Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:

	Fair Value Measurements on a Recurring Basis
	As of September 30, 2024
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	802.4	$	—	$	802.4	$	—
Marketable equity securities	304.7		304.7		—		—
Other current assets:
Derivative contracts	6.0		—		6.0		—
Other non-current assets:
Plan assets for deferred compensation	42.8		—		42.8		—
Derivative contracts	0.1		—		0.1		—
Total	$	1,156.0	$	304.7	$	851.3	$	—
Liabilities:
Other current liabilities:
Derivative contracts	$	31.6	$	—	$	31.6	$	—
Contingent consideration obligations	287.1		—		—		287.1
Other non-current liabilities:
Derivative contracts	2.4		—		2.4		—
Contingent consideration obligations	221.8		—		—		221.8
Total	$	542.9	$	—	$	34.0	$	508.9

	Fair Value Measurements on a Recurring Basis
	As of December 31, 2023
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	610.7	$	—	$	610.7	$	—
Marketable equity securities	416.8		416.8		—		—
Other current assets:
Receivable from Samsung BioLogics(1)	430.0		—		—		430.0
Derivative contracts	11.9		—		11.9		—
Other non-current assets:
Plan assets for deferred compensation	37.5		—		37.5		—
Total	$	1,506.9	$	416.8	$	660.1	$	430.0
Liabilities:
Derivative contracts	$	31.6	$	—	$	31.6	$	—
Total	$	31.6	$	—	$	31.6	$	—

(1) Represents the fair value of the second deferred payment due from Samsung BioLogics as a result of the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics during the second quarter of 2022, for which we elected the fair value option. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions, to these condensed consolidated financial statements.

Our marketable equity securities represent investments in publicly traded equity securities. Our ability to liquidate our investments in Denali, Sage and Sangamo may be limited by the size of our interest, the volume of market related activity, our concentrated level of ownership and potential restrictions resulting from our status as a collaborator. Therefore, we may realize significantly less than the current value of such investments.

For additional information on our investments in Denali, Sangamo and Sage common stock, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2023 Form 10-K.

There have been no material impairments of our assets measured and carried at fair value as of September 30, 2024 and December 31, 2023. In addition, there have been no changes to our valuation techniques as of September 30, 2024 and December 31, 2023.

For a description of our validation procedures related to prices provided by third-party pricing services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies - Fair Value Measurements, to our consolidated financial statements included in our 2023 Form 10-K.

Level 3 Assets and Liabilities Held at Fair Value

The following table presents quantitative information, as of the dates indicated, about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 financial assets and liabilities measured at fair value on a recurring basis:

	Quantitative Information about Level 3 Fair Value Measurements
	As of September 30, 2024
(In millions)	Fair Value		Valuation Technique	Significant Unobservable Input(s)	Range	Weighted Average
Liabilities:
Contingent consideration obligations	$	508.9	Discounted cash flow	Discount rate	5.4% - 5.8%	5.6	%
				Expected timing of achievement of development milestones	2025 - 2030	—

The weighted average discount rates were calculated based on the relative fair value of our contingent consideration obligations. In addition, we apply various probabilities of technological and regulatory success to the valuation models to estimate the fair values of our contingent consideration obligations, which ranged from 67.0% to near certain probability as of September 30, 2024.

There were no transfers of assets or liabilities into or out of Level 3 as of September 30, 2024 and December 31, 2023.

Contingent Consideration Obligations

In connection with our acquisition of HI-Bio in July 2024 we agreed to make additional payments based upon the achievement of certain milestone events. The following table provides a roll forward of the fair value of our contingent consideration obligation, which was classified as a Level 3 measurement:

(In millions)	For the Three and Nine Months Ended September 30, 2024
Fair value, beginning of period	$	—
Contingent consideration resulting from HI-Bio acquisition	485.1
Changes in fair value	23.8
Fair value, end of period	$	508.9

Changes in the fair value of our contingent consideration obligations are recorded in (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income.

As of September 30, 2024, approximately $287.1 million of the fair value of the total contingent consideration obligation was classified as short-term and reflected as a component of accrued expense and other within our condensed consolidated balance sheets with the remaining $221.8 million reflected as a component of other long-term liabilities in our condensed consolidated balance sheets.

For the three and nine months ended September 30, 2024, the changes in the fair value of our contingent consideration obligations were primarily due to changes in interest rates used to revalue our contingent consideration liabilities, the passage of time and updates to the expected timing of achieving certain milestones which will trigger contingent consideration payments.

Financial Instruments Not Carried at Fair Value

Other Financial Instruments

Due to the short-term nature of certain financial instruments, the carrying value reflected in our condensed consolidated balance sheets for current accounts receivable, due from anti-CD20 therapeutic programs, other current assets, accounts payable and accrued expense and other, approximates fair value.

Debt Instruments

The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:

	As of September 30, 2024				As of December 31, 2023
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
Current portion:
2023 Term Loan 364-day tranche	$	—	$	—	$	150.0	$	150.0
4.050% Senior Notes due September 15, 2025	1,739.9		1,748.1		—		—
Current portion of notes payable and term loan	1,739.9		1,748.1		150.0		150.0
Non-current portion:
2023 Term Loan three-year tranche	—		—		500.0		500.0
4.050% Senior Notes due September 15, 2025	—		—		1,721.5		1,746.6
2.250% Senior Notes due May 1, 2030	1,339.4		1,494.5		1,279.3		1,493.8
5.200% Senior Notes due September 15, 2045	1,079.2		1,101.0		1,089.7		1,100.7
3.150% Senior Notes due May 1, 2050	1,034.1		1,474.8		1,049.0		1,474.3
3.250% Senior Notes due February 15, 2051	490.9		475.5		498.2		472.8
Non-current portion of notes payable and term loan	3,943.6		4,545.8		6,137.7		6,788.2
Total notes payable and term loan	$	5,683.5	$	6,293.9	$	6,287.7	$	6,938.2

In connection with our acquisition of Reata we drew $1.0 billion from our 2023 Term Loan, comprised of a $500.0 million floating rate 364-day tranche and a $500.0 million floating rate three-year tranche. As of September 30, 2024, our 2023 Term Loan was repaid in full. For additional information on our 2023 Term Loan, please read Note 13, Indebtedness, to these condensed consolidated financial statements.

The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. The fair values of our Senior Notes as of September 30, 2024, compared to December 31, 2023, remained flat reflecting a mix of higher and lower U.S. treasury yields and credit spreads across the maturity spectrum. For additional information related to our Senior Notes, please read Note 13, Indebtedness, to our consolidated financial statements included in our 2023 Form 10-K.