UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

or

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

Commission File Number: 001-37702

Amgen Inc.

(Exact name of registrant as specified in its charter)

Delaware	95-3540776
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Amgen Center Drive	91320-1799
Thousand Oaks
California
(Address of principal executive offices)	(Zip Code)

(805) 447-1000

(Registrant’s telephone number, including area code)

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

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

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

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

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

Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

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

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

Yes ☐ No ☑

As of October 28, 2021, the registrant had 563,265,902 shares of common stock, $0.0001 par value, outstanding.

AMGEN INC.

INDEX

		Page No.
PART I - FINANCIAL INFORMATION		1
Item 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	1
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	2
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
Item 4.	CONTROLS AND PROCEDURES	42
PART II - OTHER INFORMATION		43
Item 1.	LEGAL PROCEEDINGS	43
Item 1A.	RISK FACTORS	43
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	50
Item 6.	EXHIBITS	51
INDEX TO EXHIBITS		52
SIGNATURES		58

i

PART I — FINANCIAL INFORMATION 

Item 1. FINANCIAL STATEMENTS

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share data)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenues:
Product sales	$	6,320	$	6,104	$	18,026	$	17,906
Other revenues	386		319		1,107		884
Total revenues	6,706		6,423		19,133		18,790
Operating expenses:
Cost of sales	1,609		1,561		4,736		4,562
Research and development	1,422		1,062		3,471		2,978
Acquired in-process research and development	—		—		1,505		—
Selling, general and administrative	1,305		1,346		3,943		3,957
Other	(8)		1		143		162
Total operating expenses	4,328		3,970		13,798		11,659
Operating income	2,378		2,453		5,335		7,131
Other income (expense):
Interest expense, net	(296)		(302)		(862)		(944)
Other income, net	73		55		97		69
Income before income taxes	2,155		2,206		4,570		6,256
Provision for income taxes	271		185		576		607
Net income	$	1,884	$	2,021	$	3,994	$	5,649
Earnings per share:
Basic	$	3.32	$	3.45	$	6.98	$	9.61
Diluted	$	3.31	$	3.43	$	6.93	$	9.54
Shares used in calculation of earnings per share:
Basic	567		585		572		588
Diluted	570		589		576		592

See accompanying notes.

1

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net income	$	1,884	$	2,021	$	3,994	$	5,649
Other comprehensive income (loss), net of reclassification adjustments and taxes:
(Losses) gains on foreign currency translation	(35)		14		(60)		(41)
Gains (losses) on cash flow hedges	99		(128)		241		(305)
(Losses) gains on available-for-sale securities	(1)		1		(1)		(20)
Other	(3)		(7)		(3)		(9)
Other comprehensive income (loss), net of taxes	60		(120)		177		(375)
Comprehensive income	$	1,944	$	1,901	$	4,171	$	5,274

See accompanying notes.

2

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share data)

	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,969	$	6,266
Marketable securities	952		4,381
Trade receivables, net	4,765		4,525
Inventories	4,152		3,893
Other current assets	2,542		2,079
Total current assets	24,380		21,144
Property, plant and equipment, net	4,982		4,889
Intangible assets, net	14,659		16,587
Goodwill	14,665		14,689
Other noncurrent assets	6,307		5,639
Total assets	$	64,993	$	62,948
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,171	$	1,421
Accrued liabilities	9,383		10,141
Current portion of long-term debt	4,288		91
Total current liabilities	14,842		11,653
Long-term debt	33,291		32,895
Long-term tax liabilities	6,483		6,968
Other noncurrent liabilities	2,160		2,023
Contingencies and commitments
Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—565.0 shares in 2021 and 578.3 shares in 2020	31,989		31,802
Accumulated deficit	(22,964)		(21,408)
Accumulated other comprehensive loss	(808)		(985)
Total stockholders’ equity	8,217		9,409
Total liabilities and stockholders’ equity	$	64,993	$	62,948

See accompanying notes.

3

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per-share data)

(Unaudited)

	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2020	578.3	$	31,802	$	(21,408)	$	(985)	$	9,409
Net income	—	—		1,646		—		1,646
Other comprehensive income, net of taxes	—	—		—		152		152
Dividends declared on common stock ($1.76 per share)	—	—		(1,012)		—		(1,012)
Issuance of common stock in connection with the Company’s equity award programs	0.7	6		—		—		6
Stock-based compensation expense	—	57		—		—		57
Tax impact related to employee stock-based compensation expense	—	(59)		—		—		(59)
Repurchases of common stock	(3.7)	—		(865)		—		(865)
Balance as of March 31, 2021	575.3	31,806		(21,639)		(833)		9,334
Net income	—	—		464		—		464
Other comprehensive loss, net of taxes	—	—		—		(35)		(35)
Issuance of common stock in connection with the Company’s equity award programs	0.8	47		—		—		47
Stock-based compensation expense	—	100		—		—		100
Tax impact related to employee stock-based compensation expense	—	(76)		—		—		(76)
Repurchases of common stock	(6.5)	—		(1,592)		—		(1,592)
Other	—	—		5		—		5
Balance as of June 30, 2021	569.6	31,877		(22,762)		(868)		8,247
Net income	—	—		1,884		—		1,884
Other comprehensive income, net of taxes	—	—		—		60		60
Dividends declared on common stock ($1.76 per share)	—	—		(1,017)		—		(1,017)
Issuance of common stock in connection with the Company’s equity award programs	—	9		—		—		9
Stock-based compensation expense	—	111		—		—		111
Tax impact related to employee stock-based compensation expense	—	(8)		—		—		(8)
Repurchases of common stock	(4.6)	—		(1,069)		—		(1,069)
Balance as of September 30, 2021	565.0	$	31,989	$	(22,964)	$	(808)	$	8,217

4

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(In millions, except per-share data)

(Unaudited)

	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2019	591.4	$	31,531	$	(21,330)	$	(528)	$	9,673
Cumulative effect of changes in accounting principles, net of taxes	—	—		(2)		—		(2)
Net income	—	—		1,825		—		1,825
Other comprehensive loss, net of taxes	—	—		—		(134)		(134)
Dividends declared on common stock ($1.60 per share)	—	—		(938)		—		(938)
Issuance of common stock in connection with the Company’s equity award programs	0.9	10		—		—		10
Stock-based compensation expense	—	52		—		—		52
Tax impact related to employee stock-based compensation expense	—	(68)		—		—		(68)
Repurchases of common stock	(4.3)	—		(933)		—		(933)
Balance as of March 31, 2020	588.0	31,525		(21,378)		(662)		9,485
Net income	—	—		1,803		—		1,803
Other comprehensive loss, net of taxes	—	—		—		(121)		(121)
Issuance of common stock in connection with the Company’s equity award programs	1.0	65		—		—		65
Stock-based compensation expense	—	101		—		—		101
Tax impact related to employee stock-based compensation expense	—	(81)		—		—		(81)
Repurchases of common stock	(2.6)	—		(591)		—		(591)
Other	—	—		(2)		—		(2)
Balance as of June 30, 2020	586.4	31,610		(20,168)		(783)		10,659
Net income	—	—		2,021		—		2,021
Other comprehensive loss, net of taxes	—	—		—		(120)		(120)
Dividends declared on common stock ($1.60 per share)	—	—		(952)		—		(952)
Issuance of common stock in connection with the Company’s equity award programs	0.1	5		—		—		5
Stock-based compensation expense	—	109		—		—		109
Tax impact related to employee stock-based compensation expense	—	(11)		—		—		(11)
Repurchases of common stock	(3.0)	—		(752)		—		(752)
Balance as of September 30, 2020	583.5	$	31,713	$	(19,851)	$	(903)	$	10,959

See accompanying notes.

5

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Nine months ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	3,994	$	5,649
Depreciation, amortization and other	2,546		2,728
Deferred income taxes	(264)		(339)
Acquired in-process research and development	1,505		—
Other items, net	187		270
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net	(269)		(31)
Inventories	(215)		(316)
Other assets	(373)		64
Accounts payable	(260)		(202)
Accrued income taxes, net	(719)		(301)
Long-term tax liabilities	102		110
Other liabilities	219		712
Net cash provided by operating activities	6,453		8,344
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(1,639)		—
Purchases of marketable securities	(8,901)		(5,329)
Proceeds from sales of marketable securities	4,403		2,597
Proceeds from maturities of marketable securities	7,927		2,338
Purchases of property, plant and equipment	(593)		(435)
Purchases of equity method investments	(154)		(3,154)
Other	(80)		(34)
Net cash provided by (used in) investing activities	963		(4,017)
Cash flows from financing activities:
Net proceeds from issuance of debt	4,946		8,914
Repayment of debt	—		(5,000)
Repurchases of common stock	(3,532)		(2,281)
Dividends paid	(3,023)		(2,823)
Other	(104)		(87)
Net cash used in financing activities	(1,713)		(1,277)
Increase in cash and cash equivalents	5,703		3,050
Cash and cash equivalents at beginning of period	6,266		6,037
Cash and cash equivalents at end of period	$	11,969	$	9,087

See accompanying notes.

6

AMGEN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

1. Summary of significant accounting policies

Business

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

Basis of presentation

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

The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2020, and with our condensed consolidated financial statements and the notes thereto contained in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021.

Principles of consolidation

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

Use of estimates

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

Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $9.2 billion and $9.0 billion as of September 30, 2021 and December 31, 2020, respectively.

Recent accounting pronouncements

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

7

2. Acquisitions

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

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

8

3. Revenues

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

Revenues were as follows (in millions):

	Three months ended September 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
Enbrel® (etanercept)	$	1,263	$	26	$	1,289	$	1,289	$	36	$	1,325
Prolia® (denosumab)	530		273		803		478		223		701
Otezla® (apremilast)	495		114		609		439		99		538
XGEVA® (denosumab)	372		145		517		363		118		481
Neulasta® (pegfilgrastim)	360		55		415		484		71		555
Aranesp® (darbepoetin alfa)	149		247		396		158		226		384
Repatha® (evolocumab)	139		133		272		92		113		205
KYPROLIS® (carfilzomib)	198		95		293		173		87		260
Other products	1,052		674		1,726		1,142		513		1,655
Total product sales(1)	$	4,558	$	1,762	6,320		$	4,618	$	1,486	6,104
Other revenues					386						319
Total revenues					$	6,706					$	6,423
	Nine months ended September 30,
	2021						2020
	U.S.		ROW		Total		U.S.		ROW		Total
ENBREL	$	3,270	$	87	$	3,357	$	3,619	$	105	$	3,724
Prolia®	1,569		806		2,375		1,341		673		2,014
Otezla®	1,284		335		1,619		1,280		298		1,578
XGEVA®	1,061		412		1,473		1,036		361		1,397
Neulasta®	1,215		168		1,383		1,538		219		1,757
Aranesp®	409		709		1,118		489		704		1,193
Repatha®	421		423		844		331		303		634
KYPROLIS®	547		277		824		527		266		793
Other products	3,059		1,974		5,033		3,164		1,652		4,816
Total product sales(1)	$	12,835	$	5,191	18,026		$	13,325	$	4,581	17,906
Other revenues					1,107						884
Total revenues					$	19,133					$	18,790

____________

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

9

4. Income taxes

The effective tax rate for the three and nine months ended September 30, 2021, was 12.6% for both periods, compared with rates of 8.4% and 9.7%, respectively, for the corresponding periods of the prior year.

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

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

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

In addition, in 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015 also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico, similar to those proposed for the years 2010, 2011 and 2012. We disagree with the proposed adjustments and calculations and have been pursuing resolution with the IRS administrative appeals office. As a consequence of the Tax Court litigation for the 2010-2012 period, the IRS administrative appeals office recently informed us that it does not plan to engage in discussions at this time regarding the allocation of profits between our entities in the United States and the U.S. territory of Puerto Rico for the 2013-2015 period. We are currently under examination by the IRS for the years 2016, 2017 and 2018. We are also currently under examination by a number of other state and foreign tax jurisdictions.

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

During the three and nine months ended September 30, 2021, the gross amounts of our unrecognized tax benefits (UTBs) increased $70 million and $180 million, respectively, as a result of tax positions taken during the current year. Substantially all of the UTBs as of September 30, 2021, if recognized, would affect our effective tax rate.

10

5. Earnings per share

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

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

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Income (Numerator):
Net income for basic and diluted EPS	$	1,884	$	2,021	$	3,994	$	5,649
Shares (Denominator):
Weighted-average shares for basic EPS	567		585		572		588
Effect of dilutive securities	3		4		4		4
Weighted-average shares for diluted EPS	570		589		576		592
Basic EPS	$	3.32	$	3.45	$	6.98	$	9.61
Diluted EPS	$	3.31	$	3.43	$	6.93	$	9.54

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

6. Collaborations

On July 30, 2021, we closed our collaboration and licensing agreement with Kyowa Kirin Co., Ltd. (KKC) to jointly develop and commercialize an anti-OX40 fully human monoclonal antibody (AMG 451) worldwide, except in Japan. AMG 451 is for the treatment of atopic dermatitis, with potential in other autoimmune diseases.

Under the terms of the agreement, we will lead the global development, manufacturing and commercialization of AMG 451, except in Japan. KKC will co-promote AMG 451 with Amgen in the United States and have opt-in rights to co-promote AMG 451 in various other markets outside the United States, including in Europe and Asia.

We made an upfront payment of $400 million to KKC that was recognized in Research and development (R&D) expense in the third quarter of 2021. Amgen and KKC will share equally the global development costs, except in Japan, and the U.S. commercialization costs. Outside of the United States and Japan, any commercialization costs incurred by KKC 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 KKC significant double-digit royalties on global sales, except in Japan.

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7. 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 September 30, 2021	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	$	51	$	—	$	—	$	51
U.S. Treasury bills	3,900		—		—		3,900