(e) of the Collaboration Agreement, unless otherwise agreed in writing the [*] Know-How shall not include any Information or Materials [*] any invention claimed by any of the [*] Patent Rights.
“Celltech Patent Rights” means, other than [*] Patent Rights, [*] Patent Rights and [*] Patent Rights, (i) all Patent Rights to the extent the same are [*] and which claim [*] Know-How and (ii) all Patent Rights of a [*] to the extent the same are [*]; and in each case which if not licensed herein would be infringed by [*] Antibody Products. [*] Patent Rights include [*] Patent Rights; provided that if Amgen has exercised rights under Section 3.2.1(e) of the Collaboration Agreement, unless otherwise agreed in writing, the [*] Patent Rights shall be excluded from this Licence Agreement.
“Celltech [*] Know-How” means all Information and Materials characterised, conceived, developed, derived, discovered, generated or identified solely by employees of or consultants to Celltech in the course of the [*] of Antibody Products [*] and, in each case, [*] of [*].
“Celltech [*] Patent Rights” means those Patent Rights of [*] which specifically disclose and claim [*] Know-How.
“Celltech Technology” means, collectively, [*]Know-How, [*] Know-How, [*] Patent Rights, [*] Patent Rights, [*] Patent Rights, and Celltech’s interest in [*] Know-How and Celltech’s interest in [*] Patent Rights.
“Celltech Trademarks” means the Trademarks including house marks and house dress [*] from time to time [*] and used on or in connection with Licensed Antibody Products, but excluding the [*] Trademarks.
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“Collaboration Agreement” means that certain Collaboration and Licence Agreement by and between the Parties, dated May ____, 2002.
“Commercialisation” or “Commercialise” means any and all activities (whether before or after Regulatory Approval) directed to the marketing, detailing and promotion of a Licensed Antibody Product after Regulatory Approval for commercial sale has been obtained and shall include pre-launch and post-launch marketing, manufacturing for commercial sale, promoting, detailing, distributing, offering to sell and selling a Licensed Antibody Product, importing a Licensed Antibody Product for sale, conducting marketing clinical studies (but not Development clinical studies) and interacting with Regulatory Authorities regarding the foregoing. When used as a verb, “Commercialising” means to engage in Commercialisation and “Commercialised” shall have a corresponding meaning.
“Commercially Reasonable Efforts” means efforts and resources commonly associated with good business practice and standards in the research-based pharmaceutical industry to research, develop or commercialise (as appropriate) a product of similar market potential at a similar stage in its product life, taking into account efficacy, the competitiveness of alternative products and product candidates in the marketplace (excluding other products owned or controlled or marketed by a Party or any of its Affiliates), the patent and other proprietary position of the product, the likelihood of regulatory approval given the regulatory structure involved, the profitability of the product including the royalties payable to licensors of patent rights, alternative Third Party products and product candidates and other relevant factors. Commercially Reasonable Efforts where appropriate shall be determined on a market-by-market basis for a particular product, and the level of effort may change over time, reflecting changes in the status of the product and the market involved.
“Competitive Product” means any [*] product, other than a Licensed Antibody Product, that contains [*] in either bulk or final finished form.
“Confidential Information” means all Information disclosed in good faith for the purposes of this Licence Agreement which is designated as confidential in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such Information is disclosed by the disclosing Party to the other Party.
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Notwithstanding anything in the foregoing to the contrary, Information which is disclosed in good faith for the purposes of this Licence Agreement, whether orally, electronically, visually or in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a Party (a) if the disclosing Party within thirty (30) days after such disclosure, delivers to the other Party a written document or documents describing the Information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made or (b) if such Information is of the type that is customarily considered to be confidential information by persons engaged in activities that are substantially similar to the activities being engaged in by the Parties. The terms of this Licence Agreement shall be considered Confidential Information of each Party.
“Control” or “Controlled” or “Controlling” means with respect to any (a) Material or Information or (b) intellectual property right, in each case the possession (whether by ownership, licence or other right, other than pursuant to this Licence Agreement) by a Party or its Affiliates of the ability to grant to the other Party access and/or a licence (or sublicence) as provided herein under such item or right without violating the terms of any agreement or other arrangement with any Third Party existing on the Licence Agreement Effective Date or during the Term of this Licence Agreement and existing as of the date such Party obtains such ownership, licence or other right in such Material, Information or intellectual property.
“Development” or “Develop” means all clinical and other activities undertaken to obtain Regulatory Approval of a Licensed Antibody Product after the filing of an IND for a Licensed Antibody Product and up to and including the obtaining of Regulatory Approval for commercial sale of such Licensed Antibody Product in the Field in the Territory. For the avoidance of doubt, these activities shall include clinical drug development activities, including, among other things: test method development and stability testing, toxicology, formulation, process development, manufacturing, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control development, statistical analysis and report writing, product approval and registration, and regulatory affairs related to the foregoing. When used as a verb, “Developing” means to engage in Development and “Developed” shall have a corresponding meaning.
“Dollar” means a United States dollar, and “$” shall be interpreted accordingly.
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“Drug Approval Application” means an application for any Regulatory Approval required before commercial sale or use of a Licensed Antibody Product as a drug or to treat a particular indication in a regulatory jurisdiction, including: (a) (i) a Biologics Licence Application (BLA) pursuant to 21 C.F.R. 601.2 (or any successor application or procedure) submitted to the FDA and (ii) any counterpart of a U.S. BLA in any other country in the Territory; and (b) all supplements and amendments that may be filed with respect to the foregoing.
“Effective Date of Termination of the Collaboration Agreement” means the Termination Date of the Collaboration Agreement as set forth in Article 14.8 of the Collaboration Agreement.
“FAMC” means the Fully Absorbed Manufacturing Cost as defined in Schedule E of the Collaboration Agreement.
“FDA” means the United States Food and Drug Administration or a successor agency thereto.
“Field” means [*].
“First Commercial Sale” means in relation to any Licensed Antibody Product the first shipment of such Licensed Antibody Product sold on arm’s-length terms to a non-sublicensee Third Party by Amgen, its Affiliates or its Sublicensees, in a country in the Territory after the first Regulatory Approval for Commercialisation has been achieved for such Licensed Antibody Product in such country in any indication. Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not constitute a First Commercial Sale.
“Force Majeure” means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by a Party of any of its obligations hereunder.
“GAAP” means United States generally accepted accounting principles.
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“IND” means (a) (i) an Investigational New Drug Application (as defined in the U.S. Federal Food, Drug and Cosmetic Act, as amended from time to time, and the regulations promulgated thereunder) that is required to be filed with the FDA before beginning clinical testing of a Licensed Antibody Product in human subjects, or any successor application or procedure and (ii) any counterpart of a U.S. Investigational New Drug Application in any other country in the Territory; and (b) all supplements and amendments that may be filed with respect to the foregoing.
“Information” means tangible or intangible know-how, trade secrets, inventions (i.e., conceived or reduced to practice, constructively or actually), methods, knowledge, conclusions, skill, experience, test data and results (including but not limited to, chemical, biological, biochemical, pharmaceutical, pharmacological, toxicological and research, pre-clinical and clinical data, assay, control and manufacturing processes, test data and results), analytical and quality control methods and data, results or descriptions, software and algorithms or other information (whether or not patentable) regarding technology, techniques, practices, products, business information or objectives.
“Joint Know-How” means all Information or Materials that are conceived or developed [*] and, in each case, [*] of [*].
“Joint Patent Rights” means Patent Rights in any country within the Territory which claim [*] Know-How and which identify employees or contractors of [*] as inventors.
“Licensed Antibody Product(s)” means (i) any Antibody Product and Subsequent Products (as each is defined in the Collaboration Agreement) for which Celltech elected to opt out in accordance with Article 3.4 of the Collaboration Agreement, or (ii) where (i) does not apply, all Antibody or Antibodies in whatever form that [*], and any product incorporating any such Antibody or Antibodies.
“Materials” means biological and chemical materials including, Antibodies, Licensed Antibody Products, screens, animal models, cell lines, cells, vectors, nucleic acids, receptors and reagents.
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“Net Sales” means with respect to any Licensed Antibody Product, all revenues recognised in accordance with GAAP, consistently applied as between the Parties, from sales of a Licensed Antibody Product by Amgen, its Affiliates and Sublicensees, to Third Parties (but not including sales relating to transactions between a Party, its Affiliates, and their respective Sublicensees), less the total of the following:
a) Normal or customary trade, cash, prompt payment and/or quantity discounts actually allowed and taken;
b) Returns, allowances, free goods, rebates, chargebacks, other allowances or payments to government agencies actually allowed and taken;
c) Retroactive price reductions applicable to sales of such product actually allowed and taken;
d) Credits or allowances (actively paid or allowed) for wastage replacement, whether cash or trade;
e) Non-recoverable sales taxes, excise taxes, tariffs and duties (excluding taxes when assessed on income derived from sales); and
f) [*] ([*]%) of the amount invoiced to cover bad debt, freight or other transportation charges, insurance charges, additional special packaging, and other governmental charges.
In the case of any sale of a Licensed Antibody Product between or among Amgen and its Affiliates or Sublicensees for resale, Net Sales shall be calculated as above only on the first arm’s-length sale by any such Party, Affiliate or Sublicensee to a Third Party.
Upon any sale or other disposal of any Licensed Antibody Product for any consideration other than an exclusively monetary consideration on bona fide arm’s-length terms then for the purposes of calculating the Net Sales under this Licence Agreement, such Licensed Antibody Product shall be deemed to be sold exclusively for money at the average sales price during the applicable reporting period generally achieved for such Licensed Antibody Product in the
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country in which such sale or other disposal occurred when such Licensed Antibody Product is sold alone and not with other products.
Where a Licensed Antibody Product is sold together with other pharmaceutical products for a single price (whether sold together in the same package, or merely price bundled), then for the purposes of calculating the Net Sales payable under this Licence Agreement such Licensed Antibody Product shall be deemed sold for an amount equal to the following:
(X divided by Y) multiplied by Z
where X is the average sales price during the applicable reporting period generally achieved for such Licensed Antibody Product in the country in which such sale or other disposal occurred when such Licensed Antibody Product is sold alone and not with other pharmaceutical products; Y is the sum of the average sales price during the applicable reporting period generally achieved in that country when sold alone by each product (including the Licensed Antibody Product) included in the bundle of pharmaceutical products that is sold for the single price; and Z equals the single price at which the bundle of pharmaceutical products represented in Y was actually sold. In the event one or more of the products in the bundled product are not sold separately, the Parties shall confer in good faith to determine a fair market price for the value of the Licensed Antibody Product(s) within the bundled product.
“Party” means Amgen or Celltech; “Parties” means Amgen and Celltech.
“Patent Rights” means all (a) existing issued, unexpired patents (with the term “patent” being deemed to encompass an inventor’s certificate), including any reissue, re-examination, renewal or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent and (b) existing patent applications and patent applications hereafter filed, including any continuations, continuations-in-part, divisionals, provisionals, converted provisional, continued prosecution application, or any substitute applications, any patent issued with respect to any such patent applications, any reissue, re-examination, renewal or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or
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registration patent or patent of addition based on any such patent; and all foreign counterparts of any of the foregoing.
“[*] Antibody” means an Antibody which is [*] of any [*] and claimed by any of the [*] Patent Rights.
“Phase II Study” means a clinical trial that is designed to establish the safety and preliminary efficacy of a drug for its intended use, and to define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed and that satisfy the requirements of 21 CFR 312.21(b) (or its successor regulation), or its equivalent in any other jurisdiction.
“Pivotal Study” means a clinical trial that, if the defined end-points are met, is designed (and agreed to in advance by a Regulatory Authority(ies) having jurisdiction in the country(ies) in which the trial is to be conducted, based upon existing data in the same patient population as of the start of such clinical trial) to definitively establish that a Licensed Antibody Product drug is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with the Licensed Antibody Product in the dosage range to be prescribed, and provide pivotal data supporting Regulatory Approval of such Licensed Antibody Product and that satisfies the requirements of 21 CFR 321.21(c) (or its successor regulation), or its equivalent in any other jurisdiction.
“Product Trademark” means any trademarks and trade names (and trademark applications (whether or not registered), and any renewals, extensions or modifications thereto in the Territory) together with all goodwill associated therewith, trade dress and packaging which (a) are Controlled by either Party and (b) are applied to a Licensed Antibody Product or any Promotional Materials and (c) distinguishes that Licensed Antibody Product; but excluding any house marks or house dress or any reserve trademarks and trade names (and trademark applications (and any resulting trademarks) which are Controlled by a Party and are filed with a trademark office for use with a Licensed Antibody Product but which shall not have been applied to a Licensed Antibody Product.
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“Promotional Materials” means all sales representative training materials and all written, printed, graphic, electronic, audio or video matter including, but not limited to, journal advertisements, sales visual aids, direct mail, direct-to-consumer advertising, Internet postings, product inserts, broadcast advertisements, and sales reminder aids (e.g., scratch pads, pens and other such items) intended for use or used by a Party in connection with any promotion or detailing of a Licensed Antibody Product.
“Regulatory Approval” means any and all approvals (including any applicable supplements, amendments, pre- and post-approvals, governmental price and reimbursement approvals and approvals of applications for regulatory exclusivity), licences, registrations, or authorisations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity necessary for the manufacture, distribution, use, storage, import, export, transport, promotion, marketing and sale of a Licensed Antibody Product in a country or jurisdiction.
“Regulatory Authority” means any governmental or regulatory authority involved in granting Regulatory Approvals of any Licensed Antibody Product including in the United States the FDA.
“Regulatory Filings” means, collectively, INDs, Drug Approval Applications, establishment licence applications (ELAs) and drug master files (DMFs) or any other similar filings (including any equivalents in other jurisdictions and further including any related correspondence and discussions) and applications for regulatory exclusivity, and all data contained therein, as may be required by the FDA or equivalent Regulatory Authorities in other jurisdictions, for the Development or Commercialisation of a Licensed Antibody Product.
“Research” means all research and pre-clinical activities including the filing of any IND for a Licensed Antibody Product. When used as a verb “Research” means to engage in Research, and “Researched” and “Researching” shall have a corresponding meaning.
“Royalty” or “Royalties” means those amounts payable as royalties by Amgen to Celltech pursuant to Article 4.2 of this Licence Agreement.
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“Sublicensee” means a Third Party to whom Amgen shall have granted a licence or sublicense under Amgen’s rights pursuant to Article 2.3 to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to a Licensed Antibody Product in one or more countries in the Territory. Solely for the purpose of any compensation payable to Celltech hereunder, “Sublicensee” shall include a Third Party to whom Amgen or another Sublicensee shall have granted the right to distribute one or more Licensed Antibody Product(s) but, notwithstanding the foregoing, shall not include (i) [*]; or (ii) [*].
“Term” shall have the meaning set forth in Article 11.1.
“Territory” means all the countries of the world.
“Third Party” means any person, partnership, Joint venture, corporation, trust, estate, unincorporated organisation, government or any department or agency thereof, or any entity other than a Party or any of its Affiliates.
“Third Party Payment” means all fees, milestones, royalties and any other payments paid to Third Parties under patent or technology licences that are necessary in order to Research, Develop, Commercialise, make, have made, use, sell, have sold, offer to sell or resell, import, export, distribute or otherwise transfer physical possession of or otherwise transfer title in or to the Licensed Antibody Products.
“Trademark” means any and all corporate names, service marks, logos or trademarks and trademark applications (whether or not registered) together with all good will associated therewith, and any renewals, extensions or modifications thereto either filed or used.
“Transition Date” shall have the meaning set forth in Article 5.2.8.
“Valid Claim” means a claim of any issued, unexpired Patent Right which has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.
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Each of the following definitions are found in the body of this Licence Agreement as indicated:
Defined Terms | Page/Article | ||||
“Amgen” | Page 1, 1st paragraph | ||||
“Amgen Indemnitees” | Article 10.1 | ||||
“Amgen Loss(es)” | Article 10.1 | ||||
“Celltech” | Page 1, 1st paragraph | ||||
“Celltech Indemnitees” | Article 10.2 | ||||
“Celltech Loss(es)” | Article 10.2 | ||||
“Consultation Rights” | Article 5.2.2(b) | ||||
“Defaulting Party” | Article 11.3(a) | ||||
“include”, “includes”, and “including” | Article 13.8(e) | ||||
“Indemnify” | Article 10.1 | ||||
“intellectual property” | Article 11.4(a) | ||||
“Licence Agreement” | Page 1, 1st paragraph | ||||
“Licence Agreement Effective Date” | Page 1, 1st paragraph | ||||
“[*] Patent Rights” | Article 5.2.2(a) | ||||
“Milestone Events” | Article 4.1(a) | ||||
“Milestone Payments” | Article 4.1(a) | ||||
“Non-Defaulting Party” | Article 11.3(a) | ||||
“Notice of Default” | Article 11.3(a) | ||||
“[*]” | Article 12.1 | ||||
“patent” | Page S1-10 (part of “Patent Rights” def) | ||||
“Performance Default” | Article 11.3(a) | ||||
“Pre-Effective Date Losses” | Article 10.4 | ||||
“Representation Default” | Article 11.3(a) | ||||
“Termination Date” | Article 11.6 | ||||
“Transition Date” | Article 5.2.7 | ||||
“Transition Plan” | Article 11.7(b) | ||||
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SCHEDULE TWO
PART A
[*] PATENT RIGHTS
a) [*] | |||||
| [*] Ref. No. | [*] | ||||
| Subject Matter: | [*] | ||||
| Title: | [*] | ||||
| Inventors: | [*] | ||||
| [*] | |||||
| [*] | |||||
| [*] | |||||
| [*] | |||||
| [*] | |||||
| [*] | |||||
| Priority Application Date: | [*] | ||||
| Earliest Publication Date/No. | [*] | ||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | |||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
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| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
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SCHEDULE TWO
PART B
[*] PATENT RIGHTS
b) [*] | |||||
| [*] Ref. No. | [*] | ||||
| Subject Matter: | [*] | ||||
| Title: | [*] | ||||
| Inventors: | [*] | ||||
| [*] | |||||
| Priority Application Date: | [*] | ||||
| Earliest Publication Date/No. | [*] | ||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
S2-2
SCHEDULE TWO
PART B
[*] PATENT RIGHTS
b) [*] | |||||
| [*] Ref. No. | [*] | ||||
| Subject Matter: | [*] | ||||
| Title: | [*] | ||||
| Inventors: | [*] | ||||
| [*] | |||||
| Priority Application Date: | [*] | ||||
| Earliest Publication Date/No. | [*] | ||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
S2-3
SCHEDULE TWO
PART B
[*] PATENT RIGHTS
c) [*] | |||||
| [*] Ref. No. | [*] | ||||
| Subject Matter: | [*] | ||||
| Title: | [*] | ||||
| Inventors: | [*] | ||||
| [*] | |||||
| Priority Application Date: | [*] | ||||
| Earliest Publication Date/No. | [*] | ||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
*[*]
S2-4
SCHEDULE TWO
PART B
[*] PATENT RIGHTS
c) [*] | |||||
| [*] Ref. No. | [*] | ||||
| Subject Matter: | [*] | ||||
| Title: | [*] | ||||
| Inventors: | [*] | ||||
| [*] | |||||
| Priority Application Date: | [*] | ||||
| Earliest Publication Date/No. | [*] | ||||
| Territory | Application Date | Application No. | Patent No. | Expiry Date | ||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | |||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | ||||||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||||
*[*]
S2-5
Exhibit 10.17.1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH
“[*]”.
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 805.447.1000 www.Amgen.com | |||||
Via facsimile (XXX) (XX) XXXX XXXXXX and DHL Courier
Celltech R&D Limited
208 Bath Road
Slough SL1 3WE
Berkshire, England
Attention: Company Secretary
Re: Amendment No. 1 to Collaboration and Licence Agreement
Between Amgen Inc. and Celltech R&D Limited
Amgen Ref. No. XXXXXXXXX (the “Agreement”)
To Whom It May Concern:
Celltech R&D Limited (“Celltech”) and Amgen Inc. (“Amgen”) entered into the captioned Agreement effective May 10th, 2002. The Parties agree that the Agreement is hereby amended as set forth below (“Amendment”), and that the Amendment shall have an effective date of June 9th, 2003 (the “Amendment Effective Date”). Unless specified herein, each capitalized term shall have the meaning assigned to it in the Agreement.
Section 3.2.1(d) and Section 3.2.1(e) of the Agreement are hereby amended in their entirety as follows:
3.2.1 Research
(d) If (i) Celltech has not achieved Milestone 1 as set out in Schedule A by [*]; or (ii) if Celltech achieves Milestone 1 but subsequently fails to achieve Milestone 3 as set out in Schedule A within [*] of Amgen notifying Celltech in writing (pursuant to Article 3.2.1(g) below) of [*] as determined by the [*] study results; the Parties (upon the written request of [*]) shall for a period of [*] of [*] with respect to unachieved Milestone 1 or unachieved Milestone 3 (as applicable) discuss the possibility of extending such time period for an additional, mutually agreed period. Each Party acknowledges that it shall be at its sole discretion as to whether or not to agree to such an extension of any such time period.
1
July 10, 2003
(e) Within [*] of expiry of the [*] period referred to in Article 3.2.1(d) or any extension to such date agreed to by the Parties, Amgen shall notify Celltech in writing that Amgen will either:
(i) assume the right and obligation to Research, Develop, and supply either itself or through agreement with a Third Party the [*] referred to in Milestone 1 and/or (as appropriate) the [*] referred to above in Article 3.2.1(d); or
(ii) terminate this Agreement.
If Amgen does not serve such a notice it will be deemed to have exercised the option set out in Article 3.2.1(e)(i).
Section 3.6.3 of the Agreement is amended in its entirety as follows:
3.6.3 Late Stage Development Costs
All Research and Development Costs cumulatively incurred (whether FTE Cost incurred directly by Amgen or Celltech or amounts payable to Third Parties engaged by Celltech or Amgen) for Late Stage Development of Antibody Products shall be shared as follows:
(a) up to [*] Dollars ($[*]) of such cumulative Research and Development Costs, on the basis of [*]:[*] Amgen:Celltech;
(b) over [*] Dollars ($[*]) of such cumulative Research and Development Costs, on the basis of [*]:[*] Amgen:Celltech.
The costs of manufacture, including scale-up and validation of Antibody Raw Material and Antibody Product in Finished Form, shall be deemed Research and Development Costs of Late Stage Development to the extent only that Antibody Raw Material and Antibody Product in Finished Form so produced is not used for Commercialisation and otherwise shall be a Cost of Goods.
Amgen and Celltech warrant and represent that they have the right to enter into this Amendment and that the terms of this Amendment are not inconsistent with other contractual obligations (express or implied) which they may have. No amendment, modification or supplement of any provision of this Amendment shall be valid or effective unless made in writing and signed by a duly authorized officer of each party. This Amendment shall be governed by the laws of the State of New York.
2
July 10, 2003
Except as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain in full force and effect. The Agreement as amended pursuant to this Amendment, constitutes the entire understanding of the parties and each reference to “Agreement” contained in the Collaboration and Licence Agreement shall from and after the date of the Amendment Effective Date refer to the Collaboration and Licence Agreement as modified hereby. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. If this Amendment is acceptable to you, please confirm by signing and returning the duplicate copy of this agreement to XXXXX X. XXXXXXXXX, M/S XX-X-X, at Amgen.
Yours sincerely,
/s/ David L. Lacey
David L. Lacey, M.D.
Vice President, Basic Research & Metabolic Disorders
Celltech R&D Limited
By: /s/ Melanie G. Lee
Title: R&D Director
Date: 24th July 2003
copy: Ian J. Nicholson
Senior V.P. Business Development, Celltech
XXX XXXXXXXX, Esq.
XXXXX XXXXXX
3
Exhibit 10.17.1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[*]”.
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 805.447.1000 www.Amgen.com | |||||
| November 14, 2016 | |||||
Via facsimile and overnight courier
UCB Celltech (as successor in interest to Celltech R&D Limited)
208 Bath Road
Slough SL1 3WE
Berkshire, England
Attention: Company Secretary
| Re: | Amendment No. 2 to Collaboration and Licence Agreement Between Amgen Inc. and Celltech R&D Limited | ||||
| Amgen Ref. No. 200203470 | |||||
To Whom It May Concern:
Celltech R&D Limited (“UCB”) and Amgen Inc. (“Amgen”) entered into the captioned Agreement effective May 10, 2002, as amended by Amendment No. 1 to the Agreement effective June 9, 2003 (the “Agreement”). The Parties, by entering into this letter agreement (this “Amendment”), agree that the Agreement is hereby amended and supplemented as set forth below and that the Amendment shall have an effective date of November 14, 2016 (the “Amendment Effective Date”). Unless specified herein, each capitalized term shall have the meaning assigned to it in the Agreement.
1.The term “Amgen Initial Countries” in Article 1 of the Agreement is hereby amended and restated as follows:
“Amgen Initial Countries” means the United States, Canada, Mexico, Japan, Australia and New Zealand.
2.The term “Celltech Initial Countries” in Article 1 of the Agreement is hereby amended and restated as follows:
“Celltech Initial Countries” means the United Kingdom, France, Germany, Spain, Italy,Norway, Switzerland and any country in addition to those named which, as of the
date of first Regulatory Approval for Commercialisation of an Antibody Product, is a member state of the European Union.
3.Article 1 of the Agreement is hereby amended by including the following definition after “Research Plan” and before “Secondary Detail”:
“Romosozumab” means the Antibody Product known as romosozumab.
4.Article 5.12(b) of the Agreement is hereby amended and restated as follows:
b. The Joint Commercialisation Committee shall review on a quarterly basis (including a review of the fourth quarter, reasonably promptly after its end) the Commercialisation Expenses actually incurred against the consolidated budget prepared by the Territory Commercial Lead (as described in Article 5.12(a)) for such expenses in the applicable calendar year and will consider for approval any appropriate changes to such budget. For clarity, such budget shall provide for all expenses to be incurred by or on behalf of the Territory Commercial Lead in the countries in such Party’s Lead Territory, whether expected to be incurred by the Territory Commercial Lead, by the other Party or by any Third Parties. If in the course of the quarterly review (or otherwise), either Party should determine for any Antibody Product that the actual amounts incurred for such calendar year are, in the aggregate, likely to be, or that the actual amounts incurred for such calendar year are, greater than [*] of the aggregate amount budgeted by the Territory Commercial Lead for such calendar year, the Joint Commercialisation Committee shall review the reasons for such potential overrun and determine whether such overrun is acceptable. To the extent the Joint Commercialisation Committee determines that such overrun is acceptable, the Joint Commercialisation Committee shall approve a revised Commercialisation budget to include such overrun. To the extent the Joint Commercialisation Committee determines that such overrun is not acceptable, the Joint Commercialisation Committee shall initiate such actions as required to remedy the situation. To the extent the Joint Commercialisation Committee is unable to agree on any matter or remediation relating to said overrun (and in any event if the Joint Commercialisation Committee does not determine that said overrun is acceptable), [*].
5.The Parties agree that Article 5 of the Agreement is hereby amended by including the following as Article 5.18:
“5.18 Romosozumab Commercialisation Principles. This Article 5.18 shall apply notwithstanding any other term of this Agreement (including without limitation Articles 5.7, 5.9 and 5.12):
a. Each Party, including when acting as Territorial Commercial Lead, shall Commercialise Romosozumab and carry out its activities contemplated by this Agreement subject to, and in accordance with, and otherwise comply with such commercialisation principles mutually agreed from time to time by the Parties in writing
2
as expressly constituting such for purposes of this Article 5.18 (the “Commercialisation Principles”), and neither Party shall take any action with respect to Romosozumab that conflicts with the Commercialisation Principles. The Commercialisation Plan for Romosozumab, to be developed and approved by the Joint Commercialisation Committee as provided for in Article 5.8 of this Agreement, and each Country Plan for Romosozumab, to be developed by the relevant Territorial Commercial Lead as provided for in Article 5.9 of this Agreement, shall be developed in accordance with the terms of this Agreement and the Commercialisation Principles, and shall not conflict with the Commercialisation Principles unless mutually agreed in writing by the Parties. The Commercialisation Principles shall not be modified in any respect by either Party, the Joint Commercialisation Committee or any other governance body formed pursuant to the Agreement without the express written consent of the Parties. The Parties hereby agree that (i) Articles 5.2 and 5.11(a) through 5.11(d) shall not apply with respect to Romosozumab; and (ii) Articles 5.11(e) through 5.11(h) shall continue to apply in full force and effect with respect to Romosozumab, provided that (x) references therein and otherwise in the Agreement to Co-Detailer instead shall be deemed to refer to the Party that is not the Territorial Commercial Lead in the country in question; (y) the Parties shall Commercialise Romosozumab under a single Product Trademark in accordance with the applicable Country Plan; and (z) with respect to Article 5.11(h), as between the Parties, only the Territory Commercial Lead’s corporate name and logo shall appear on Promotional Materials for Romosozumab in respect of such country, except in the case of the Celltech Initial Countries (after giving effect to this Amendment) and China (to the extent there is co-detailing in any such country).
b. For the avoidance of doubt, any dispute between the Parties with respect to the Commercialisation Principles shall be addressed according to Article 15 of the Collaboration Agreement. If the dispute remains unresolved after the process set forth in Article 15, then either Party may at any time thereafter pursue any legal or equitable remedy available to it. Notwithstanding the provisions of this Article 5.18(b), either Party shall be entitled at all times and without delay to seek equitable relief.”
Each of Amgen and UCB represent and warrant that it has the right to enter into this Amendment and that the terms of this Amendment are not inconsistent with other contractual obligations (express or implied) that it may separately have. No amendment or supplement to, or modification of, any provision of this Amendment shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party. This Amendment shall be governed by and interpreted in all respects under the substantive laws of the State of New York, as applied to agreements executed and performed entirely in the State of New York by residents of the State of New York, without regard to the United Nations Convention on International Contracts for the Sale of Goods.
Except as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain in full force and effect. The Agreement, as amended and supplemented pursuant to
3
this Amendment, constitutes the entire understanding of the Parties and each reference to “Agreement” contained in the Collaboration and Licence Agreement shall, from and after the date of the Amendment Effective Date, refer to the Collaboration and Licence Agreement as amended and supplemented hereby. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. If this Amendment is acceptable to you, please confirm by signing and returning a copy to Amgen.
4
Yours sincerely,
AMGEN INC.
/s/ Anthony C. Hooper
By: Anthony C. Hooper
Title: EVP, Global Commercial Operations
/s/ David W. Meline
By: David W. Meline
Title: EVP, Chief Financial Officer
5
Acknowledged and agreed:
UCB CELLTECH
/s/ Mark Glyn Hardy
By: Mark Glyn Hardy
Title: Company Secretary
6
Exhibit 10.22.5
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT BOTH (I) IS NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 805.447.1000 www.Amgen.com | |||||
December 1, 2023
Via Overnight Courier Service
AstraZeneca Collaboration Ventures, LLC
One MedImmune Way
Gaithersburg, Maryland 20878
Facsimile: 301-398-9625
Attention: President
Re: AstraZeneca-Amgen Collaboration Agreement (Amgen Reference Number: 2012575259)
Dear President:
Reference is hereby made to the Collaboration Agreement, dated as of March 30, 2012,
by and between AstraZeneca Collaboration Ventures, LLC (“Partner”) and Amgen Inc. (“Amgen”) (and such agreement, as amended and in effect on the date hereof, the “Agreement”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in
the Agreement.
As you are aware, Amgen intends to engage approximately [***] FTEs for call center activities (Tezspire Together) in the United States (such FTEs, the “US Hub FTEs”). The Tezspire Together services will be insourced and operated at the Amgen Capability Center in Tampa, FL, beginning October 30, 2023, and will involve services including, but not limited to, benefits verification, prior authorization education, free-drug prescreening, script triage and general assistance on affordability enrollment and program offerings.
Amgen and Partner hereby agree that in consideration of the mutual promises and covenants hereinafter set forth herein, from and after December 1, 2023 (the “Letter Agreement Effective Date”), the FTE Rate for purposes of solely the US Hub FTEs shall be equal to the US Hub FTE Rate, as hereinafter defined:
“US Hub FTE Rate” means, until such time as the Parties agree in writing otherwise, $[***] in 2023 and $[***] in 2024. The US Hub FTE
Page 2 of 3
Rate will in years following 2024 be increased by a percentage equivalent to the change over the preceding twelve month period in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The US Hub FTE Rate includes costs of salaries, benefits, supplies, other employee costs, facility costs, depreciation and supporting general and administration allocations.
[The remainder of this page intentionally left blank.]
Page 3 of 3
Upon execution and delivery of this letter agreement by the Parties, the amendments set forth above shall be effective as of the Letter Agreement Effective Date. Except as specifically provided above, the Agreement is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of the Parties. This letter agreement may be executed in counterparts with the same effect as if both Parties had signed the same document. All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument. Signature pages of this letter agreement may be exchanged by facsimile or other electronic means (including DocuSign) without affecting the validity thereof.
Sincerely,
Amgen Inc.
By: /s/ Susan Logan
Name: Susan Logan
Title: Vice President, General Manager
ACKNOWLEDGED AND AGREED TO:
AstraZeneca Collaboration Ventures, LLC
By: /s/ Richard J. Kenny
Name: Richard J. Kenny
Title: Assistant Secretary
cc: AstraZeneca Collaboration Ventures, LLC
One Medlmmune Way
Gaithersburg, Maryland 20878
Attention: Mariam Koohdary
One Medlmmune Way
Gaithersburg, Maryland 20878
Attention: Mariam Koohdary
Exhibit 21
AMGEN INC.
The following is a list of subsidiaries of the Company as of December 31, 2023, omitting some subsidiaries which, considered in the aggregate, would not constitute a significant subsidiary.
SUBSIDIARY (Name under which subsidiary does business) | STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION | |||||||
| Amgen (Europe) GmbH | Switzerland | |||||||
| Amgen Australia Pty Ltd | Australia | |||||||
| Amgen Canada Inc. | Canada | |||||||
| Amgen Fremont Inc. | Delaware | |||||||
| Amgen Global Finance B.V. | Netherlands | |||||||
| Amgen Global Manufacturing Ltd. | United Kingdom | |||||||
| Amgen Global Technology Unlimited Company | United Kingdom | |||||||
| Amgen GmbH Germany | Germany | |||||||
| Amgen Ilaç Ticaret Limited Şirketi | Turkey | |||||||
| Amgen International Holdings Inc. | Delaware | |||||||
| Amgen K-A, Inc. | Delaware | |||||||
| Amgen K.K. | Japan | |||||||
| Amgen Manufacturing, Limited | Bermuda | |||||||
| Amgen Rare Disease Holdings Inc. | Delaware | |||||||
| Amgen Research (Munich) GmbH | Germany | |||||||
| Amgen S.A.S. | France | |||||||
| Amgen S.p.A. | Italy | |||||||
| Amgen SF, LLC | Delaware | |||||||
| Amgen Singapore Holding Pte Ltd | Singapore | |||||||
| Amgen Singapore Manufacturing Pte. Ltd. | Singapore | |||||||
| Amgen Technology (Ireland) Unlimited Company | Ireland | |||||||
| Amgen Technology, Limited | Bermuda | |||||||
| Amgen USA Inc. | Delaware | |||||||
| Amgen Worldwide Holdings B.V. | Netherlands | |||||||
| Amgen, S.A. | Spain | |||||||
| BioVex Limited | United Kingdom | |||||||
| BioVex, Inc. | Delaware | |||||||
| ChemoCentryx, Inc. | Delaware | |||||||
| Five Prime Therapeutics Inc. | Delaware | |||||||
| Horizon Therapeutics Capital Limited | Ireland | |||||||
| Horizon Therapeutics Finance Limited | Ireland | |||||||
| Horizon Therapeutics Finance Sarl | Luxembourg | |||||||
| Horizon Therapeutics Holdings Limited | Ireland | |||||||
| Horizon Therapeutics Ireland DAC | Ireland | |||||||
| Horizon Therapeutics Limited | Ireland | |||||||
| Horizon Therapeutics Treasury DAC | Ireland | |||||||
| Horizon Therapeutics U.S. Holding LLC | Delaware | |||||||
| Horizon Therapeutics USA, Inc. | Delaware | |||||||
| HZNP Finance Limited | Ireland | |||||||
| Immunex Corporation | Washington | |||||||
| Onyx Pharmaceuticals, Inc. | Delaware | |||||||
Exhibit 21
SUBSIDIARY (Name under which subsidiary does business) | STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION | |||||||
| Onyx Therapeutics, Inc. | Delaware | |||||||
| Pillartree Limited | Ireland | |||||||
| Saga Investments Coöperatief U.A. | Netherlands | |||||||
| TeneoBio, Inc. | Delaware | |||||||
| TeneoThree, Inc. | Delaware | |||||||
| Viela Bio, Inc. | Delaware | |||||||
Exhibit 31
CERTIFICATIONS
I, Robert A. Bradway, Chairman of the Board, Chief Executive Officer and President of Amgen Inc., certify that:
1.I have reviewed this Annual Report on Form 10-K of Amgen Inc.;
2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
(d)Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| February 14, 2024 | /s/ ROBERT A. BRADWAY | ||||
| Robert A. Bradway | |||||
| Chairman of the Board, | |||||
| Chief Executive Officer and President | |||||
1
CERTIFICATIONS
I, Peter H. Griffith, Executive Vice President and Chief Financial Officer of Amgen Inc., certify that:
1.I have reviewed this Annual Report on Form 10-K of Amgen Inc.;
2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
(d)Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| February 14, 2024 | /s/ PETER H. GRIFFITH | ||||
| Peter H. Griffith | |||||
| Executive Vice President and Chief Financial Officer | |||||
2
Exhibit 32
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Amgen Inc. (the “Company”) hereby certifies that:
(i)the accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| February 14, 2024 | /s/ ROBERT A. BRADWAY | ||||
| Robert A. Bradway | |||||
| Chairman of the Board, | |||||
| Chief Executive Officer and President | |||||
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Amgen Inc. and will be retained by Amgen Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
1
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Amgen Inc. (the “Company”) hereby certifies that:
(i)the accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| February 14, 2024 | /s/ PETER H. GRIFFITH | ||||
| Peter H. Griffith | |||||
| Executive Vice President and Chief Financial Officer | |||||
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Amgen Inc. and will be retained by Amgen Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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Exhibit 97
Amgen Policy on Recovery of Erroneously Awarded Compensation
(effective as of October 2, 2023)
(effective as of October 2, 2023)
1. Recovery of Erroneously Awarded Compensation in the Event of an Accounting Restatement
In the event Amgen Inc. (the “Company”) is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws (including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period), the Company will recover reasonably promptly the amount of incentive-based compensation (defined as compensation that is granted, earned, or vested based wholly, or in part, upon the attainment of a financial reporting measure) received by the Company’s executive officers during the relevant recovery period (described in Section 4 hereof) that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on restated amounts computed without regard to any taxes paid (“erroneously awarded compensation”), as calculated pursuant to Section 2 hereof.
Incentive-based compensation shall be deemed received in the Company fiscal period during which the financial reporting measure specified in the incentive-based compensation award is attained, even if the payment or grant of the incentive-based compensation occurs after the end of that period.
2. Calculation of Erroneously Awarded Compensation
For purposes of this policy, financial reporting measures are measures that are determined and presented in accordance with generally accepted accounting principles (GAAP) used in preparing the Company’s financial statements, and any measures derived in whole, or in part, from such measures, including, but not limited to, stock price and total shareholder return. For purposes of this policy, a financial reporting measure need not be presented within the financial statements or included in a filing with the Securities and Exchange Commission.
For incentive-based compensation based on stock price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in the accounting restatement: (A) the amount must be based on a reasonable estimate of the effect of the accounting restatement on the stock price or total shareholder return upon which the incentive-based compensation was received; and (B) the Company will maintain documentation of the determination of that reasonable estimate and provide such documentation to Nasdaq as it may require.
3. Impracticability Exceptions to Recovery
The Company must recover erroneously awarded compensation in compliance with this policy except to the extent that conditions (A), (B), or (C) herein are satisfied and the Compensation and Management Development Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”) has determined that recovery would be impracticable: (A) the direct expense paid to a third party to assist in enforcing this policy would exceed the amount to be recovered (after making a reasonable attempt at recovering such erroneously awarded compensation, documenting such reasonable attempt(s) to recover, and providing such documentation to Nasdaq); (B) recovery would violate any U.S. laws adopted prior to November 28, 2022 (after obtaining an opinion of legal counsel, acceptable to Nasdaq, that recovery would result in such a violation, and providing such opinion to Nasdaq); or (C) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly
available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the regulations promulgated thereunder describing certain Internal Revenue Code (the “Code”) plan qualification requirements.
4. Relevant Recovery Period and Covered Executives
This policy shall apply to incentive-based compensation received on or after October 2, 2023 by a person: (A) after such person began service as an executive officer of the Company; (B) if that person served as an executive officer at any time during the performance period for such incentive-based compensation; (C) while the Company has a class of securities listed on NASDAQ; and (D) during the three completed fiscal years immediately preceding the date that the Company is required to prepared an accounting restatement described herein.
For purposes of determining the relevant recovery period, the date that the Company is required to prepare an accounting restatement as described in Section 1 hereof is the earlier to occur of: (A) the date the Board, a committee of the Board, or the officers of the Company authorized to take such action (if Board action is not required), conclude(s), or reasonably should have concluded, that the Company is required to prepare such accounting restatement; or (B) the date a court, regulator or other legally authorized body directs the Company to prepare such accounting restatement.
Notwithstanding the terms of the incentive-based compensation awarded by the Company, all incentive-based compensation received on or after October 2, 2023 shall be subject to this policy.
For the purposes of this policy, the term “executive officers” means the Company’s “officers” under Rule 16a-1(f) in the Securities Exchange Act of 1934 (the “Exchange Act”).
5. No Indemnification; No Liability
Neither the Company nor any affiliate of the Company will indemnify or insure any current or former executive officer against the loss of erroneously awarded compensation pursuant to this policy, including any direct or indirect payment or reimbursement for the cost of third-party insurance purchased by any executive officer to fund potential obligations under this policy. Neither the Company, any affiliates of the Company nor any member of the Committee or the Board shall have any liability to any person as a result of actions taken under this policy.
6. Application; Enforceability
This policy is in no way intended to limit any other action that the Company or any affiliate of the Company could or might decide to take against an executive officer. This policy is intended to apply in addition to any other clawback, recoupment, forfeiture or similar policies or provisions of the Company or its affiliates in effect from time to time, including, but not limited to: (A) the Executive Officer Equity Recoupment Policy; (B) the Code of Ethics for CEO and Senior Financial Officers; (C) the Amgen Inc. Executive Incentive Plan; (D) the Amgen Global Management Incentive Plan; (E) the Amgen Inc. Global Performance Incentive Plan; and (E) any policies or provisions contained in any employment agreement, bonus plan, incentive plan, equity-based plan or award agreement thereunder or similar plan, program, agreement of the Company or an affiliate, or required under applicable law (together, as amended, modified or supplemented from time to time, the “Other Recovery Arrangements”); provided, however, that as of October 2, 2023 this policy supersedes and replaces in its entirety the Policy on Executive Compensation in Restatement Situations adopted on March 6, 2007.
7. Limitations on Duplicate Recovery
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Unless otherwise prohibited by Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder, the Nasdaq listing rules, and any applicable rules, standards or other guidance adopted by the Securities and Exchange Commission or Nasdaq (together, the “Applicable Rules”), to the extent this policy provides for recovery of erroneously awarded compensation already recovered by the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 or any Other Recovery Arrangements, the amount of erroneously awarded compensation already recovered by the Company from the recipient of such erroneously awarded compensation may be credited to the amount of erroneously awarded compensation required to be recovered pursuant to this policy from such person.
8. Reporting and Disclosure
The Company shall make all disclosures with respect to this policy in accordance with the requirements of the federal securities laws, including disclosures required under Item 402(w) of Regulation S-K of the Securities Act of 1933 (the “Securities Act”) regarding the Company’s actions to recover erroneously awarded compensation and the filing of this policy as an exhibit to the Company’s annual report on Form 10-K.
9. Administration
This policy shall be administered by the Compensation Committee. The Compensation Committee will, subject to the provisions of this policy and the Applicable Rules, make such determinations and interpretations and take such actions in connection with this policy as it deems necessary, appropriate, or advisable. Subject to any permitted review by Nasdaq pursuant to the Applicable Rules, all determinations and interpretations made by the Compensation Committee will be final, binding, and conclusive and need not be uniform with respect to each individual covered by the policy.
The Committee may delegate duties with respect to this policy to one or more directors or authorized employees of the Company, as permitted under applicable law.
The Committee shall, in its sole discretion, determine the manner of recovery of any erroneously awarded compensation, which may include, without limitation, reduction or cancellation by the Company or an affiliate of the Company of incentive-based compensation or erroneously awarded compensation, reimbursement or repayment by any person subject to this policy of the erroneously awarded compensation, and, to the extent permitted by law, an offset of the erroneously awarded compensation against other compensation payable by the Company or an affiliate of the Company to the executive officer, including, but not limited to, base salary, bonuses, equity awards with time-based vesting conditions, and compensation previously deferred.
The Compensation Committee may amend, modify or terminate this policy in whole, or in part, at any time and from time to time in its sole discretion.
10. Interpretation
This policy will be interpreted and applied in a manner that is consistent with the requirements of the Applicable Rules, and to the extent this policy is inconsistent with such Applicable Rules, it shall be deemed amended to the minimum extent necessary to ensure compliance therewith.
The provisions in this policy are intended to be applied to the fullest extent of the law; provided, however, to the extent that any provision of this policy is found to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.
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References to the Applicable Rules, Code, Exchange Act, NASDAQ listing rules, Sarbanes-Oxley Act of 2022, Securities Act, and any regulations, standards or guidance promulgated thereunder shall include any amendment or successor thereto.
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