UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, ~~2021~~2022


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

For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			94-3047598
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California 94404

(Address of principal executive offices) (Zip Code)

650-574-3000

(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, par value, $0.001 per share

GILD

The Nasdaq Global Select Market

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 x 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 x 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 x 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 x

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of October ~~29, 2021: 1,254,383,522~~31, 2022: 1,254,243,845

GILEAD SCIENCES, INC.

INDEX

PART I.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets at September 30, ~~2021~~2022 and December 31, ~~2020 (unaudited)~~

~~Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,~~ 2021 ~~and 2020 (unaudited)~~

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2022 and 2021

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021

Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3329

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

4535

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

5950

Item 3.

Defaults Upon Senior Securities

5950

Item 4.

Mine Safety Disclosures

We own or have rights to various trademarks ~~copyrights~~ and trade names used in our business, including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®, ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, DESCOVY FOR PREP®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPCLUDEX®~~(BULEVIRTIDE)~~, HEPSERA®, JYSELECA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, SUNLENCA®, TECARTUS®, TRODELVY®, TRUVADA®, TRUVADA FOR PREP®, TYBOST®, VEKLURY®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®. This report also ~~includes other~~refers to trademarks, service marks and trade names of other companies.

This Quarterly Report on Form 10-Q, including Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” “forecast” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends; operating cost and revenue trends; liquidity and capital needs; plans and expectations with respect to products, product candidates, corporate strategy, business and operations, financial projections and the use of capital; collaboration and licensing arrangements; patent protection and estimated loss of exclusivity for our products and product candidates; ongoing litigation and investigation matters; statements regarding the anticipated future impact on our business of the coronavirus disease 2019 (“COVID-19”) and related public health measures; and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified in Part II, Item 1A. Risk Factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof unless otherwise specified. Except as required under federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in Part II, Item 1A. Risk Factors of this Quarterly Report in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

PART I. FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share amounts)	(in millions, except per share amounts)	September 30, 2021		December 31, 2020		(in millions, except per share amounts)	September 30, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	4,362	$	5,997	Cash and cash equivalents	$	4,699	$	5,338
Short-term marketable securities		1,376		1,411
Short-term marketable debt securities						Short-term marketable debt securities	961		1,182
Accounts receivable, net	Accounts receivable, net	4,566		4,892		Accounts receivable, net	4,354		4,493
Inventories	Inventories	1,676		1,683		Inventories	1,463		1,618
Prepaid and other current assets	Prepaid and other current assets	2,011		2,013		Prepaid and other current assets	2,077		2,141
Total current assets	Total current assets	13,991		15,996		Total current assets	13,554		14,772
Property, plant and equipment, net	Property, plant and equipment, net	5,037		4,967		Property, plant and equipment, net	5,349		5,121
Long-term marketable securities		1,099		502
Long-term marketable debt securities						Long-term marketable debt securities	1,282		1,309
Intangible assets, net	Intangible assets, net	33,900		33,126		Intangible assets, net	29,440		33,455
Goodwill	Goodwill	8,332		8,108		Goodwill	8,314		8,332
Other long-term assets	Other long-term assets	4,739		5,708		Other long-term assets	4,618		4,963
Total assets	Total assets	$	67,098	$	68,407	Total assets	$	62,557	$	67,952
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	585	$	844	Accounts payable	$	614	$	705
Accrued government and other rebates	Accrued government and other rebates	3,368		3,460		Accrued government and other rebates	3,674		3,244
Accrued and other current liabilities	Accrued and other current liabilities	3,781		4,336		Accrued and other current liabilities	3,865		6,145
Current portion of long-term debt and other obligations, net	Current portion of long-term debt and other obligations, net	2,511		2,757		Current portion of long-term debt and other obligations, net	2,270		1,516
Total current liabilities	Total current liabilities	10,245		11,397		Total current liabilities	10,423		11,610
Long-term debt, net	Long-term debt, net	25,175		28,645		Long-term debt, net	22,953		25,179
Long-term income taxes payable	Long-term income taxes payable	4,642		5,016		Long-term income taxes payable	3,982		4,767
Deferred tax liability	Deferred tax liability	4,603		3,914		Deferred tax liability	3,036		4,356
Other long-term obligations	Other long-term obligations	962		1,214		Other long-term obligations	1,106		976
Commitments and contingencies (Note 11)		0		0
Commitments and contingencies (Note 10)						Commitments and contingencies (Note 10)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—		Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,255 and 1,254 shares issued and outstanding, respectively		1		1
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,254 shares issued and outstanding						Common stock, par value $0.001 per share; 5,600 shares authorized; 1,254 shares issued and outstanding	1		1
Additional paid-in capital	Additional paid-in capital	4,492		3,880		Additional paid-in capital	5,226		4,661
Accumulated other comprehensive income (loss)		74		(60)
Accumulated other comprehensive income						Accumulated other comprehensive income	98		83
Retained earnings	Retained earnings	16,903		14,381		Retained earnings	15,756		16,324
Total Gilead stockholders’ equity	Total Gilead stockholders’ equity	21,470		18,202		Total Gilead stockholders’ equity	21,081		21,069
Noncontrolling interest	Noncontrolling interest	1		19		Noncontrolling interest	(24)		(5)
Total stockholders’ equity	Total stockholders’ equity	21,471		18,221		Total stockholders’ equity	21,057		21,064
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	67,098	$	68,407	Total liabilities and stockholders’ equity	$	62,557	$	67,952

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME

(unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020		2021		2020		(in millions, except per share amounts)	2022		2021		2022		2021
Revenues:	Revenues:									Revenues:
Product sales	Product sales	$	7,356	$	6,493	$	19,848	$	17,027	Product sales	$	6,978	$	7,356	$	19,650	$	19,848
Royalty, contract and other revenues	Royalty, contract and other revenues	65		84		213		241		Royalty, contract and other revenues	64		65		242		213
Total revenues	Total revenues	7,421		6,577		20,061		17,268		Total revenues	7,042		7,421		19,892		20,061
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	1,223		1,141		3,974		3,174		Cost of goods sold	1,395		1,223		4,261		3,974
Research and development expenses	Research and development expenses	1,147		1,158		3,336		3,461		Research and development expenses	1,149		1,101		3,429		3,243
Acquired in-process research and development expenses	Acquired in-process research and development expenses	19		1,171		177		5,792		Acquired in-process research and development expenses	448		65		786		270
In-process research and development impairment										In-process research and development impairment	—		—		2,700		—
Selling, general and administrative expenses	Selling, general and administrative expenses	1,190		1,106		3,596		3,421		Selling, general and administrative expenses	1,213		1,190		3,653		3,596
Total costs and expenses	Total costs and expenses	3,579		4,576		11,083		15,848		Total costs and expenses	4,205		3,579		14,829		11,083
Income from operations	Income from operations	3,842		2,001		8,978		1,420		Income from operations	2,837		3,842		5,063		8,978
Interest expense	Interest expense	(250)		(236)		(763)		(717)		Interest expense	(229)		(250)		(709)		(763)
Other income (expense), net	Other income (expense), net	(154)		(940)		(696)		(848)		Other income (expense), net	(176)		(154)		(571)		(696)
Income (loss) before income taxes		3,438		825		7,519		(145)
Income before income taxes										Income before income taxes	2,432		3,438		3,783		7,519
Income tax expense	Income tax expense	(852)		(472)		(1,694)		(1,310)		Income tax expense	(646)		(852)		(850)		(1,694)
Net income (loss)		2,586		353		5,825		(1,455)
Net income										Net income	1,786		2,586		2,933		5,825
Net loss attributable to noncontrolling interest	Net loss attributable to noncontrolling interest	6		7		18		27		Net loss attributable to noncontrolling interest	3		6		19		18
Net income (loss) attributable to Gilead		$	2,592	$	360	$	5,843	$	(1,428)
Net income (loss) per share attributable to Gilead common stockholders - basic		$	2.06	$	0.29	$	4.65	$	(1.14)
Shares used in per share calculation - basic		1,256		1,255		1,256		1,257
Net income (loss) per share attributable to Gilead common stockholders - diluted		$	2.05	$	0.29	$	4.63	$	(1.14)
Shares used in per share calculation - diluted		1,262		1,261		1,262		1,257
Net income attributable to Gilead										Net income attributable to Gilead	$	1,789	$	2,592	$	2,952	$	5,843
Net income per share attributable to Gilead common stockholders – basic										Net income per share attributable to Gilead common stockholders – basic	$	1.43	$	2.06	$	2.35	$	4.65
Shares used in per share calculation – basic										Shares used in per share calculation – basic	1,255		1,256		1,255		1,256
Net income per share attributable to Gilead common stockholders – diluted										Net income per share attributable to Gilead common stockholders – diluted	$	1.42	$	2.05	$	2.34	$	4.63
Shares used in per share calculation – diluted										Shares used in per share calculation – diluted	1,261		1,262		1,261		1,262

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2021 2020 2021 2020
Net income (loss) $ 2,586 $ 353 $ 5,825 $ (1,455)
Other comprehensive income (loss):
Net foreign currency translation gain (loss), net of tax (20) 23 (15) (12)
Available-for-sale debt securities:
Net unrealized gain (loss), net of tax — (9) (3) 42
Reclassifications to net income (loss), net of tax — (4) — (17)
Net change — (13) (3) 25
Cash flow hedges:
Net unrealized gain (loss), net of tax 37 (46) 92 (25)
Reclassifications to net income (loss), net of tax 18 (11) 60 (50)
Net change 55 (57) 152 (75)
Other comprehensive income (loss) 35 (47) 134 (62)
Comprehensive income (loss) 2,621 306 5,959 (1,517)
Comprehensive loss attributable to noncontrolling interest 6 7 18 27
Comprehensive income (loss) attributable to Gilead $ 2,627 $ 313 $ 5,977 $ (1,490)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Net income	$	1,786	$	2,586	$	2,933	$	5,825
Other comprehensive income:
Net foreign currency translation loss, net of tax	(81)		(20)		(102)		(15)
Available-for-sale debt securities:
Net unrealized loss, net of tax	(7)		—		(38)		(3)
Reclassifications to net income, net of tax	—		—		1		—
Net change	(7)		—		(37)		(3)
Cash flow hedges:
Net unrealized gain, net of tax	140		37		254		92
Reclassifications to net income, net of tax	(41)		18		(100)		60
Net change	99		55		154		152
Other comprehensive income	11		35		15		134
Comprehensive income	1,797		2,621		2,948		5,959
Comprehensive loss attributable to noncontrolling interest	3		6		19		18
Comprehensive income attributable to Gilead	$	1,800	$	2,627	$	2,967	$	5,977

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Three Months Ended September 30, 2022
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of June 30, 2022	1,254	$	1	$	5,031	$	87	$	15,117	$	(21)	$	20,215
Net income (loss)	—	—		—		—		1,789		(3)		1,786
Other comprehensive income, net of tax	—	—		—		11		—		—		11
Issuances under employee stock purchase plan	2	—		30		—		—		—		30
Issuances under equity incentive plans	2	—		6		—		—		—		6
Stock-based compensation	—	—		170		—		—		—		170
Repurchases of common stock	(4)	—		(11)		—		(217)		—		(228)
Dividends declared ($0.73 per share)	—	—		—		—		(933)		—		(933)
Balance as of September 30, 2022	1,254	$	1	$	5,226	$	98	$	15,756	$	(24)	$	21,057


		Three Months Ended September 30, 2021																								Nine Months Ended September 30, 2022
(in millions, except per share amounts)	(in millions, except per share amounts)	Gilead Stockholders’ Equity															Noncontrolling Interest				Total Stockholders’ Equity		(in millions, except per share amounts)			Gilead Stockholders’ Equity										Noncontrolling Interest		Total Stockholders’ Equity
		Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Income				Retained Earnings													Common Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
		Shares	Amount																						Shares		Amount
Balance at June 30, 2021		1,254	$	1			$	4,271			$	39			$	15,392			$	7			$	19,710
Balance as of December 31, 2021																							Balance as of December 31, 2021			1,254		$	1	$	4,661	$	83	$	16,324	$	(5)	$	21,064
Net income (loss)	Net income (loss)	—	—		—				—				2,592				(6)				2,586		Net income (loss)			—		—		—		—		2,952		(19)		2,933
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				35				—				—				35		Other comprehensive income, net of tax			—		—		—		15		—		—		15
Issuances under employee stock purchase plan	Issuances under employee stock purchase plan	1	—		35				—				—				—				35		Issuances under employee stock purchase plan			3		—		103		—		—		—		103
Issuances under equity incentive plans	Issuances under equity incentive plans	3	—		22				—				—				—				22		Issuances under equity incentive plans			9		—		30		—		—		—		30
Stock-based compensation	Stock-based compensation	—	—		171				—				—				—				171		Stock-based compensation			—		—		465		—		—		—		465
Repurchases of common stock	Repurchases of common stock	(3)	—		(7)				—				(176)				—				(183)		Repurchases of common stock			(12)		—		(33)		—		(723)		—		(756)
Dividends declared ($0.71 per share)		—	—		—				—				(905)				—				(905)
Balance at September 30, 2021		1,255	$	1	$	4,492			$	74			$	16,903			$	1			$	21,471
Dividends declared ($2.19 per share)																							Dividends declared ($2.19 per share)			—		—		—		—		(2,797)		—		(2,797)
Balance as of September 30, 2022																							Balance as of September 30, 2022			1,254		$	1	$	5,226	$	98	$	15,756	$	(24)	$	21,057

Nine Months Ended September 30, 2021
(in millions, except per share amounts) Gilead Stockholders’ Equity Noncontrolling
Interest Total
Stockholders’
Equity
Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings
Shares Amount
Balance at December 31, 2020 1,254 $ 1 $ 3,880 $ (60) $ 14,381 $ 19 $ 18,221
Net income (loss) — — — — 5,843 (18) 5,825
Other comprehensive income, net of tax — — — 134 — — 134
Issuances under employee stock purchase plan 2 — 111 — — — 111
Issuances under equity incentive plans 9 — 46 — — — 46
Stock-based compensation — — 479 — — — 479
Repurchases of common stock (10) — (24) — (607) — (631)
Dividends declared ($2.13 per share) — — — — (2,714) — (2,714)
Balance at September 30, 2021 1,255 $ 1 $ 4,492 $ 74 $ 16,903 $ 1 $ 21,471

See accompanying notes.

~~GILEAD SCIENCES, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(unaudited)~~


	Three Months Ended September 30, 2021
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of June 30, 2021	1,254	$	1	$	4,271	$	39	$	15,392	$	7	$	19,710
Net income (loss)	—	—		—		—		2,592		(6)		2,586
Other comprehensive income, net of tax	—	—		—		35		—		—		35
Issuances under employee stock purchase plan	1	—		35		—		—		—		35
Issuances under equity incentive plans	3	—		22		—		—		—		22
Stock-based compensation	—	—		171		—		—		—		171
Repurchases of common stock	(3)	—		(7)		—		(176)		—		(183)
Dividends declared ($0.71 per share)	—	—		—		—		(905)		—		(905)
Balance as of September 30, 2021	1,255	$	1	$	4,492	$	74	$	16,903	$	1	$	21,471


		Three Months Ended September 30, 2020																								Nine Months Ended September 30, 2021
(in millions, except per share amounts)	(in millions, except per share amounts)	Gilead Stockholders’ Equity															Noncontrolling Interest				Total Stockholders’ Equity		(in millions, except per share amounts)			Gilead Stockholders’ Equity										Noncontrolling Interest		Total Stockholders’ Equity
		Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings													Common Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
		Shares	Amount																						Shares		Amount
Balance at June 30, 2020		1,254	$	1			$	3,511			$	70			$	14,445			$	115			$	18,142
Change in noncontrolling interest		—	—		—				—				—				(82)				(82)
Balance as of December 31, 2020																							Balance as of December 31, 2020			1,254		$	1	$	3,880	$	(60)	$	14,381	$	19	$	18,221
Net income (loss)	Net income (loss)	—	—		—				—				360				(7)				353		Net income (loss)			—		—		—		—		5,843		(18)		5,825
Other comprehensive income (loss), net of tax		—	—		1				(47)				(1)				—				(47)
Other comprehensive income, net of tax																							Other comprehensive income, net of tax			—		—		—		134		—		—		134
Issuances under employee stock purchase plan	Issuances under employee stock purchase plan	1	—		34				—				—				—				34		Issuances under employee stock purchase plan			2		—		111		—		—		—		111
Issuances under equity incentive plans	Issuances under equity incentive plans	2	—		2				—				—				—				2		Issuances under equity incentive plans			9		—		46		—		—		—		46
Stock-based compensation	Stock-based compensation	—	—		173				—				—				—				173		Stock-based compensation			—		—		479		—		—		—		479
Repurchases of common stock	Repurchases of common stock	(4)	—		(9)				—				(229)				—				(238)		Repurchases of common stock			(10)		—		(24)		—		(607)		—		(631)
Dividends declared ($0.68 per share)		—	—		—				—				(866)				—				(866)
Balance at September 30, 2020		1,253	$	1	$	3,712			$	23			$	13,709			$	26			$	17,471
Dividends declared ($2.13 per share)																							Dividends declared ($2.13 per share)			—		—		—		—		(2,714)		—		(2,714)
Balance as of September 30, 2021																							Balance as of September 30, 2021			1,255		$	1	$	4,492	$	74	$	16,903	$	1	$	21,471

Nine Months Ended September 30, 2020
(in millions, except per share amounts) Gilead Stockholders’ Equity Noncontrolling
Interest Total
Stockholders’
Equity
Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Shares Amount
Balance at December 31, 2019 1,266 $ 1 $ 3,051 $ 85 $ 19,388 $ 125 $ 22,650
Cumulative effect from the adoption of new accounting standard — — — — (7) — (7)
Change in noncontrolling interest — — — — — (72) (72)
Net loss — — — — (1,428) (27) (1,455)
Other comprehensive income (loss), net of tax — — 1 (62) (1) — (62)
Issuances under employee stock purchase plan 2 — 100 — — — 100
Issuances under equity incentive plans 10 — 148 — — — 148
Stock-based compensation — — 482 — — — 482
Repurchases of common stock (25) — (70) — (1,644) — (1,714)
Dividends declared ($2.04 per share) — — — — (2,599) — (2,599)
Balance at September 30, 2020 1,253 $ 1 $ 3,712 $ 23 $ 13,709 $ 26 $ 17,471

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Operating Activities:	Operating Activities:					Operating Activities:
Net income (loss)		$	5,825	$	(1,455)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	2,933	$	5,825
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	Depreciation expense	239		209		Depreciation expense	240		239
Amortization expense	Amortization expense	1,276		844		Amortization expense	1,335		1,276
Stock-based compensation expense	Stock-based compensation expense	476		482		Stock-based compensation expense	463		476
Acquired in-process research and development expenses	Acquired in-process research and development expenses	177		5,792		Acquired in-process research and development expenses	786		270
In-process research and development impairment						In-process research and development impairment	2,700		—
Deferred income taxes	Deferred income taxes	243		(12)		Deferred income taxes	(1,214)		243
Net loss from equity securities	Net loss from equity securities	667		1,046		Net loss from equity securities	596		667
Other	Other	601		210		Other	546		508
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	272		(334)		Accounts receivable, net	(125)		272
Inventories	Inventories	(24)		(48)		Inventories	(34)		(24)
Prepaid expenses and other	Prepaid expenses and other	(17)		22		Prepaid expenses and other	12		(17)
Accounts payable	Accounts payable	(242)		(134)		Accounts payable	(38)		(242)
Income taxes payable	Income taxes payable	(463)		(428)		Income taxes payable	(564)		(463)
Accrued and other liabilities	Accrued and other liabilities	(851)		58		Accrued and other liabilities	(1,131)		(851)
Net cash provided by operating activities	Net cash provided by operating activities	8,179		6,252		Net cash provided by operating activities	6,505		8,179
Investing Activities:	Investing Activities:					Investing Activities:
Purchases of marketable debt securities	Purchases of marketable debt securities	(2,891)		(19,809)		Purchases of marketable debt securities	(1,398)		(2,891)
Proceeds from sales of marketable debt securities	Proceeds from sales of marketable debt securities	506		12,367		Proceeds from sales of marketable debt securities	370		506
Proceeds from maturities of marketable debt securities	Proceeds from maturities of marketable debt securities	1,808		8,528		Proceeds from maturities of marketable debt securities	1,232		1,808
Acquisitions, including in-process research and development, net of cash acquired	Acquisitions, including in-process research and development, net of cash acquired	(1,401)		(5,804)		Acquisitions, including in-process research and development, net of cash acquired	(1,579)		(1,540)
Purchases of equity securities	Purchases of equity securities	(332)		(388)		Purchases of equity securities	(166)		(332)
Capital expenditures	Capital expenditures	(423)		(469)		Capital expenditures	(547)		(423)
Other	Other	(120)		(63)		Other	(3)		19
Net cash used in investing activities	Net cash used in investing activities	(2,853)		(5,638)		Net cash used in investing activities	(2,091)		(2,853)
Financing Activities:	Financing Activities:					Financing Activities:
Proceeds from debt financing, net of issuance costs		—		7,189
Proceeds from issuances of common stock	Proceeds from issuances of common stock	157		248		Proceeds from issuances of common stock	133		157
Repurchases of common stock	Repurchases of common stock	(497)		(1,583)		Repurchases of common stock	(604)		(497)
Repayments of debt and other obligations	Repayments of debt and other obligations	(3,750)		(2,500)		Repayments of debt and other obligations	(1,500)		(3,750)
Payments of dividends	Payments of dividends	(2,711)		(2,591)		Payments of dividends	(2,794)		(2,711)
Other	Other	(134)		(124)		Other	(150)		(134)
Net cash provided by (used in) financing activities		(6,935)		639
Net cash used in financing activities						Net cash used in financing activities	(4,915)		(6,935)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(26)		2		Effect of exchange rate changes on cash and cash equivalents	(138)		(26)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(1,635)		1,255		Net change in cash and cash equivalents	(639)		(1,635)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	5,997		11,631		Cash and cash equivalents at beginning of period	5,338		5,997
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	4,362	$	12,886	Cash and cash equivalents at end of period	$	4,699	$	4,362

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Basis of Presentation~~

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. The financial statements include all adjustments consisting of normal recurring adjustments that the management of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and a variable interest entity (“VIE”) for which we are the primary beneficiary. All intercompany transactions have been eliminated. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interests in our Condensed Consolidated Statements of Operations equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties.

We assess whether we are the primary beneficiary of a VIE at the inception of the arrangement and at each reporting date. This assessment is based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We did not have any material VIEs as of September 30, 2021.

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, ~~2020,~~2021, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission.

~~Segment Information~~

We There have ~~1 operating segment, which focuses on~~been no material changes to our organization or summary of significant accounting policies as disclosed in that filing except for our classification of expenses related to development milestones and other collaboration payments made prior to regulatory approval of a developed product. Beginning in the ~~discovery,~~second quarter of 2022, we reclassified such expenses from Research and development ~~and commercialization of innovative medicines in areas of unmet medical need. Our Chief Executive Officer, as the chief operating decision-maker (“CODM”), manages and allocates resources~~expenses to the operations of the company on an entity-wide basis. Managing and allocating resources on an entity-wide basis enables our CODM to assess the overall level of resources available and how to best deploy these resources across functions andAcquired in-process research and development ~~(“R&D”) projects based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities to best support~~expenses in the ~~long-term growth of our business. See Note 2. Revenues for a summary of disaggregated revenues by product and geographic region.~~

~~Significant Accounting Policies, Estimates and Judgments~~

~~The preparation of these~~ Condensed Consolidated ~~Financial~~ Statements of Income. Concurrently, we reclassified the cash payments related to these expenses from Other to Acquisitions, including in-process research and development, net of cash acquired within Investing Activities in ~~accordance with U.S. generally accepted accounting principles requires management~~the Condensed Consolidated Statements of Cash Flows. We believe this presentation assists users of the financial statements to ~~make estimates~~better understand the total costs incurred to acquire in-process research and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updateddevelopment (“IPR&D”) projects. Prior periods have been revised to reflect current information, such as the economic considerations related to the impact that the coronavirus disease 2019 (“COVID-19”) could have on our significant accounting estimates. Actual results may differ significantly from these estimates.

~~Concentrations~~this classification, resulting in a reduction of ~~Risk~~

~~We are subject to credit risk from our portfolio~~previously-reported Research and development expenses of ~~cash equivalents~~$46 million and marketable securities. Under our investment policy, we limit amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. We are not exposed to any significant concentrations of credit risk from these financial instruments. The goals of our investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax rate of return.

We are also subject to credit risk from our accounts receivable related to our product sales. Trade accounts receivable are recorded net of allowances for wholesaler chargebacks related to government and other programs, cash discounts for prompt payment and credit losses. Estimates of our allowance for credit losses consider a number of factors, including existing contractual payment terms, individual customer circumstances, historical payment patterns of our customers, a review of the local economic environment and its potential impact on expected future customer payment patterns and government funding and reimbursement practices. The majority of our trade accounts receivable arises from product sales in the United States and Europe. There were no material write-offs charged against the allowance$93 million for the three and nine months ended September 30, 2021, respectively, and ~~2020.~~$8 million for the three months ended March 31, 2022.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and include all adjustments consisting of normal recurring adjustments that the management of Gilead believes are necessary for a fair presentation of the periods presented and are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period. Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

2. REVENUES

Disaggregation of Revenues

~~Revenues were as follows:~~The following table summarizes our Total revenues:


		Three Months Ended September 30, 2021								Three Months Ended September 30, 2020									Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
(in millions)	(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total		(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product Sales:
Product sales:																		Product sales:
HIV	HIV																	HIV
Atripla		$	21	$	2	$	4	$	27	$	99	$	5	$	9	$	113
Biktarvy	Biktarvy	1,875		254		147		2,276		1,584		194		113		1,891		Biktarvy	$	2,286	$	278	$	201	$	2,766	$	1,875	$	254	$	147	$	2,276
Complera/Eviplera	Complera/Eviplera	28		31		5		64		26		35		9		70		Complera/Eviplera	20		21		3		43		28		31		5		64
Descovy	Descovy	355		42		36		433		424		49		35		508		Descovy	444		28		28		500		355		42		36		433
Genvoya	Genvoya	576		100		68		744		669		116		61		846		Genvoya	502		71		27		600		576		100		68		744
Odefsey	Odefsey	275		112		12		399		309		116		12		437		Odefsey	276		86		12		374		275		112		12		399
Stribild	Stribild	28		11		3		42		27		13		2		42		Stribild	22		7		3		32		28		11		3		42
Truvada	Truvada	55		5		7		67		492		6		11		509		Truvada	24		3		2		30		55		5		7		67
Revenue share - Symtuza(1)	Revenue share - Symtuza(1)	86		41		3		130		82		34		2		118		Revenue share - Symtuza(1)	85		40		4		130		86		41		3		130
Other HIV(2)	Other HIV(2)	3		4		—		7		10		1		2		13		Other HIV(2)	1		6		5		12		24		6		4		34
Total HIV	Total HIV	3,302		602		285		4,189		3,722		569		256		4,547		Total HIV	3,661		541		285		4,487		3,302		602		285		4,189

Veklury																		Veklury	336		130		458		925		1,527		109		287		1,923
Hepatitis C virus (“HCV”)	Hepatitis C virus (“HCV”)																	Hepatitis C virus (“HCV”)
Ledipasvir/Sofosbuvir(3)	Ledipasvir/Sofosbuvir(3)	14		5		26		45		36		11		37		84		Ledipasvir/Sofosbuvir(3)	8		5		12		25		14		5		26		45
Sofosbuvir/Velpatasvir(4)	Sofosbuvir/Velpatasvir(4)	173		77		82		332		170		74		86		330		Sofosbuvir/Velpatasvir(4)	241		131		84		455		173		77		82		332
Other HCV(5)	Other HCV(5)	37		12		3		52		35		13		2		50		Other HCV(5)	34		7		2		44		37		12		3		52
Total HCV	Total HCV	224		94		111		429		241		98		125		464		Total HCV	283		143		98		524		224		94		111		429
Hepatitis B virus (“HBV”) / Hepatitis Delta virus (“HDV”)

Hepatitis B virus (“HBV”) / Hepatitis delta virus (“HDV”)																		Hepatitis B virus (“HBV”) / Hepatitis delta virus (“HDV”)
Vemlidy	Vemlidy	103		9		96		208		99		8		70		177		Vemlidy	129		9		90		228		103		9		96		208
Viread	Viread	1		7		18		26		3		8		21		32		Viread	2		5		15		22		1		7		18		26
Other HBV/HDV(6)	Other HBV/HDV(6)	—		13		—		13		—		2		—		2		Other HBV/HDV(6)	—		13		—		14		—		13		—		13
Total HBV/HDV	Total HBV/HDV	104		29		114		247		102		18		91		211		Total HBV/HDV	131		28		106		264		104		29		114		247

Veklury		1,527		109		287		1,923		785		60		28		873

Cell Therapy
Cell therapy																		Cell therapy
Tecartus	Tecartus	35		12		—		47		5		4		—		9		Tecartus	60		20		1		81		35		12		—		47
Yescarta	Yescarta	100		66		9		175		85		51		2		138		Yescarta	210		91		16		317		100		66		9		175
Total Cell Therapy		135		78		9		222		90		55		2		147
Total cell therapy																		Total cell therapy	270		111		17		398		135		78		9		222

Trodelvy	Trodelvy	100		1		—		101		—		—		—		—		Trodelvy	139		38		3		180		100		1		—		101

Other	Other																	Other
AmBisome	AmBisome	7		67		69		143		18		58		35		111		AmBisome	9		63		33		105		7		67		69		143
Letairis	Letairis	46		—		—		46		78		—		—		78		Letairis	43		—		—		43		46		—		—		46
Zydelig		6		7		—		13		8		9		—		17
Other(7)	Other(7)	28		10		5		43		32		10		3		45		Other(7)	28		11		13		52		34		17		5		56
Total Other		87		84		74		245		136		77		38		251
Total other																		Total other	80		75		46		200		87		84		74		245
Total product sales	Total product sales	5,479		997		880		7,356		5,076		877		540		6,493		Total product sales	4,900		1,064		1,013		6,978		5,479		997		880		7,356
Royalty, contract and other revenues	Royalty, contract and other revenues	30		34		1		65		24		60		—		84		Royalty, contract and other revenues	28		37		—		64		30		34		1		65
Total revenues	Total revenues	$	5,509	$	1,031	$	881	$	7,421	$	5,100	$	937	$	540	$	6,577	Total revenues	$	4,928	$	1,101	$	1,013	$	7,042	$	5,509	$	1,031	$	881	$	7,421


		Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020									Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
(in millions)	(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total		(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product Sales:
Product sales:																		Product sales:
HIV	HIV																	HIV
Atripla		$	96	$	10	$	12	$	118	$	275	$	17	$	19	$	311
Biktarvy	Biktarvy	4,926		707		461		6,094		4,346		528		314		5,188		Biktarvy	$	6,088	$	807	$	577	$	7,472	$	4,926	$	707	$	461	$	6,094
Complera/Eviplera	Complera/Eviplera	73		104		12		189		77		124		17		218		Complera/Eviplera	56		76		10		142		73		104		12		189
Descovy	Descovy	994		128		105		1,227		1,124		156		103		1,383		Descovy	1,152		92		91		1,335		994		128		105		1,227
Genvoya	Genvoya	1,633		306		184		2,123		1,927		376		183		2,486		Genvoya	1,441		220		103		1,764		1,633		306		184		2,123
Odefsey	Odefsey	773		336		39		1,148		851		341		36		1,228		Odefsey	763		278		36		1,077		773		336		39		1,148
Stribild	Stribild	94		33		12		139		100		42		12		154		Stribild	68		23		7		98		94		33		12		139
Truvada	Truvada	268		18		24		310		1,245		20		37		1,302		Truvada	77		12		13		102		268		18		24		310
Revenue share - Symtuza(1)	Revenue share - Symtuza(1)	261		125		8		394		244		112		6		362		Revenue share - Symtuza(1)	251		126		10		388		261		125		8		394
Other HIV(2)	Other HIV(2)	14		9		12		35		24		4		21		49		Other HIV(2)	11		20		15		45		110		19		24		153
Total HIV	Total HIV	9,132		1,776		869		11,777		10,213		1,720		748		12,681		Total HIV	9,906		1,653		863		12,422		9,132		1,776		869		11,777

Veklury																		Veklury	1,179		560		1,166		2,905		2,763		761		684		4,208
HCV	HCV																	HCV
Ledipasvir/Sofosbuvir(3)	Ledipasvir/Sofosbuvir(3)	63		24		76		163		113		26		124		263		Ledipasvir/Sofosbuvir(3)	27		13		43		83		63		24		76		163
Sofosbuvir/Velpatasvir(4)	Sofosbuvir/Velpatasvir(4)	649		234		272		1,155		646		253		330		1,229		Sofosbuvir/Velpatasvir(4)	629		288		244		1,161		649		234		272		1,155
Other HCV(5)	Other HCV(5)	97		64		9		170		100		37		12		149		Other HCV(5)	88		31		7		127		97		64		9		170
Total HCV	Total HCV	809		322		357		1,488		859		316		466		1,641		Total HCV	745		332		294		1,371		809		322		357		1,488
HBV / HDV

HBV/HDV																		HBV/HDV
Vemlidy	Vemlidy	266		25		298		589		248		22		194		464		Vemlidy	306		27		289		622		266		25		298		589
Viread	Viread	8		22		55		85		10		27		100		137		Viread	4		17		48		69		8		22		55		85
Other HBV/HDV(6)	Other HBV/HDV(6)	1		29		—		30		9		6		—		15		Other HBV/HDV(6)	1		41		—		42		1		29		—		30
Total HBV/HDV	Total HBV/HDV	275		76		353		704		267		55		294		616		Total HBV/HDV	311		85		337		733		275		76		353		704

Veklury		2,763		761		684		4,208		785		60		28		873

Cell Therapy
Cell therapy																		Cell therapy
Tecartus	Tecartus	94		25		—		119		5		5		—		10		Tecartus	160		56		2		217		94		25		—		119
Yescarta	Yescarta	300		188		25		513		283		144		7		434		Yescarta	528		253		42		823		300		188		25		513
Total Cell Therapy		394		213		25		632		288		149		7		444
Total cell therapy																		Total cell therapy	688		308		44		1,040		394		213		25		632

Trodelvy	Trodelvy	261		1		—		262		—		—		—		—		Trodelvy	379		98		8		485		261		1		—		262

Other	Other																	Other
AmBisome	AmBisome	32		202		186		420		46		166		113		325		AmBisome	48		192		140		380		32		202		186		420
Letairis	Letairis	157		—		—		157		241		—		—		241		Letairis	135		—		—		135		157		—		—		157
Ranexa		5		—		—		5		9		—		—		9
Zydelig		22		27		1		50		24		30		1		55
Other(7)	Other(7)	82		41		22		145		103		32		7		142		Other(7)	91		52		35		178		109		68		23		200
Total Other		298		270		209		777		423		228		121		772
Total other																		Total other	275		244		174		693		298		270		209		777
Total product sales	Total product sales	13,932		3,419		2,497		19,848		12,835		2,528		1,664		17,027		Total product sales	13,482		3,281		2,887		19,650		13,932		3,419		2,497		19,848
Royalty, contract and other revenues	Royalty, contract and other revenues	70		140		3		213		55		170		16		241		Royalty, contract and other revenues	140		98		4		242		70		140		3		213
Total revenues	Total revenues	$	14,002	$	3,559	$	2,500	$	20,061	$	12,890	$	2,698	$	1,680	$	17,268	Total revenues	$	13,622	$	3,378	$	2,891	$	19,892	$	14,002	$	3,559	$	2,500	$	20,061

(1) Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited ~~Company.~~Company (“Janssen”).

(2) Includes Atripla, Emtriva and Tybost.

(3) Amounts consist of sales of Harvoni and the authorized generic version of Harvoni sold by our separate subsidiary, Asegua Therapeutics LLC.

(4) Amounts consist of sales of Epclusa and the authorized generic version of Epclusa sold by our separate subsidiary, Asegua Therapeutics LLC.

(5) Includes Vosevi and Sovaldi.

(6) Includes Hepcludex and Hepsera.

(7) Includes Cayston, Jyseleca, Ranexa and ~~Jyseleca.~~Zydelig.

Revenues from Major Customers

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of our ~~total~~Total revenues:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
(as a percentage of total revenues)	(as a percentage of total revenues)	2021		2020		2021		2020		(as a percentage of total revenues)	2022		2021		2022		2021
AmerisourceBergen Corporation	AmerisourceBergen Corporation	25	%	30	%	24	%	25	%	AmerisourceBergen Corporation	18	%	25	%	17	%	24	%
Cardinal Health, Inc.	Cardinal Health, Inc.	22	%	19	%	21	%	22	%	Cardinal Health, Inc.	25	%	22	%	25	%	21	%
McKesson Corporation	McKesson Corporation	21	%	22	%	18	%	22	%	McKesson Corporation	22	%	21	%	20	%	18	%

Revenues Recognized from Performance Obligations Satisfied in Prior Periods

~~Revenues~~The following table summarizes revenues recognized from performance obligations satisfied in prior years related to royalties for licenses of our intellectual property were $190 million and $625 million for the three and nine months ended September 30, 2021, respectively, and $206 million and $618 million for the three and nine months ended September 30, 2020, respectively.periods:

Variable consideration is included in the net sales price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring when the uncertainty associated with the variable consideration is subsequently resolved. Estimates are assessed each period and updated to reflect current information. Changes in estimates for variable consideration related to sales made in prior years resulted in a $188 million and $661 million increase in revenues for the three and nine months ended September 30, 2021, respectively, and $13 million and $94 million increase in revenues for the three and nine months ended September 30, 2020, respectively.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Revenue share with Janssen and royalties for licenses of intellectual property	$	192	$	190	$	573	$	625
Changes in estimates	$	207	$	188	$	452	$	661

Contract Balances

Our contract assets, which consist of unbilled amounts primarily from arrangements where the licensing of intellectual property is the only or predominant performance obligation, totaled ~~$167~~$164 million and ~~$198~~$174 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Contract liabilities, which generally result from receipt of advance payment before our performance under the contract, were $85 million and ~~$97~~$79 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. During the three and nine months ended September 30, 2021 and 2020, revenue recognized that was included in the contract liability balance as of the beginning of the respective years was not material. Revenue expected to be recognized in the future from contract liabilities as the related performance obligations are satisfied is not expected to be material in any one year.

3. FAIR VALUE MEASUREMENTS

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:

•Level 1 inputs include quoted prices in active markets for identical assets or liabilities;

•Level 2 inputs include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or ~~liabilities;~~liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

•Level 3 inputs include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Our Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Our financial instruments consist primarily of cash and cash equivalents, marketable debt securities, accounts receivable, foreign currency exchange contracts, equity securities, accounts payable and short-term and long-term debt. Cash and cash equivalents, marketable debt securities, certain equity securities and foreign currency exchange contracts are reported at their respective fair values on our Condensed Consolidated Balance Sheets. Equity securities without readily determinable fair values are recorded using the measurement alternative of cost less impairment, if any, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. Short-term and long-term debt are reported at their amortized costs on our Condensed Consolidated Balance Sheets. The remaining financial instruments are reported on our Condensed Consolidated Balance Sheets at amounts that approximate current fair values. ~~There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.~~

The following table summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy:

September 30, 2021 December 31, 2020
(in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale debt securities:
U.S. treasury securities $ 360 $ — $ — $ 360 $ 309 $ — $ — $ 309
U.S. government agencies securities — 5 — 5 — — — —
Non-U.S. government securities — 44 — 44 — 43 — 43
Certificates of deposit — 361 — 361 — 216 — 216
Corporate debt securities — 1,272 — 1,272 — 1,142 — 1,142
Residential mortgage and asset-backed securities — 447 — 447 — 316 — 316
Equity securities:
Money market funds 2,768 — — 2,768 4,361 — — 4,361
Equity investment in Galapagos 881 — — 881 1,648 — — 1,648
Other publicly traded equity securities(1)
876 — — 876 743 — — 743
Deferred compensation plan 249 — — 249 218 — — 218
Foreign currency derivative contracts — 55 — 55 — 12 — 12
Total $ 5,134 $ 2,184 $ — $ 7,318 $ 7,279 $ 1,729 $ — $ 9,008
Liabilities:
Liability for MYR GmbH (“MYR”) contingent consideration $ — $ — $ 328 $ 328 $ — $ — $ — $ —
Deferred compensation plan 249 — — 249 218 — — 218
Foreign currency derivative contracts — 8 — 8 — 121 — 121
Total $ 249 $ 8 $ 328 $ 585 $ 218 $ 121 $ — $ 339

~~(1)~~ Includes our equity investment in Arcus Biosciences, Inc. (“Arcus”) of $482 million as of September 30, 2021 recorded in Prepaid and other current assets and $212 million as of December 31, 2020 recorded in Other long-term assets on our Condensed Consolidated Balance Sheets. See Note 9. Collaborations and Other Arrangements for further information.

~~Equity Securities~~

~~The following table summarizes the classification of our equity securities measured at fair value on a recurring basis on our Condensed Consolidated Balance Sheets:~~

(in millions) September 30, 2021 December 31, 2020
Cash and cash equivalents $ 2,768 $ 4,361
Prepaid and other current assets(1)
871 853
Other long-term assets(1)
1,135 1,756
Total $ 4,774 $ 6,970

~~(1)~~ ~~See the table under the Equity Investment in Galapagos NV (“Galapagos”) for more information.~~

Changes in the fair value of equity securities resulted in net unrealized loss of $142 million and $667 million for the three and nine months ended September 30, 2021, respectively, and $964 million and $1.0 billion for the three and nine months ended September 30, 2020, respectively, which were included in Other income (expense), net on our Condensed Consolidated Statements of Operations.

Our available-for-sale debt securities are classified as cash equivalents, short-term marketable securities and long-term marketable securities in our Condensed Consolidated Balance Sheets. See Note 4. Available-For-Sale Debt Securities for additional information.

~~Equity Investment in Galapagos~~

~~The following table summarizes the classification of our equity investment in Galapagos in our Condensed Consolidated Balance Sheets:~~

(in millions) September 30, 2021 December 31, 2020
Prepaid and other current assets $ — $ 351
Other long-term assets 881 1,297
Total $ 881 $ 1,648

We elected and applied the fair value option to account for our equity investment in Galapagos whereby the investment is marked to market through earnings each reporting period based on the market price of Galapagos shares. We believe the fair value option best reflects the underlying economics of the investment. The portion of the investment subject to long-term contractual lock-up provisions is classified within Other long-term assets and the remainder is classified as Prepaid and other current assets on our Condensed Consolidated Balance Sheets. In April 2021, we amended the Galapagos subscription agreement to extend the initial lock-up provision for certain Galapagos shares from August 2021 to August 2024. As of September 30, 2021, all of our equity investment in Galapagos was classified as Other long-term assets on our Condensed Consolidated Balance Sheets.

~~Other Equity Securities~~

Equity investments not measured at fair value and excluded from the above tables were limited partnerships and other equity method investments of $96 million and $58 million at September 30, 2021 and December 31, 2020, respectively, and other equity investments without readily determinable fair values of $211 million and $204 million at September 30, 2021 and December 31, 2020, respectively. These amounts were included in Other long-term assets on our Condensed Consolidated Balance Sheets.

~~Related Party Transaction~~

During the second quarter of 2021, Gilead donated certain equity securities at fair value to the Gilead Foundation, a California nonprofit organization (the “Foundation”). The Foundation is a related party as certain officers of the Company also serve as directors of the Foundation. The donation expense of $212 million was recorded within Selling, general and administrative expenses on our Condensed Consolidated Statements of Operations during the nine months ended September 30, 2021.


	September 30, 2022								December 31, 2021
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale debt securities:
U.S. treasury securities	$	448	$	—	$	—	$	448	$	407	$	—	$	—	$	407
U.S. government agencies securities	—		19		—		19		—		4		—		4
Non-U.S. government securities	—		44		—		44		—		50		—		50
Certificates of deposit	—		65		—		65		—		249		—		249
Corporate debt securities	—		1,367		—		1,367		—		1,363		—		1,363
Residential mortgage and asset-backed securities	—		347		—		347		—		424		—		424
Equity securities:
Money market funds	3,316		—		—		3,316		3,661		—		—		3,661
Equity investment in Galapagos NV (“Galapagos”)	703		—		—		703		931		—		—		931
Equity investment in Arcus Biosciences, Inc. (“Arcus”)	361		—		—		361		559		—		—		559
Other publicly traded equity securities	205		—		—		205		331		—		—		331
Deferred compensation plan	208		—		—		208		261		—		—		261
Foreign currency derivative contracts	—		242		—		242		—		80		—		80
Total	$	5,242	$	2,084	$	—	$	7,325	$	6,150	$	2,170	$	—	$	8,320
Liabilities:
Liability for MYR GmbH (“MYR”) contingent consideration	$	—	$	—	$	249	$	249	$	—	$	—	$	317	$	317
Deferred compensation plan	208		—		—		208		261		—		—		261
Foreign currency derivative contracts	—		2		—		2		—		5		—		5
Total	$	208	$	2	$	249	$	458	$	261	$	5	$	317	$	583

Level 2 Inputs

WeAvailable-for-Sale Debt Securities

For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of ~~Level 2 financial instruments by~~the measurement date, and taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate the fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

For our marketable securities, we review trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data.Foreign Currency Derivative Contracts

Substantially all of our foreign currency derivative contracts have maturities within an 18-month time horizon and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. We estimate the fair values of these contracts by taking into consideration the valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency exchange rates, ~~London Interbank Offered Rates (“LIBOR”)~~Secured Overnight Financing Rate and swap rates. These inputs, where applicable, are observable at commonly quoted intervals.

Senior Unsecured Notes

The total estimated fair values of our ~~aggregate short-term and long-term debt,~~senior unsecured notes, determined using Level 2 inputs based on their quoted market values, were approximately ~~$29.6~~$21.2 billion and ~~$34.6~~$28.6 billion as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and the carrying values were ~~$26.6~~$24.1 billion and ~~$30.3~~$25.6 billion as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

1413

Level 3 Inputs

~~We measured assets acquired and liabilities assumed at fair value as of the acquisition on a nonrecurring basis, in~~Contingent Consideration

In connection with our first quarter 2021 acquisition of ~~MYR. The~~MYR, we recorded a liability for contingent consideration, ~~of $341 million as of~~which is revalued each reporting period until the ~~acquisition date~~related contingency is remeasured on a recurring basis. The estimated fair value of this contingent liability was $328 million as of September 30, 2021. The change in estimated fair value from the acquisition date was primarily due to the effect of foreign exchange remeasurement.resolved. The contingent consideration was estimated using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of Hepcludex. ~~See Note 6. Acquisitions for additional information.~~

The following table summarizes the change in fair value of our contingent consideration:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Beginning balance	$	306	$	334	$	317	$	—
Additions	—		—		—		341
Changes in valuation assumptions	(30)		—		(19)		—
Effect of foreign exchange remeasurement	(27)		(7)		(49)		(13)
Ending balance	$	249	$	328	$	249	$	328

Changes in valuation assumptions were primarily related to increasing discount rates and updated probability rate estimates. Such changes were included in Research and development expenses on our Condensed Consolidated Statements of Income. Effect of foreign exchange remeasurement was included in Other income (expense), net on our Condensed Consolidated Statements of Income.

Liability Related to the Sale of Future Royalties

We ~~measured assets acquired and liabilities assumed at fair value~~recorded a liability related to the sale of future royalties as part of ~~the acquisition on a nonrecurring basis, in connection with~~ our fourth quarter 2020 acquisition of Immunomedics, Inc. (“Immunomedics”)., which is subsequently amortized using the effective interest method over the remaining estimated life. The fair values of the liability related to the sale of future royalties ~~assumed is recorded at amortized cost, which approximated fair value~~were $1.1 billion and $1.3 billion as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively, and the carrying value was $1.1 billion as of September 30, 2022 and December 31, 2021. See Note ~~6. Acquisitions and Note 10.~~9. Debt and Credit Facilities for additional information.

Fair Value Level Transfers

There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

Nonrecurring Fair Value Measurements

During the nine months ended September 30, 2022, we recorded a partial impairment charge of $2.7 billion related to certain IPR&D assets. See Note 7. Goodwill and Intangible Assets for additional information.

4. AVAILABLE-FOR-SALE DEBT SECURITIES AND EQUITY SECURITIES

Available-for-Sale Debt Securities

The following table summarizes our available-for-sale debt securities:


		September 30, 2021								December 31, 2020									September 30, 2022								December 31, 2021
(in millions)	(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury securities	U.S. treasury securities	$	360	$	—	$	—	$	360	$	308	$	1	$	—	$	309	U.S. treasury securities	$	456	$	—	$	(7)	$	448	$	408	$	—	$	(1)	$	407
U.S. government agencies securities	U.S. government agencies securities	5		—		—		5		—		—		—		—		U.S. government agencies securities	19		—		—		19		4		—		—		4
Non-U.S. government securities	Non-U.S. government securities	44		—		—		44		43		—		—		43		Non-U.S. government securities	44		—		—		44		50		—		—		50
Certificates of deposit	Certificates of deposit	361		—		—		361		216		—		—		216		Certificates of deposit	65		—		—		65		249		—		—		249
Corporate debt securities	Corporate debt securities	1,272		1		(1)		1,272		1,140		2		—		1,142		Corporate debt securities	1,397		—		(30)		1,367		1,365		—		(2)		1,363
Residential mortgage and asset-backed securities	Residential mortgage and asset-backed securities	447		—		—		447		316		—		—		316		Residential mortgage and asset-backed securities	350		—		(3)		347		425		—		(1)		424
Total	Total	$	2,489	$	1	$	(1)	$	2,489	$	2,023	$	3	$	—	$	2,026	Total	$	2,331	$	—	$	(40)	$	2,290	$	2,501	$	—	$	(4)	$	2,497

The aggregate fair value of investments with unrealized losses was $2.1 billion and $2.0 billion as of September 30, 2022 and December 31, 2021, respectively. No allowance for credit losses was recognized for investments with unrealized losses as of September 30, 2022, as we do not currently intend to sell, and it is not more likely than not that we will be required to sell, such investments before recovery of their amortized cost bases. The unrealized losses were primarily driven by broader change in interest rates with no adverse conditions identified that would prevent the issuer from making scheduled principal and interest payments.

The following table summarizes the classification of our available-for-sale debt securities in our Condensed Consolidated Balance Sheets:


(in millions)	(in millions)	September 30, 2021		December 31, 2020		(in millions)	September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	14	$	113	Cash and cash equivalents	$	47	$	6
Short-term marketable securities		1,376		1,411
Long-term marketable securities		1,099		502
Short-term marketable debt securities						Short-term marketable debt securities	961		1,182
Long-term marketable debt securities						Long-term marketable debt securities	1,282		1,309
Total	Total	$	2,489	$	2,026	Total	$	2,290	$	2,497

The following table summarizes our available-for-sale debt securities by contractual maturity:


		September 30, 2021					September 30, 2022
(in millions)	(in millions)	Amortized Cost		Fair Value		(in millions)	Amortized Cost		Fair Value
Within one year	Within one year	$	1,390	$	1,390	Within one year	$	1,018	$	1,008
After one year through five years	After one year through five years	1,075		1,075		After one year through five years	1,298		1,268
After five years		24		24
After five years through ten years						After five years through ten years	7		7
After ten years						After ten years	7		7
Total	Total	$	2,489	$	2,489	Total	$	2,331	$	2,290

~~We held~~Equity Securities

Equity Securities Measured at Fair Value

The following table summarizes the classification of our equity securities measured at fair value on a ~~total~~recurring basis on our Condensed Consolidated Balance Sheets. Prepaid and other current assets and Other long-term assets include our equity method investments in Arcus and Galapagos, respectively, for which we elected and applied the fair value option as we believe it best reflects the underlying economics of ~~214~~these investments.


(in millions)	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	3,316	$	3,661
Prepaid and other current assets	578		885
Other long-term assets	899		1,197
Total	$	4,793	$	5,743

Other Equity Securities

Equity method investments and ~~208 positions which~~other equity investments without readily determinable fair values were ~~in unrealized loss positions~~$415 million and $338 million as of September 30, 2022 and December 31, 2021, respectively, and ~~2020, respectively. The~~were included in Other long-term assets on our Condensed Consolidated Balance Sheets.

Unrealized Gains and Losses

Net unrealized losses ~~were largely due to changes in interest rates. Aggregated gross unrealized losses~~recognized on ~~available-for-sale debt~~equity securities were ~~not material~~$197 million and $596 million for the three and nine months ended September 30, 2022, and $142 million and $667 million for the three and nine months ended September 30, 2021, respectively, and ~~2020. No impairment was recognized for~~were included in Other income (expense), net on our Condensed Consolidated Statements of Income.

Related Party Transaction

During the ~~three and~~ nine months ended September 30, 2022 and 2021, Gilead donated certain equity securities at fair value to the Gilead Foundation, a California nonprofit public benefit corporation (the “Foundation”). The Foundation is a related party as certain of our officers also serve as directors of the Foundation. The donation expense of $85 million and ~~2020.~~$212 million was recorded within Selling, general and administrative expenses on our Condensed Consolidated Statements of Income during the nine months ended September 30, 2022 and 2021, respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations in foreign countries expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, primarily the Euro. To manage this risk, we ~~may~~ hedge a portion of our foreign currency ~~exposure~~exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward ~~or option~~ contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes.

~~We hedge our exposure to foreign currency exchange rate fluctuations for certain monetary assets and liabilities that are denominated in a non-functional currency.~~ The derivative instruments we use to hedge ~~this exposure~~our exposures for certain monetary assets and liabilities are not designated as hedges and, as a result, changes in their fair value are recorded in Other income (expense), net on our Condensed Consolidated Statements of ~~Operations.~~Income.

~~We hedge our exposure to foreign currency exchange rate fluctuations for forecasted product sales that are denominated in a non-functional currency.~~ The derivative instruments we use to hedge ~~this exposure~~our exposures for forecasted product sales are designated as cash flow hedges and have maturities of 18 months or less. Upon executing a hedging contract and ~~quarterly~~each reporting period thereafter, we assess hedge effectiveness using regression analysis. The unrealized gains or losses on these hedges are recorded in Accumulated other comprehensive income (“AOCI”) and are reclassified into ~~product~~Product sales on our Condensed Consolidated Statements of Income when the respective hedged transactions affect earnings. The majority of gains and losses related to the hedged forecasted transactions reported in AOCI as of September 30, ~~2021~~2022 are expected to be reclassified to ~~product~~Product sales within 12 months.

The cash flow effects of our derivative contracts for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 were included within Net cash provided by operating activities on our Condensed Consolidated Statements of Cash Flows.

We had notional amounts onof foreign currency exchange contracts outstanding of $3.0 billion ~~and $2.4 billion~~ as of September 30, ~~2021~~2022 and $2.9 billion as of December 31, ~~2020, respectively.~~2021.

While all our derivative contracts allow us the right to offset assets and liabilities, we have presented amounts on a gross basis. The following table summarizes the classification and fair values of derivative instruments onin our Condensed Consolidated Balance Sheets:

September 30, 2021

September 30, 2022

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

(in millions)

Classification

Fair Value

Classification

Fair Value

(in millions)

Classification

Fair Value

Classification

Fair Value

Derivatives designated as hedges:

Foreign currency exchange contracts

Prepaid and other current assets

Accrued and other current liabilities

(8)

Foreign currency exchange contracts

Prepaid and other current assets

215

Accrued and other current liabilities

—

Foreign currency exchange contracts

Other long-term assets

Other long-term obligations

—

Foreign currency exchange contracts

Other long-term assets

Other long-term obligations

—

Total derivatives designated as hedges

(8)

Total derivatives designated as hedges

232

—

Derivatives not designated as hedges:

Foreign currency exchange contracts

Prepaid and other current assets

—

Accrued and other current liabilities

—

Foreign currency exchange contracts

Prepaid and other current assets

Accrued and other current liabilities

Total derivatives not designated as hedges

—

Total derivatives not designated as hedges

Total derivatives

(8)

Total derivatives

242

December 31, 2020

December 31, 2021

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

(in millions)

Classification

Fair Value

Classification

Fair Value

(in millions)

Classification

Fair Value

Classification

Fair Value

Derivatives designated as hedges:

Foreign currency exchange contracts

Prepaid and other current assets

—

Accrued and other current liabilities

(113)

Foreign currency exchange contracts

Prepaid and other current assets

Accrued and other current liabilities

Foreign currency exchange contracts

Other long-term assets

—

Other long-term obligations

(7)

Foreign currency exchange contracts

Other long-term assets

Other long-term obligations

Total derivatives designated as hedges

—

(120)

Total derivatives designated as hedges

Derivatives not designated as hedges:

Foreign currency exchange contracts

Prepaid and other current assets

Accrued and other current liabilities

(1)

Foreign currency exchange contracts

Prepaid and other current assets

—

Accrued and other current liabilities

—

Total derivatives not designated as hedges

(1)

Total derivatives not designated as hedges

—

Total derivatives

(121)

Total derivatives

The following table summarizes the effect of our foreign currency exchange contracts on our Condensed Consolidated Financial Statements:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Derivatives designated as hedges:	Derivatives designated as hedges:									Derivatives designated as hedges:
Gains (losses) recognized in AOCI	Gains (losses) recognized in AOCI	$	42	$	(52)	$	104	$	(28)	Gains (losses) recognized in AOCI	$	162	$	42	$	292	$	104
Gains (losses) reclassified from AOCI into product sales		$	(21)	$	12	$	(69)	$	57
Gains (losses) reclassified from AOCI into Product sales										Gains (losses) reclassified from AOCI into Product sales	$	48	$	(21)	$	115	$	(69)
Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Gains (losses) recognized in Other income (expense), net	Gains (losses) recognized in Other income (expense), net	$	5	$	(13)	$	24	$	(10)	Gains (losses) recognized in Other income (expense), net	$	6	$	5	$	70	$	24

From time to time, we may discontinue cash flow hedges and, as a result, record related amounts in Other income (expense), net on our Condensed Consolidated Statements of ~~Operations.~~Income. There were no discontinuances of cash flow hedges for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

~~As of September 30, 2021 and December 31, 2020, we only held foreign currency exchange contracts.~~ The following table summarizes the potential effect of offsetting our foreign currency exchange contracts on our Condensed Consolidated Balance Sheets:

Gross Amounts Not Offset
on our Condensed
Consolidated Balance Sheets
(in millions) Gross Amounts
of Recognized
Assets/Liabilities Gross Amounts
Offset on our
Condensed
Consolidated
Balance Sheets Amounts of Assets/Liabilities Presented
on our Condensed Consolidated
Balance Sheets Derivative
Financial
Instruments Cash Collateral
Received/
Pledged Net Amount
(Legal Offset)
As of September 30, 2021
Derivative assets $ 55 $ — $ 55 $ (7) $ — $ 48
Derivative liabilities $ (8) $ — $ (8) $ 7 $ — $ (1)
As of December 31, 2020
Derivative assets $ 12 $ — $ 12 $ (12) $ — $ —
Derivative liabilities $ (121) $ — $ (121) $ 12 $ — $ (109)


			Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets
(in millions)	Gross Amounts of Assets/Liabilities Presented on the Condensed Consolidated Balance Sheets		Derivative Financial Instruments		Cash Collateral Received/Pledged		Net Amount (Legal Offset)
As of September 30, 2022
Derivative assets	$	242	$	(2)	$	—	$	240
Derivative liabilities	$	2	$	(2)	$	—	$	—
As of December 31, 2021
Derivative assets	$	80	$	(4)	$	—	$	76
Derivative liabilities	$	5	$	(4)	$	—	$	1

~~6. ACQUISITIONS~~

We account for business combinations using the acquisition method of accounting, which generally requires that assets acquired, including in-process research and development (“IPR&D”) projects, and liabilities assumed be recorded at their fair values as of the acquisition date on our Condensed Consolidated Balance Sheets. Any excess of consideration over the fair value of net assets acquired is recorded as goodwill. Transaction costs associated with business combinations are expensed as they are incurred. The first quarter 2021 acquisition of MYR and the fourth quarter 2020 acquisition of Immunomedics were accounted for as business combinations.

When the net assets acquired do not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an acquisition of assets. For an asset acquisition, no goodwill is recorded and contingent consideration, such as payments upon achievement of various development, regulatory and commercial milestones, generally is not recognized as of the acquisition date. In an asset acquisition, upfront payments allocated to IPR&D projects at the acquisition date and subsequent milestone payments are expensed unless there is an alternative future use. The second quarter 2020 acquisition of Forty Seven, Inc. (“Forty Seven”) was accounted for as an asset acquisition.

~~MYR~~

In the first quarter of 2021, we completed the acquisition of MYR, a German biotechnology company. MYR focuses on the development and commercialization of therapeutics for the treatment of HDV. The acquisition provided Gilead with Hepcludex, which was conditionally approved by the European Medicines Agency (“EMA”) in July 2020 for the treatment of chronic HDV infection in adults with compensated liver disease. Upon closing, MYR became a wholly-owned subsidiary of Gilead. The financial results of MYR were included in our Condensed Consolidated Financial Statements from the date of the acquisition. Acquisition-related expenses were not material for the three and nine months ended September 30, 2021.

The aggregate consideration for this acquisition of €1.3 billion (or $1.6 billion) primarily consists of €1.0 billion (or $1.2 billion) paid upon closing and contingent consideration of up to €300 million, subject to customary adjustments, representing a potential future milestone payment upon FDA approval of Hepcludex. The fair value of this contingent liability, estimated using probability-weighted scenarios for FDA approval, was $341 million as of the acquisition date and was initially recorded in Other long-term obligations on our Condensed Consolidated Balance Sheets. In the second quarter of 2021, the balance was reclassified to Accrued and other current liabilities on our Condensed Consolidated Balance Sheets. The estimated fair value of the contingent liability was $328 million as of September 30, 2021. The change in estimated fair value from the acquisition date was primarily due to the effect of foreign exchange remeasurement.

The fair value estimates for the assets acquired and liabilities assumed were based upon valuations using information known and knowable as of the date of this filing. Changes to these assumptions and estimates could cause an impact to the valuation of assets acquired, including intangible assets, goodwill and the related tax impacts of the acquisition, as well as legal and other contingencies. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

~~The following table summarizes estimated fair values of assets acquired and liabilities assumed as of the acquisition date:~~


~~(in millions)~~	~~Amount~~
~~Intangible assets:~~
~~Finite-lived intangible asset~~	$	~~845~~
~~Acquired IPR&D~~	~~1,190~~
~~Deferred income taxes, net~~	~~(513)~~
~~Other assets (and liabilities), net~~	~~(187)~~
~~Total identifiable net assets~~	~~1,335~~
~~Goodwill~~	~~226~~
~~Total consideration~~	$	~~1,561~~

~~Intangible Assets~~

The finite-lived intangible asset of $845 million represents the estimated fair value of Hepcludex for HDV in Europe as of the acquisition date. The fair value was determined by applying the income approach using unobservable inputs to estimate probability-weighted net cash flows attributable to Hepcludex for HDV in Europe and a discount rate of 12%. The discount rate used represents the estimated rate that market participants would use to value this intangible asset. This intangible asset is being amortized over an estimated useful life of 10 years.

Acquired intangible assets related to IPR&D consist of Hepcludex for HDV in all other regions without regulatory approval, including the United States. The estimated aggregate fair value of $1.2 billion as of the acquisition date was determined by applying the income approach using unobservable inputs to estimate probability-weighted net cash flows attributable to this asset and a discount rate of 12%. The discount rate used represents the estimated rate that market participants would use to value this intangible asset.

Some of the more significant assumptions inherent in the development of intangible asset fair values include: estimates of projected future cash flows including revenues and operating profits; probability of success; the discount rate selected; the life of the potential commercialized products and the risks related to the viability of and potential alternative treatments in any future target markets, among other factors.

~~Intangible assets related to IPR&D projects are considered to be indefinite-lived assets until the completion or abandonment of the associated R&D efforts.~~

The inputs used for valuing these identifiable intangibles are unobservable and considered Level 3 under the fair value measurement and disclosure guidance. See Note 3. Fair Value Measurements for additional information.

~~Deferred Income Taxes~~

The net deferred tax liability was based upon the difference between the estimated book basis and tax basis of net assets acquired and an estimate for the final pre-acquisition net operating losses of MYR.

~~Goodwill~~

The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed of $226 million was recorded as goodwill, which primarily reflects the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recognized for MYR is not expected to be deductible for income tax purposes.

~~There were no material measurement period adjustments recorded to the fair values of assets acquired and liabilities assumed during the three and nine months ended September 30, 2021.~~

~~Immunomedics~~

In the fourth quarter of 2020, we completed the acquisition of Immunomedics, a company focused on the development of antibody-drug conjugate technology, for cash consideration of $20.6 billion. Upon closing, Immunomedics became a wholly-owned subsidiary of Gilead. The acquisition was financed with the majority of the proceeds from the September 2020 senior unsecured notes offering, an additional $1.0 billion borrowing under a new senior unsecured term loan facility and cash on hand. During the nine months ended September 30, 2021, we repaid the borrowing under the senior unsecured term loan facility. See Note 10. Debt and Credit Facilities for further information.

~~The following table summarizes estimated fair values of assets acquired and liabilities assumed as of the acquisition date:~~


~~(in millions)~~	~~Amount~~
~~Cash and cash equivalents~~	$	~~726~~
~~Inventories~~	~~946~~
~~Intangible assets:~~
~~Finite-lived intangible asset~~	~~4,600~~
~~Acquired IPR&D~~	~~15,760~~
~~Outlicense contract~~	~~175~~
~~Deferred tax liabilities~~	~~(4,565)~~
~~Liability related to future royalties~~	~~(1,100)~~
~~Other assets (and liabilities), net~~	64
~~Total identifiable net assets~~	~~16,606~~
~~Goodwill~~	~~3,991~~
~~Total consideration transferred~~	$	~~20,597~~

~~There were no material measurement period adjustments recorded to the fair values of assets acquired and liabilities assumed during the three and nine months ended September 30, 2021.~~

~~Forty Seven~~

In the second quarter of 2020, we completed the acquisition of Forty Seven, a clinical-stage immuno-oncology company focused on developing therapies targeting cancer immune evasion pathways and specific cell targeting approaches, for total consideration of $4.7 billion, net of acquired cash. Upon closing, Forty Seven became a wholly-owned subsidiary of Gilead. During the nine months ended September 30, 2020, we recorded a $4.5 billion charge representing an acquired IPR&D asset with no alternative future use in Acquired in-process research and development expenses, and stock-based compensation expense of $144 million primarily in Research and development expenses on our Condensed Consolidated Statements of Operations.

7.~~GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill~~

~~The following table summarizes the changes in the carrying amount of goodwill:~~


~~(in millions)~~	~~Amount~~
~~Balance at December 31, 2020~~	$	~~8,108~~
~~Goodwill resulting from the acquisition of MYR~~	~~226~~
~~Measurement period adjustments~~	~~(2)~~
~~Balance at September 30, 2021~~	$	~~8,332~~

~~Intangible Assets~~

~~The following table summarizes our Intangible assets, net:~~

September 30, 2021 December 31, 2020
(in millions) Gross
Carrying
Amount Accumulated
Amortization Foreign Currency Translation Adjustment Net Carrying Amount Gross
Carrying
Amount Accumulated
Amortization Foreign Currency Translation Adjustment Net Carrying Amount
Finite-lived assets:
Intangible asset - sofosbuvir $ 10,720 $ (5,477) $ — $ 5,243 $ 10,720 $ (4,952) $ — $ 5,768
Intangible asset - axicabtagene ciloleucel(1)
7,110 (1,400) — 5,710 6,200 (1,105) — 5,095
Intangible asset - Trodelvy(2)
5,630 (390) — 5,240 4,600 (63) — 4,537
Intangible asset - Hepcludex 845 (50) — 795 — — — —
Other 1,410 (619) 1 792 1,377 (540) (1) 836
Total finite-lived assets 25,715 (7,936) 1 17,780 22,897 (6,660) (1) 16,236
Indefinite-lived assets - IPR&D(1)(2)(3)(4)
16,120 — — 16,120 16,890 — — 16,890
Total intangible assets $ 41,835 $ (7,936) $ 1 $ 33,900 $ 39,787 $ (6,660) $ (1) $ 33,126

~~(1)~~ Gross carrying amount as of September 30, 2021 includes $910 million reclassified from indefinite-lived assets - IPR&D following the March 2021 FDA approval of Yescarta for the treatment of adult patients with relapsed or refractory follicular lymphoma.

~~(2)~~ Gross carrying amount as of September 30, 2021 includes Trodelvy for metastatic triple-negative breast cancer which was granted approval by FDA in April 2021 and Trodelvy for use in adult patients with locally advanced or metastatic urothelial cancer (“UC”) which was granted accelerated approval by FDA in April 2021. The amount related to UC of $1.0 billion was reclassified to finite-lived assets from indefinite-lived assets - IPR&D.

~~(3)~~ ~~Gross carrying amount as of September 30, 2021 includes $1.2 billion recognized from the first quarter 2021 acquisition of MYR. See Note~~ 6. ~~Acquisitions for additional information.~~

~~(4)~~ In October 2021, FDA granted approval of Tecartus for the treatment of adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia. Accordingly, the related amount of $200 million will be reclassified to finite-lived assets in the fourth quarter of 2021.

Aggregate amortization expense related to finite-lived intangible assets was $441 million and $1.3 billion for the three and nine months ended September 30, 2021 and $281 million and $844 million for the three and nine months ended September 30, 2020, respectively, and was primarily included in Cost of goods sold on our Condensed Consolidated Statements of Operations.

~~The following table summarizes the estimated future amortization expense associated with our finite-lived intangible assets as of September 30, 2021:~~

(in millions) Amount
2021 (remaining three months) $ 441
2022 1,764
2023 1,764
2024 1,764
2025 1,759
Thereafter 10,288
Total $ 17,780

8.~~OTHER FINANCIAL INFORMATION~~

~~Accounts receivable, net~~

~~The following table summarizes our Accounts receivable, net:~~

(in millions) September 30, 2021 December 31, 2020
Accounts receivable $ 5,284 $ 5,560
Less: chargebacks 591 552
Less: cash discounts and other 70 72
Less: allowances for credit losses 57 44
Accounts receivable, net $ 4,566 $ 4,892

~~Inventories~~

~~The following table summarizes our Inventories:~~

(in millions) September 30, 2021 December 31, 2020
Raw materials $ 1,067 $ 1,080
Work in process 727 976
Finished goods 1,003 958
Total $ 2,797 $ 3,014
Reported as:
Inventories $ 1,676 $ 1,683
Other long-term assets(1)
1,121 1,331
Total $ 2,797 $ 3,014

~~(1)~~ ~~Amounts primarily consist of raw materials.~~

~~Accrued and other current liabilities~~

~~The following table summarizes the components of Accrued and other current liabilities:~~

(in millions) September 30, 2021 December 31, 2020
Compensation and employee benefits $ 691�� $ 864
Income taxes payable 447 598
Allowance for sales returns 530 587
Other accrued liabilities 2,113 2,287
Total $ 3,781 $ 4,336

9. ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS

We ~~continue to pursue~~enter into acquisitions, licensing and strategic collaborations and other similar arrangements with third parties for the development and commercialization of certain products and product candidates. ~~These~~The collaborations and other arrangements may involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities. These arrangements may include non-refundable upfront payments, expense reimbursements or payments by us for options to acquire certain rights, contingent obligations by us for potential development and regulatory milestone payments and/or sales-based milestone payments, royalty payments, revenue or profit-sharing arrangements, cost-sharing arrangements and ~~cost-sharing arrangements.~~equity investments. We also ~~continue to pursue~~have equity investments in third parties focused on the development and commercialization of products and product candidates.

~~Merck Sharp & Dohme Corp. (“Merck”)~~Acquisitions

MiroBio

On ~~March 13, 2021,~~September 20, 2022, we entered into a license and collaboration agreement with Merck, a subsidiary of Merck & Co., Inc. to jointly develop and commercialize long-acting investigational treatments in HIV that combine Gilead’s investigational capsid inhibitor, lenacapavir, and Merck’s investigational nucleoside reverse transcriptase translocation inhibitor, islatravir. The collaboration will initially focus on long-acting oral and injectable formulations.

Under the terms of the agreement, Gilead and Merck will share global development and commercialization costs at 60% and 40%, respectively, across the oral and injectable formulation programs. For long-acting oral products, Gilead will lead commercialization in the United States, and Merck will lead commercialization in the European Union (“EU”) and rest of the world. For long-acting injectable products, Merck will lead commercialization in the United States and Gilead will lead commercialization in the EU and rest of the world. Gilead and Merck will jointly promote the combination products in the United States and certain other major markets. We will share global product revenues with Merck equally until product revenues surpass certain pre-determined per formulation revenue tiers. Upon passing $2.0 billion in net product sales for the oral combination in a given calendar year, our share of revenue will increase to 65% for any revenues above the threshold for such calendar year. Upon passing $3.5 billion in net product sales for the injectable combination in a given calendar year, our share of revenue will increase to 65% for any revenues above the threshold for such calendar year. Reimbursements of research and development costs to or from Merck are recorded within Research and development expenses on our Condensed Consolidated Statements of Operations. Expenses recognized under the agreement were not material for the three and nine months ended September 30, 2021. No revenues have been recognized under the agreement for the three and nine months ended September 30, 2021.

We will also have the option to license certain of Merck’s investigational oral integrase inhibitors to develop in combination with lenacapavir. Reciprocally, Merck will have the option to license certain of Gilead’s investigational oral integrase inhibitors to develop in combination with islatravir. Each company may exercise its option for such investigational oral integrase inhibitor of the other company within the first five years after execution of the agreement, following completion of the first Phase 1 clinical trial of that integrase inhibitor. Upon exercise of an option, the companies will split development costs and revenues, unless the non-exercising company decides to opt-out, in which case the non-exercising company will be paid a royalty.

~~Arcus~~

On May 27, 2020, we entered into a transaction with Arcus, which included entry into an option, license and collaboration agreement (the “Collaboration Agreement”) and a common stock purchase agreement and an investor rights agreement (together, and as subsequently amended the “Stock Purchase Agreements”). Under the Stock Purchase Agreements, we have the right to purchase additional shares of Arcus from Arcus over the five-year period beginning on the closing of the Stock Purchase Agreements, up to a maximum of 35%acquired all of the outstanding ~~voting stock. We are subject to~~share capital of MiroBio Ltd. (“MiroBio”), a ~~three-year standstill, which period began~~privately-held U.K.-based biotechnology company focused on the date the parties entered into the Stock Purchase Agreements, restricting our ability to acquire voting stock of Arcus exceeding more than 35% of the then issued and outstanding voting stock of Arcus, subject to certain exceptions. Additionally, we agreed not to dispose of any equity securities of Arcus prior to the second anniversary of the closing of the Stock Purchase Agreements without the prior consent of Arcus, subject to certain exceptions.

Pursuant to the Collaboration Agreement and Stock Purchase Agreements which closed on July 13, 2020, and a separate secondary equity offering which closed on May 29, 2020, we acquired approximately 8.2restoring immune balance with agonists targeting immune inhibitory receptors, for $414 million shares of Arcus common stock for approximately $261 million. In the first quarter of 2021, we amended and restated the common stock purchase agreement and acquired approximately 5.7 million additional shares of Arcus common stock for $220 million.in cash. As a result, ~~we currently own~~MiroBio became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a ~~total of 13.8~~$389 million shares of Arcus, which represented approximately 19.5% of the issued and outstanding voting stock of Arcus immediately following the closing of the first quarter 2021 transaction. The amendment and restatement of the common stock purchase agreement in the first quarter of 2021 did not modify any of the terms above. We elected and applied the fair value optioncharge to account for our equity investment in Arcus whereby the investment is marked to market each reporting period based on the market price of Arcus shares. We believe the fair value option best reflects the underlying economics of the investment. Changes in fair value of the investment are recognized in Other income (expense), net on our Condensed Consolidated Statements of Operations. We initially recorded our equity investments in Arcus in Other long-term assets on our Condensed Consolidated Balance Sheets as the investments are subject to contractual lock-up provisions, subject to certain conditions. In the third quarter of 2021, we reclassified our equity investments in Arcus to Prepaid and other current assets on our Condensed Consolidated Balance Sheets as the contractual lock-up provisions will expire in July 2022.

~~Other Arrangements~~

During the three and nine months ended September 30, 2021 and 2020, we entered into several collaborations, equity investments and licensing arrangements as well as other similar arrangements that we do not consider to be individually material. We recorded upfront collaboration expenses related to these arrangements within Acquired in-process research and development expenses on our Condensed Consolidated Statements of ~~Operations. Upfront~~Income during the three months ended September 30, 2022. The remaining purchase price relates to various other assets acquired and liabilities assumed.

MYR

The aggregate consideration for this acquisition of €1.3 billion (or $1.6 billion) primarily consisted of €1.0 billion (or $1.2 billion) paid upon closing and contingent consideration of up to €300 million, subject to customary adjustments, representing a potential future milestone payment upon FDA approval of Hepcludex. The fair value of this contingent liability, estimated using probability-weighted scenarios for FDA approval, was $341 million as of the acquisition date. The fair value of this contingent liability was $249 million as of September 30, 2022 and recorded in Other long-term obligations in our Condensed Consolidated Balance Sheets. See Note 3. Fair Value Measurements for additional information.

The acquisition of MYR was accounted for as a business combination using the acquisition method of accounting. The one-year measurement period was completed in the first quarter of 2022, with adjustments recorded to the fair values of assets acquired and liabilities assumed of $18 million. See Note 7. Goodwill and Intangible Assets for additional information.

Collaborations and Other Arrangements

Dragonfly

In April 2022, we entered into a strategic research collaboration ~~expenses~~agreement (the “Dragonfly Collaboration Agreement”) with Dragonfly Therapeutics, Inc. (“Dragonfly”) to develop natural killer (“NK”) cell engager-based immunotherapies for oncology and ~~cash payments~~inflammation indications. Under the terms of the Dragonfly Collaboration Agreement, we received an exclusive, worldwide license from Dragonfly for the 5T4-targeting investigational immunotherapy program, DF7001, as well as options, after the completion of certain preclinical activities, to license exclusive, worldwide rights to develop and commercialize additional NK cell engager programs using the Dragonfly Tri-specific NK Engager platform. Upon the closing of the Dragonfly Collaboration Agreement, we made a $300 million upfront payment to Dragonfly, and we made an additional $15 million payment related to a target selection in connection with an August 2022 amendment to the agreement, which were recorded in Acquired in-process research and development expenses on our ~~equity investments~~Condensed Consolidated Statements of Income during the nine months ended September 30, 2022. These payments were ~~not material~~classified as Acquisitions, including in-process research and development, net of cash acquired in Investing Activities on our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022. In addition, Dragonfly is eligible to receive performance-based development and regulatory milestone payments of up to $630 million related to the DF7001 program with further commercial milestone payments and royalties on worldwide net sales if certain products are successfully developed and approved. If we exercise our options on additional NK cell engager programs, Dragonfly would be eligible to receive opt-in payments and performance-based development, regulatory and commercial milestone payments and royalties on worldwide net sales on these optioned programs as well.

Arcus

In 2020, we entered into an option, license and collaboration agreement with Arcus (the “Arcus Collaboration Agreement”), which granted us the right to opt in to all current and future clinical-stage product candidates for up to ten years following the closing of the transaction. In November 2021, we exercised our options to three of the clinical-stage programs and amended the Arcus Collaboration Agreement. The option exercise and amendment transaction closed in December 2021, triggering collaboration opt-in payments of $725 million and waiving a $100 million option continuation payment which would have been due to Arcus in the third quarter of 2022. The collaboration opt-in payments of $725 million were recorded in Accrued and other current liabilities on our Consolidated Balance Sheets as of December 31, 2021 and paid to Arcus in January 2022. Our payments to Arcus were included in Acquisitions, including in-process research and development, net of cash acquired in Investing Activities on our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022.

7.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the changes in the carrying amount of Goodwill:


(in millions)	Amount
Balance as of December 31, 2021	$	8,332
Measurement period adjustments	(18)
Balance as of September 30, 2022	$	8,314

During the nine months ended September 30, 2022, goodwill decreased by $18 million as a result of finalizing the amount of acquired net operating losses of MYR, which resulted in a decrease to the net deferred tax liability acquired.

Intangible Assets

The following table summarizes our Intangible assets, net:


	September 30, 2022								December 31, 2021
(in millions)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount
Finite-lived assets:
Intangible asset – sofosbuvir	$	10,720	$	(6,176)	$	—	$	4,544	$	10,720	$	(5,651)	$	—	$	5,069
Intangible asset – axicabtagene ciloleucel	7,110		(1,806)		—		5,304		7,110		(1,501)		—		5,609
Intangible asset – Trodelvy	5,630		(856)		—		4,774		5,630		(507)		—		5,123
Intangible asset – Hepcludex	845		(136)		—		709		845		(72)		—		773
Other	1,614		(726)		1		889		1,610		(650)		1		961
Total finite-lived assets	25,919		(9,700)		1		16,220		25,915		(8,381)		1		17,535
Indefinite-lived assets – IPR&D	13,220		—		—		13,220		15,920		—		—		15,920
Total intangible assets	$	39,139	$	(9,700)	$	1	$	29,440	$	41,835	$	(8,381)	$	1	$	33,455

Aggregate amortization expense related to finite-lived intangible assets was $445 million and $1.3 billion for the three and nine months ended September 30, 2022, respectively, and $441 million and $1.3 billion for the three and nine months ended September 30, 2021, respectively, and ~~2020.~~

~~Under the financial terms~~is primarily included in Cost of these arrangements, we may be required to make payments upon achievement of developmental, regulatory and commercial milestones, which could be significant. Future milestone payments, if any, will be reflected ingoods sold on our Condensed Consolidated Statements of ~~Operations when~~Income.

The following table summarizes the ~~corresponding events become probable.~~ estimated future amortization expense associated with our finite-lived intangible assets as of September 30, 2022:


(in millions)	Amount
2022 (remaining three months)	$	445
2023	1,781
2024	1,781
2025	1,776
2026	1,768
Thereafter	8,669
Total	$	16,220

IPR&D Impairment

In ~~addition,~~connection with our acquisition of Immunomedics in 2020, we ~~may be required~~allocated a portion of the purchase price to ~~pay significant royalties on future sales if products~~acquired IPR&D intangible assets. Approximately $8.8 billion was assigned to IPR&D intangible assets related to ~~these arrangements~~Trodelvy for treatment of patients with hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) metastatic breast cancer. In March 2022, we received data from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with HR+/HER2- metastatic breast cancer who have received prior endocrine therapy, cyclin-dependent kinase 4/6 inhibitors and two to four lines of chemotherapy (“third-line plus patients”). Based on our evaluation of the study results, and in connection with the preparation of the financial statements for the first quarter, we updated our estimate of the fair value of our HR+/HER2- IPR&D intangible asset to $6.1 billion as of March 31, 2022. Our estimate of fair value used a probability-weighted income approach that discounts expected future cash flows to the present value, which requires the use of Level 3 fair value measurements and inputs, including estimated revenues, costs, and probability of technical and regulatory success. The expected cash flows included cash flows from HR+/HER2- metastatic breast cancer for third-line plus patients and patients in earlier lines of therapy which are ~~commercialized. The payment~~the subject of ~~these amounts, however,~~separate clinical studies. Our revised discounted cash flows were lower primarily due to a delay in launch timing for third-line plus patients which caused a decrease in our market share assumptions based on the expected competitive environment. There were no changes in our plans or assumptions related to our estimated cash flows for patients in the earlier lines of therapy. We used a discount rate of 6.75% which is ~~contingent upon~~based on the ~~occurrence~~estimated weighted-average cost of ~~various future events, which have~~capital for companies with profiles similar to ours and represents the rate that market participants would use to value the intangible assets. We determined the revised estimated fair value was below the carrying value of the asset and, as a ~~high degree~~result, we recognized a partial impairment charge of ~~uncertainty~~$2.7 billion in In-process research and development impairment on our Condensed Consolidated Statements of ~~occurrence.~~Income during the three months ended March 31, 2022. No other indicators of impairment were noted for both the three and nine months ended September 30, 2022 and 2021.

2420

108.OTHER FINANCIAL INFORMATION

Accounts receivable, net

The following table summarizes our Accounts receivable, net:


(in millions)	September 30, 2022		December 31, 2021
Accounts receivable	$	5,006	$	5,278
Less: chargebacks	514		671
Less: cash discounts and other	86		67
Less: allowances for credit losses	51		47
Accounts receivable, net	$	4,354	$	4,493

Inventories

The following table summarizes our Inventories:


(in millions)	September 30, 2022		December 31, 2021
Raw materials	$	1,133	$	1,112
Work in process	430		590
Finished goods	1,039		1,032
Total	$	2,602	$	2,734
Reported as:
Inventories	$	1,463	$	1,618
Other long-term assets(1)	1,138		1,116
Total	$	2,602	$	2,734

(1) Amounts primarily consist of raw materials.

Accrued and other current liabilities

The following table summarizes the components of Accrued and other current liabilities:


(in millions)	September 30, 2022		December 31, 2021
Compensation and employee benefits	$	752	$	927
Income taxes payable	902		539
Allowance for sales returns	392		499
Accrual for settlement related to bictegravir litigation(1)	—		1,250
Other accrued liabilities	1,819		2,930
Total	$	3,865	$	6,145

_______________________________

(1) See Note 10. Commitments and Contingencies for additional information.

9. DEBT AND CREDIT FACILITIES

The following table summarizes the carrying amount of our borrowings under various financing arrangements:


(in millions)	(in millions)				Carrying Amount				(in millions)				Carrying Amount
Type of Borrowing	Type of Borrowing	Issue Date	Maturity Date	Interest Rate	September 30, 2021		December 31, 2020		Type of Borrowing	Issue Date	Maturity Date	Interest Rate	September 30, 2022		December 31, 2021
Senior Unsecured		March 2011	April 2021	4.50%	$	—	$	1,000
Senior Unsecured		September 2020	September 2021	3-month LIBOR + 0.15%	—		499
Senior Unsecured		December 2011	December 2021	4.40%	—		1,249
Senior Unsecured		September 2016	March 2022	1.95%	500		499
Senior Unsecured		September 2015	September 2022	3.25%	999		998
Senior Unsecured		September 2016	September 2023	2.50%	748		748
Senior Unsecured		September 2020	September 2023	3-month LIBOR + 0.52%	499		498
Senior Unsecured		September 2020	September 2023	0.75%	1,994		1,992
Term Loan		October 2020	October 2023	variable	—		998
Senior Unsecured	Senior Unsecured	March 2014	April 2024	3.70%	1,747		1,746		Senior Unsecured	September 2016	March 2022	1.95%	$	—	$	500
Senior Unsecured	Senior Unsecured	November 2014	February 2025	3.50%	1,747		1,746		Senior Unsecured	September 2015	September 2022	3.25%	—		999
Senior Unsecured	Senior Unsecured	September 2015	March 2026	3.65%	2,738		2,737		Senior Unsecured	September 2016	September 2023	2.50%	749		748
Senior Unsecured	Senior Unsecured	September 2016	March 2027	2.95%	1,246		1,246		Senior Unsecured	September 2020	September 2023	0.75%	1,498		1,496
Senior Unsecured	Senior Unsecured	September 2020	October 2027	1.20%	746		745		Senior Unsecured	March 2014	April 2024	3.70%	1,748		1,747
Senior Unsecured	Senior Unsecured	September 2020	October 2030	1.65%	992		992		Senior Unsecured	November 2014	February 2025	3.50%	1,748		1,747
Senior Unsecured	Senior Unsecured	September 2015	September 2035	4.60%	992		991		Senior Unsecured	September 2015	March 2026	3.65%	2,741		2,739
Senior Unsecured	Senior Unsecured	September 2016	September 2036	4.00%	742		741		Senior Unsecured	September 2016	March 2027	2.95%	1,247		1,247
Senior Unsecured	Senior Unsecured	September 2020	October 2040	2.60%	987		986		Senior Unsecured	September 2020	October 2027	1.20%	747		746
Senior Unsecured	Senior Unsecured	December 2011	December 2041	5.65%	996		996		Senior Unsecured	September 2020	October 2030	1.65%	993		993
Senior Unsecured	Senior Unsecured	March 2014	April 2044	4.80%	1,736		1,735		Senior Unsecured	September 2015	September 2035	4.60%	992		992
Senior Unsecured	Senior Unsecured	November 2014	February 2045	4.50%	1,733		1,732		Senior Unsecured	September 2016	September 2036	4.00%	742		742
Senior Unsecured	Senior Unsecured	September 2015	March 2046	4.75%	2,220		2,219		Senior Unsecured	September 2020	October 2040	2.60%	987		987
Senior Unsecured	Senior Unsecured	September 2016	March 2047	4.15%	1,727		1,726		Senior Unsecured	December 2011	December 2041	5.65%	996		996
Senior Unsecured	Senior Unsecured	September 2020	October 2050	2.80%	1,476		1,476		Senior Unsecured	March 2014	April 2044	4.80%	1,736		1,736
Total senior unsecured notes and term loan facility					26,565		30,295
Liability related to future royalties					1,121		1,107
Senior Unsecured									Senior Unsecured	November 2014	February 2045	4.50%	1,733		1,733
Senior Unsecured									Senior Unsecured	September 2015	March 2046	4.75%	2,221		2,220
Senior Unsecured									Senior Unsecured	September 2016	March 2047	4.15%	1,728		1,727
Senior Unsecured									Senior Unsecured	September 2020	October 2050	2.80%	1,477		1,476
Total senior unsecured notes									Total senior unsecured notes				24,084		25,571
Liability related to the sale of future royalties									Liability related to the sale of future royalties				1,139		1,124
Total debt, net	Total debt, net				27,686		31,402		Total debt, net				25,223		26,695
Less: current portion of long-term debt and other obligations, net					2,511		2,757
Total long-term debt, net					$	25,175	$	28,645
Less: Current portion of long-term debt and other obligations, net									Less: Current portion of long-term debt and other obligations, net				2,270		1,516
Total Long-term debt, net									Total Long-term debt, net				$	22,953	$	25,179

~~Debt~~Senior Unsecured Notes

~~During the nine months ended September 30, 2021,~~In February 2022, we repaid ~~$3.75 billion~~$500 million of ~~debt. We~~senior unsecured notes prior to the March 2022 maturity by exercising a par call option. Additionally, in July 2022, we repaid $1.0 billion of senior unsecured notes ~~due April 2021 in~~prior to the first quarter of 2021 and $1.25 billion of senior unsecured notes due December 2021 in the third quarter of 2021. Additionally, we repaid $1.0 billion principal amount outstanding under our three-year $1.0 billion senior unsecured term loan facility due October 2023 and $500 million of our senior unsecured floating rate notes due September ~~2021 upon maturity. In October 2021, we exercised our option to~~2022 maturity by exercising a par call $500 million of our floating rate senior unsecured notes and $500 million of our 0.75% senior unsecured notes, both having a final maturity of September 2023. The notes will be repaid in November 2021.

option. No new debt was issued during the three and nine months ended September 30, ~~2021.~~2022. We are required to comply with certain covenants under our note indentures governing our senior unsecured notes. As of September 30, ~~2021,~~2022, we were not in ~~compliance with all~~violation of any covenants.

Revolving Credit Facility

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there were no amounts outstanding under our $2.5 billion revolving credit facility maturing in June 2025, and we were in compliance with all covenants.

1110. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are a party to various legal actions. ~~The most~~Certain significant ~~of these~~matters are described below. We recognize accruals for such actions to the extent that we conclude that a loss is both probable and reasonably estimable. We accrue for the best estimate of a loss within a range; however, if no estimate in the range is better than any other, then we accrue the minimum amount in the range. If we determine that a material loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss. Unless otherwise noted, ~~it is not possible to determine~~ the outcome of these matters ~~or the outcome (including in excess of any accrual)~~either is not expected to be material ~~and~~or is not possible to determine such that we cannot reasonably estimate the maximum potential exposure or the range of possible loss. ~~In the third quarter of 2021, we reversed a $175 million previously recorded litigation accrual following a favorable court decision.~~

We did not have any material accruals for the matters described below ~~on our Condensed Consolidated Balance Sheets~~ as of September 30, ~~2021 and~~2022. As of December 31, ~~2020.~~2021, we recorded an accrual of $1.25 billion in Accrued and other current liabilities on our Consolidated Balance Sheets for the previously disclosed legal settlement related to the bictegravir litigation, which we paid in February 2022.

Litigation Related to Sofosbuvir

In 2012, we acquired Pharmasset, Inc. Through the acquisition, we acquired sofosbuvir, a nucleotide analog that acts to inhibit the replication of ~~the~~ HCV. In 2013, we received approval from FDA for sofosbuvir, now known commercially as Sovaldi. Sofosbuvir is also included in all of our marketed HCV products. We have received a number of litigation claims regarding sofosbuvir. While we have carefully considered these claims both prior to and following the acquisition and believe they are without merit, we cannot predict the ultimate outcome of such claims or range of loss.

We are aware of patents and patent applications owned by third parties that have been or may in the future be alleged by such parties to cover the use of our HCV products. If third parties obtain valid and enforceable patents, and successfully prove infringement of those patents by our HCV products, we could be required to pay significant monetary damages. We cannot predict the ultimate outcome of intellectual property claims related to our HCV products. We have spent, and will continue to spend, significant resources defending against these claims.

Litigation with the University of Minnesota

The University of Minnesota (the “University”) has obtained U.S. Patent No. 8,815,830 (the “’830 patent”), which purports to broadly cover nucleosides with antiviral and anticancer activity. In 2016, the University filed a lawsuit against us in the U.S. District Court for the District of Minnesota, alleging that the commercialization of sofosbuvir-containing products infringes the ’830 patent. We believe the ’830 patent is invalid and will not be infringed by the continued commercialization of sofosbuvir. In 2017, the court granted our motion to transfer the case to California. We have also filed petitions for inter partes review with the U.S. Patent and Trademark Office Patent Trial and Appeal Board (“PTAB”) alleging that all asserted claims are invalid for anticipation and obviousness. The PTAB instituted one of these petitions and a merits hearing was held in February 2021. In 2018, the U.S. District Court for the Northern District of California stayed the litigation until after the PTAB ~~concludes~~concluded the inter partes review that it ~~has~~had initiated. In May 2021, the PTAB issued a written decision finding the asserted claims of the University’s patent invalid. In July 2021, the University appealed this decision. The litigation in the U.S. District Court will remain stayed through the appeal proceedings.

Litigation with NuCana plc. (“NuCana”)

NuCana has obtained European Patent No. 2,955,190 (the “EP ’190 patent”) that allegedly covers sofosbuvir. In ~~Opposition~~opposition proceedings before the European Patent Office (“EPO”) held in February 2021, the EPO Opposition Division upheld the validity of the EP ’190 patent in amended form. The EPO has now scheduled the appeal hearing for December 2023. We continue to believe that the amended EP ’190 patent claims are invalid. ~~Subsequently,~~Subsequent to the EPO opposition decision, we initiated proceedings to invalidate the UKU.K. counterpart of the EP ’190 patent in the High Court of England & Wales. In March 2021, NuCana filed a counterclaim against us in the High Court of England & Wales alleging patent infringement of the UKU.K. counterpart and seeking damages and other relief. The hearing date for the U.K. NuCana case has been scheduled for January 2023.

In April 2021, NuCana also filed a lawsuit against us in Germany at the Landgericht Düsseldorf alleging patent infringement of the German counterpart of the EP ’190 patent and seeking damages and ~~other~~injunctive relief. ~~The hearing date~~In April 2022, we filed an action for grant of a compulsory license before the Federal Patent Court in Germany. In July 2022, the Düsseldorf court determined that NuCana’s German ~~NuCana case has been scheduled for May 2022.~~

counterpart of the EP ’190 patent is infringed and granted an injunction. In August 2022, Gilead filed a notice of appeal regarding the Düsseldorf court’s decision.

Litigation Related to Axicabtagene Ciloleucel

In October 2017, Juno Therapeutics, Inc. and Sloan Kettering Cancer Center (collectively, “Juno”) filed a lawsuit against us in the U.S. District Court for the Central District of California, alleging that the commercialization of axicabtagene ciloleucel, sold commercially as Yescarta, infringes on U.S. Patent No. 7,446,190 (the “’190 patent”). A jury trial was held on the ’190 patent, and in December 2019, the jury found that the asserted claims of the ’190 patent were valid, and that we willfully infringed the asserted claims of the ’190 patent. The jury also awarded Juno damages in amounts of $585 million in an ~~up-front~~upfront payment and a 27.6% running royalty from October 2017 through the date of the jury’s verdict. The parties filed post-trial motions in the first quarter of 2020, and the trial judge entered a judgment in April 2020. The trial judge affirmed the jury’s verdict, enhanced the past damages by 50% and maintained the royalties on future Yescarta sales at 27.6%. In April 2020, we filed an appeal seeking to reverse the judgment or obtain a new trial due to errors made by the trial judge, and in July 2021, the appeals court heard oral arguments. In August 2021, the Court of Appeals for the Federal Circuit (the “CAFC”) reversed the jury verdict, finding the asserted claims of Juno’s patent invalid. In October 2021, Juno filed a petition for rehearing with the CAFC. In January 2022, the CAFC denied Juno’s petition for rehearing. In June 2022, Juno filed a petition for certiorari seeking a review by the Supreme Court. The Supreme Court has not yet ruled on Juno’s petition. We believe that the likelihood of a material adverse outcome in this matter is remote.

~~Litigation Related to Bictegravir~~

In 2018, ViiV Healthcare Company (“ViiV”) filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the commercialization of bictegravir, sold commercially in combination with tenofovir alafenamide and emtricitabine as Biktarvy, infringes ViiV’s U.S. Patent No. 8,129,385 (the “’385 patent”) covering ViiV’s dolutegravir. Bictegravir is structurally different from dolutegravir, and we believe that bictegravir does not infringe the claims of the ’385 patent. The court has set a trial date of January 2022 for this lawsuit. ViiV is seeking billions of dollars for alleged damages comprised of ViiV’s lost profits and a royalty on sales of bictegravir from launch through the trial. ViiV calculates these damages based on the cumulative U.S. revenues from Biktarvy since launch, which have totaled $16.4 billion through September 30, 2021. In addition, should a court find that we are liable for infringement, we expect ViiV will seek a royalty on sales after the trial. Although we cannot predict with certainty the ultimate outcome of this litigation, an adverse judgment could result in substantial monetary damages, including ViiV’s lost profits and royalties through trial, and a going-forward royalty stream on future sales.

In 2018, ViiV also filed a lawsuit against us in the Federal Court of Canada, alleging that our activities relating to our bictegravir compound have infringed ViiV’s Canadian Patent No. 2,606,282 (the “’282 patent”), which was issued to Shionogi & Co. Ltd. and ViiV. The ’282 patent is the compound patent covering ViiV’s dolutegravir. We believe that bictegravir does not infringe the claims of the ’282 patent. In January 2020, the court held a summary trial to assess ViiV’s infringement allegations. In April 2020, the court determined that bictegravir does not infringe the claims of the ’282 patent and dismissed the case. ViiV appealed this decision, and in June 2021, the Canadian Federal Court of Appeal upheld the Federal Court of Canada’s decision. ViiV has sought leave to appeal to the Canadian Supreme Court.

In November and December 2019, ViiV filed lawsuits in France, Germany, Ireland and the UK asserting the relevant national designations of European Patent No. 3 045 206 (“EP ’206”); in Australia asserting Australian Patent No. 2006239177; in Japan asserting Japanese Patent No. 4295353; and in Korea asserting Korean Patent Nos. 1848819 (“KR ’819”) and 1363875. These patents all relate to molecules that ViiV claims would act as integrase inhibitors. We believe that bictegravir does not infringe the claims of any of ViiV’s patents. In 2019, we filed an opposition in the EPO requesting revocation of EP ’206. The EPO hearing took place in January 2021, and the patent claims, which do not cover bictegravir, were maintained in amended form. Both parties have appealed this decision. Additionally, in 2020, we filed a petition in the Korean Intellectual Property Office requesting invalidation of KR ’819. Following a trial, a tribunal of the Korean Intellectual Property Trial and Appeal Board found KR ’819 to be invalid. In March 2021, ViiV appealed this decision. In April 2021, the court in Germany held a hearing on the issue of infringement, and in September 2021, determined that Gilead does not infringe ViiV’s EP ’206 patent both in its original form and as amended by the EPO. ViiV has appealed this decision.

In all jurisdictions, to the extent that the claims of ViiV’s patents are interpreted to cover bictegravir, we believe that those claims are invalid. We cannot predict the ultimate outcome of intellectual property claims related to bictegravir.

2723

Litigation Relating to Pre-Exposure Prophylaxis

In August 2019, we filed petitions requesting inter partes review of U.S. Patent Nos. 9,044,509, 9,579,333, 9,937,191 and 10,335,423 (collectively, “HHS Patents”) by PTAB. The HHS Patents are assigned to the U.S. Department of Health and Human Services (“HHS”) and purport to claim a process of protecting a primate host from infection by an immunodeficiency retrovirus by administering a combination of emtricitabine and tenofovir disoproxil fumarate (“TDF”) or ~~TDF~~tenofovir alafenamide (“TAF”) prior to exposure of the host to the immunodeficiency retrovirus, a process commonly known as pre-exposure prophylaxis (“PrEP”). In November 2019, the U.S. Department of Justice filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the sale of Truvada and Descovy for use as PrEP infringes the HHS Patents. In February 2020, PTAB declined to institute our petitions for inter partes review of the HHS Patents. In April 2020, we filed a breach of contract lawsuit against the U.S. federal government in the U.S. Court of Federal Claims, alleging violations of 4four material transfer agreements (“MTAs”) related to the research underlying the HHS Patents and a clinical trial agreement (“CTA”) by the U.S. Centers for Disease Control and Prevention related to PrEP research. Although we cannot predict with certainty the ultimate outcome of these litigation matters, we believe that the U.S. federal government breached the MTAs and CTA, that Truvada and Descovy do not infringe the HHS Patents and that the HHS Patents are invalid over prior art descriptions of Truvada’s use for PrEP and post-exposure prophylaxis as well because physicians and patients were using the claimed methods years before HHS filed the applications for the patents. A trial ~~date~~ for the bifurcated portion of the lawsuit in the Court of Federal Claims ~~has been set for~~was held in June 2022, post-trial briefing is now complete, and a decision is not expected until after closing arguments, which were held in October 2022.A trial date for the lawsuit in the Delaware District Court ~~of Delaware~~ has been set for May 2023.

Litigation with Generic Manufacturers

As part of the approval process for some of our products, FDA granted us a New Chemical Entity (“NCE”) exclusivity period during which other manufacturers’ applications for approval of generic versions of our product will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (“ANDA”), the application form typically used by manufacturers seeking approval of a generic drug. The sale of generic versions of our products ~~earlier than~~prior to their patent expiration would have a significant negative effect on our revenues and results of operations. To seek approval for a generic version of a product having NCE status, a generic company may submit its ANDA to FDA four years after the branded product’s approval.

Starting in December 2019, we received letters from Lupin Ltd. (“Lupin”), Apotex Inc., Shilpa Medicare Ltd. (“Shilpa”), Sunshine Lake Pharma Co. Ltd. (“Sunshine Lake”), Laurus Labs (“Laurus”), Natco Pharma Ltd. (“Natco”), Macleods Pharma Ltd. (“Macleods”), Hetero Labs Ltd. (“Hetero”) and Cipla Ltd. (“Cipla”) (collectively, ~~“generic manufacturers”~~“Generic Manufacturers”) indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of certain of our ~~tenofovir alafenamide (“TAF”)-containing~~TAF-containing products. Between them, these ~~generic manufacturers~~Generic Manufacturers seek to market generic versions of Odefsey, Descovy and Vemlidy. ~~Some generic manufacturers~~The Generic Manufacturers have challenged the validity of 4two to four patents listed on the Orange Book and associated with ~~TAF, while others have challenged the validity of 2 of our Orange Book-listed patents associated with~~ TAF. We filed lawsuits against the ~~generic manufacturers,~~Generic Manufacturers, and we intend to enforce and defend our intellectual property. In November 2021, we reached an agreement with Shilpa to resolve the lawsuit against Shilpa; in January 2022, we reached an agreement with Sunshine Lake to resolve the lawsuit against Sunshine Lake; and in May 2022, we reached an agreement with Natco to resolve the lawsuit against Natco. The settlement agreements have been filed with the U.S. Federal Trade Commission and the U.S. Department of Justice as required by law. In April 2022, the case against Laurus was dismissed after Laurus agreed not to challenge any of the Orange Book-listed patents associated with TAF.

In September 2022, we entered into settlement agreements with Lupin, Macleods, Hetero, Apotex Inc., and Cipla to resolve the litigation and patent challenges associated with Descovy, Vemlidy, and Odefsey in the U.S. District Court for the District of Delaware. Pursuant to the settlement agreements, the manufacturers were granted a non-exclusive license in the United States to our patents on tenofovir alafenamide relating to Descovy and Vemlidy beginning on October 31, 2031, and to Odefsey beginning on January 31, 2032, or earlier in certain circumstances. The settlement agreements have been filed with the U.S. Federal Trade Commission and the U.S. Department of Justice as required by law.

In October 2021, we received a letter from Lupin ~~Ltd.~~ indicating that it has submitted an ANDA to ~~the~~ FDA requesting permission to market and manufacture a generic version of Symtuza, a product commercialized by Janssen and for which Gilead shares in revenues. In November 2021, we, along with Janssen Products, L.P. and Janssen (“Janssen”), filed a patent infringement lawsuit against Lupin as co-plaintiffs in the U.S. District Court of Delaware. We separately filed an additional lawsuit against Lupin asserting infringement of two additional patents in the same court. This second case has been stayed pending resolution of the generic litigation regarding our TAF-containing products. Trial has been scheduled for October 2023. In September 2022, we received a letter from Apotex Inc. and Apotex Corp. (“Apotex”) stating that they have submitted an ANDA for a generic version of Symtuza. In October 2022, we, along with Janssen, filed a patent infringement lawsuit against Apotex as co-plaintiffs in the U.S. District Court of Delaware. We ~~are evaluating~~separately filed an additional lawsuit against Apotex asserting infringement of two additional patents in the ~~letter~~same court.

Starting in March 2022, we received letters from Lupin, Laurus and Cipla indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of Biktarvy. Lupin, Laurus, and Cipla have challenged the validity of three of the five patents listed in the Orange Book as associated with Biktarvy. We filed a lawsuit against Lupin, Laurus and Cipla in May 2022 in the U.S. District Court of Delaware, and intend to enforce and defend our intellectual property. Trial has been scheduled for December 2024.

European Patent Claims

In 2015, several parties filed oppositions in the EPO requesting revocation of one of our granted European patents covering sofosbuvir that expires in 2028. In 2016, the EPO upheld the validity of certain claims of our sofosbuvir patent. We have appealed this decision, seeking to restore all of the original claims, and several of the original opposing parties have also appealed, requesting full revocation. An appeal hearing ~~originally~~has been scheduled for ~~July 2021 has been canceled and a new date has not yet been set by the EPO.~~November 2022.

In 2017, several parties filed oppositions in the EPO requesting revocation of our granted European patent relating to sofosbuvir that expires in 2024. The EPO conducted an oral hearing for this opposition in 2018 and upheld the claims. ~~NaN of the~~The original opposing parties have appealed, requesting full revocation.

In 2016, several parties filed oppositions in the EPO requesting revocation of our granted European patent covering TAF that expires in 2026. In 2017, the EPO upheld the validity of the claims of our TAF patent. NaN parties have appealed this decision. The appeal hearing was held in March 2021, and the validity of all claims were upheld.

In 2017, several parties filed oppositions in the EPO requesting revocation of our granted European patent relating to TAF hemifumarate that expires in 2032. In 2019, the EPO upheld the validity of the claims of our TAF hemifumarate patent. ~~NaN~~Three parties have appealed this decision.

~~In 2016, 3 parties filed oppositions in~~ The hearing for the EPO requesting revocation of our granted European patent covering cobicistat that expires in 2027. In 2017, the EPO upheld the validity of the claims of our cobicistat patent. NaN parties have appealed this decision.appeal has been scheduled for March 2023.

The appeal process may take several years for all EPO opposition proceedings. While we are confident in the strength of our patents, we cannot predict the ultimate outcome of these oppositions. If we are unsuccessful in defending these oppositions, some or all of our patent claims may be narrowed or revoked and the patent protection for sofosbuvir, TAF and TAF hemifumarate ~~and cobicistat~~ in the ~~European Union~~EU could be substantially shortened or eliminated entirely. If our patents are revoked, and no other European patents are granted covering these compounds, our exclusivity may be based entirely on regulatory exclusivity granted by EMA. If we lose patent protection for any of these compounds, our revenues and results of operations could be negatively impacted for the years including and succeeding the year in which such exclusivity is lost.

Antitrust and Consumer Protection

We, ~~(along~~along with ~~Japan Tobacco, Inc. (“Japan Tobacco”),~~ Bristol-Myers Squibb Company (“BMS”) and Johnson & Johnson, Inc.), have been named as defendants in class action lawsuits filed in 2019 and 2020 related to various drugs used to treat HIV, including drugs used in combination antiretroviral therapy. ~~Japan Tobacco was dismissed from the lawsuit after a favorable court ruling on the defendants’ motion to dismiss.~~ Plaintiffs allege that we (and the other ~~remaining~~ defendants) engaged in various conduct to restrain competition in violation of federal and state antitrust laws and state consumer protection laws. The lawsuits, which have been consolidated, are pending in the U.S. District Court for the Northern District of California. The lawsuits seek to bring claims on behalf of two nationwide ~~classes -~~ classes—one of direct purchasers consisting largely of wholesalers, and another of indirect or end-payor purchasers, including health insurers and individual patients. Plaintiffs seek damages, permanent injunctive relief and other relief. In ~~September~~the second half of 2021 and first half of 2022, several plaintiffs filed separate lawsuits effectively opting out of the class action cases, asserting claims that are substantively the same as the putative classes.These cases have been coordinated with the class actions. Trial has been set for March 2023.

In January 2022, we, along with BMS and ~~generic manufacturer Teva Pharmaceuticals USA (“Teva”)~~Janssen Products, L.P., were named as defendants in ~~similar lawsuits~~a lawsuit filed ~~by CVS, Rite Aid, Walgreens, Safeway, Kroger, Albertsons and HEB (the “Retailers”)~~ in the ~~U.S. District~~Superior Court ~~for~~of the ~~Northern District~~State of ~~California. The Retailers are opting~~California, County of San Mateo, by Aetna, Inc. on behalf of itself and its affiliates and subsidiaries that effectively opts the Aetna plaintiffs out of the ~~proposed direct purchaser~~above class ~~and, based on assignments by their wholesalers, seek to bring claims substantially~~actions. The allegations are substantively the same as those in the ~~putative class.~~class actions. The Aetna plaintiffs seek damages, permanent injunctive relief and other relief.

In September 2020, we, along with generic manufacturers Cipla ~~Ltd.~~ and Cipla USA Inc. (together, ~~“Cipla”~~“Cipla Defendants”), were named as defendants in a class action lawsuit filed in the U.S. District Court for the Northern District of California by Jacksonville Police Officers and Fire Fighters Health Insurance Trust (“Jacksonville Trust”) on behalf of end-payor purchasers. Jacksonville Trust claims that the 2014 settlement agreement between us and the Cipla Defendants, which settled a patent dispute relating to patents covering our Emtriva, Truvada and Atripla products and permitted generic entry prior to patent expiry, violates certain federal and state antitrust and consumer protection laws. The Plaintiff seeks damages, permanent injunctive relief and other relief.

In February 2021, we, along with BMS and Teva Pharmaceutical Industries Ltd., were named as defendants in a lawsuit filed in the First Judicial District Court for the State of New Mexico, County of Santa Fe by the New Mexico Attorney General. The New Mexico Attorney General alleges that we (and the other defendants) restrained competition in violation of New Mexico antitrust and consumer protection laws. The New Mexico Attorney General seeks damages, permanent injunctive relief and other relief.

While we believe these cases are without merit, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages or could be subject to permanent injunctive relief awarded in favor of plaintiffs.

Product Liability

We have been named as a defendant in 1one class action lawsuit and various product liability lawsuits related to Viread, Truvada, Atripla, Complera and Stribild. Plaintiffs allege that Viread, Truvada, Atripla, Complera and/or Stribild caused them to experience kidney, bone and/or tooth injuries. The lawsuits, which are pending in state or federal court in California, Delaware ~~Missouri~~ and ~~New Jersey,~~Missouri, involve more than ~~24,000~~26,000 plaintiffs. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. The first bellwether trial in California state court was scheduled to begin in October 2022, but is currently stayed while the California First District Court of Appeal considers the merits of plaintiffs’ theories of liability. The first bellwether trial in California federal court is scheduled to begin in January 2024. We intend to vigorously defend ourselves in these actions. While we believe these cases are without merit, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages.

Government Investigation

In 2017, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents related to our promotional speaker programs for HIV. We are cooperating with this inquiry.

Qui Tam Litigation

A former sales employee filed a qui tam lawsuit against Gilead in March 2017 in U.S. District Court for the Eastern District of Pennsylvania. Following the government’s decision not to intervene in the suit, the ~~relator served us with a Second Amended Complaint~~case was unsealed in ~~January 2021.~~December 2020. The lawsuit alleges that certain of Gilead’s HCV ~~patient access programs, clinical educator programs, speaker programs, and other~~ sales and marketing ~~programs~~activities violated the federal False Claims Act and various state false claims acts. In July 2021, the relator filed a Third Amended Complaint, removing allegations against us regarding our patient access programs, clinical educator programs and relationships with specialty pharmacies. The relator seeks all available relief under these statutes.

NaN former employees filed a qui tam lawsuit against Gilead in April 2020 in California state court. These same former employees had previously filed a qui tam lawsuit in federal court in California, and the U.S. Department of Justice declined intervention and moved to dismiss relators’ federal False Claims Act claims. Relators subsequently voluntarily dismissed their federal lawsuit and refiled their lawsuit in California state court. Following the California Attorney General’s Office’s decision not to intervene, relators served Gilead with their complaint in August 2020. The complaint alleges violations of the California False Claims Act (“CFCA”) and employment law claims. Relators seek all available relief under the CFCA.

Health Choice Advocates, LLC (“Health Choice”) filed a qui tam lawsuit against Gilead in April 2020 in New Jersey state court. Following the New Jersey Attorney General’s Office’s decision not to intervene in the suit, Health Choice served us with their original complaint in August 2020. The lawsuit alleges that Gilead violated the New Jersey False Claims Act through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs. The lawsuit seeks all available relief under the New Jersey False Claims Act. In April 2021, the trial court granted our motion to dismiss with prejudice. Health Choice has appealed the trial court’s dismissal.

Health Choice filed another qui tam lawsuit against Gilead in May 2020 making similar allegations in Texas state court. Following the Texas Attorney General’s Office’s decision not to intervene in the suit, Health Choice served us with their original complaint in October 2020. The lawsuit alleges that Gilead violated the Texas Medicare Fraud Prevention Act (“TMFPA”) through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs. The lawsuit seeks all available relief under the TMFPA. In September 2021, the Texas Court of Appeals for the Sixth Court Appeals District granted our request to stay the Texas ~~litigation. The case is stayed~~litigation pending final judgment in the Eastern District of Pennsylvania lawsuit filed in March 2017, as discussed above.

We intend to vigorously defend ourselves in these actions. While we believe these cases are without merit, we cannot predict the ultimate outcomes. If any of these plaintiffs are successful in their claims, we could be required to pay significant monetary damages.

Securities Litigation

Immunomedics and several of its former officers and directors have been named as defendants in putative class actions filed in 2018 and 2019, which were consolidated in September 2019. Plaintiffs filed a consolidated complaint in November 2019 and an amended complaint in July 2021. Plaintiffs allege that Immunomedics and the individual defendants violated the federal securities laws in connection with Immunomedics’ Biologics License Application for Trodelvy, and seek certification of a class of shareholders, damages and other relief. The consolidated lawsuit is pending in the U.S. District Court for the District of New Jersey. In June 2022, plaintiffs filed their Motion for Class Certification, and Immunomedics submitted its Opposition in July 2022. A decision on class certification is pending. While we believe this case is without merit, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages.

Other Matters

We are a party to various legal actions that arose in the ordinary course of our business. We do not believe that these other legal actions will have a material adverse impact on our consolidated ~~business,~~ financial position, or results of ~~operations.~~operations or cash flows.

~~12.~~

11. STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

In the first quarter of 2016, our Board of Directors authorized a $12.0 billion stock repurchase program (“2016 Program”) under which repurchases may be made in the open market or in privately negotiated transactions. We started repurchases under the 2016 Program in April 2016.

In the first quarter of 2020, our Board of Directors authorized a ~~new~~ $5.0 billion stock repurchase program (“2020 Program”), which will commence upon the completion of the 2016 Program. Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.

During the three and nine months ended September 30, 2021, we repurchased and retired 2.1 million and 7.5 million shares of our common stock for $145 million and $497 million, respectively, through open market transactions under the 2016 Program. During the three and nine months ended September 30, 2020, we repurchased and retired 3.0 million and 22.4 million shares of our common stock for $201 million and $1.6 billion, respectively, through open market transactions under the 2016 Program.

As of September 30, ~~2021,~~2022, the aggregate remaining authorized repurchase amount under both programs was ~~$6.3~~$5.7 billion.

The following table summarizes our stock repurchases through open market transactions under the 2016 Program:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Shares repurchased and retired	2.9		2.1		9.5		7.5
Amount	$	180	$	145	$	604	$	497

Accumulated Other Comprehensive Income

The following table summarizes the changes in AOCI by component, net of tax:


(in millions)	(in millions)	Foreign Currency Translation, Net of Tax		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total		(in millions)	Foreign Currency Translation, Net of Tax		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance at December 31, 2020		$	51	$	2	$	(113)	$	(60)
Balance as of December 31, 2021										Balance as of December 31, 2021	$	13	$	(4)	$	74	$	83
Net unrealized gain (loss)	Net unrealized gain (loss)	(15)		(3)		92		74		Net unrealized gain (loss)	(102)		(38)		254		114
Reclassifications to net income (loss)		—		—		60		60
Reclassifications to net income										Reclassifications to net income	—		1		(100)		(99)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(15)		(3)		152		134		Net current period other comprehensive income (loss)	(102)		(37)		154		15
Balance at September 30, 2021		$	36	$	(1)	$	39	$	74
Balance as of September 30, 2022										Balance as of September 30, 2022	$	(89)	$	(41)	$	228	$	98


(in millions)	(in millions)	Foreign Currency Translation, Net of Tax		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total		(in millions)	Foreign Currency Translation, Net of Tax		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance at December 31, 2019		$	53	$	1	$	31	$	85
Balance as of December 31, 2020										Balance as of December 31, 2020	$	51	$	2	$	(113)	$	(60)
Net unrealized gain (loss)	Net unrealized gain (loss)	(12)		42		(25)		5		Net unrealized gain (loss)	(15)		(3)		92		74
Reclassifications to net income (loss)		—		(17)		(50)		(67)
Reclassifications to net income										Reclassifications to net income	—		—		60		60
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(12)		25		(75)		(62)		Net current period other comprehensive income (loss)	(15)		(3)		152		134
Balance at September 30, 2020		$	41	$	26	$	(44)	$	23
Balance as of September 30, 2021										Balance as of September 30, 2021	$	36	$	(1)	$	39	$	74

The amounts reclassified to ~~net~~Net income ~~(loss)~~ for gains and losses on cash flow hedges are recorded as part of Product sales on our Condensed Consolidated Statements of ~~Operations.~~Income. See Note 5. Derivative Financial Instruments for additional information. The amounts reclassified to ~~net~~Net income ~~(loss)~~ for gains and losses on available-for-sale debt securities are recorded as part of Other income (expense), net on our Condensed Consolidated Statements of Operations. Gross realized gains and losses on available-for-sale debt securities were not material for the nine months ended September 30, 2021 and 2020. The income tax impact allocated to each component of other comprehensive income (loss) was not material for the periods presented.Income.

~~13.~~

12. NET INCOME ~~(LOSS)~~ PER SHARE ATTRIBUTABLE TO GILEAD COMMON STOCKHOLDERS

Basic net income ~~(loss)~~ per share attributable to Gilead common stockholders is calculated based on the ~~weighted average~~weighted-average number of shares of our common stock outstanding during the period. Diluted net income ~~(loss)~~ per share attributable to Gilead common stockholders is calculated based on the ~~weighted average~~weighted-average number of shares of our common stock and other dilutive securities outstanding during the period. The potentially dilutive shares of our common stock resulting from the assumed exercise of outstanding stock options and equivalents were determined under the treasury stock method.

The following table shows the calculation of basic and diluted net income per share attributable to Gilead common stockholders:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions, except per share amounts)	2022		2021		2022		2021
Net income attributable to Gilead	$	1,789	$	2,592	$	2,952	$	5,843
Shares used in per share calculation - basic	1,255		1,256		1,255		1,256
Dilutive effect of stock options and equivalents	6		6		5		6
Shares used in per share calculation - diluted	1,261		1,262		1,261		1,262

Net income per share attributable to Gilead common stockholders - basic	$	1.43	$	2.06	$	2.35	$	4.65
Net income per share attributable to Gilead common stockholders - diluted	$	1.42	$	2.05	$	2.34	$	4.63

Potential shares of common stock excluded from the computation of diluted net income ~~(loss)~~ per share attributable to Gilead common stockholders because their effect would have been antidilutive were 17 million for both the three and nine months ended September 30, 2022, and 14 million and 15 million for the three and nine months ended September 30, 2021, ~~respectively, and 13 million and 38 million for the three and nine months ended September 30, 2020,~~ respectively.

~~The following table summarizes the calculation of basic and diluted net income (loss) per share attributable to Gilead common stockholders:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per share amounts) 2021 2020 2021 2020
Net income (loss) attributable to Gilead $ 2,592 $ 360 $ 5,843 $ (1,428)
Shares used in per share calculation - basic 1,256 1,255 1,256 1,257
Dilutive effect of stock options and equivalents 6 6 6 —
Shares used in per share calculation - diluted 1,262 1,261 1,262 1,257
Net income (loss) per share attributable to Gilead common stockholders - basic $ 2.06 $ 0.29 $ 4.65 $ (1.14)
Net income (loss) per share attributable to Gilead common stockholders - diluted $ 2.05 $ 0.29 $ 4.63 $ (1.14)

~~14.~~13. INCOME TAXES

The following table summarizes our ~~income~~Income tax expense:


		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
		September 30,						September 30,							September 30,						September 30,
(in millions, except percentages)	(in millions, except percentages)	2021			2020			2021			2020			(in millions, except percentages)	2022			2021			2022			2021
Income (loss) before income taxes		$	3,438		$	825		$	7,519		$	(145)
Income before income taxes														Income before income taxes	$	2,432		$	3,438		$	3,783		$	7,519
Income tax expense	Income tax expense	$	(852)		$	(472)		$	(1,694)		$	(1,310)		Income tax expense	$	(646)		$	(852)		$	(850)		$	(1,694)
Effective tax rate	Effective tax rate	24.8		%	57.2		%	22.5		%	(903.4)		%	Effective tax rate	26.6		%	24.8		%	22.5		%	22.5		%

Our effective income tax rate of 26.6% and 22.5% for the three and nine months ended September 30, 2022, respectively, was higher than the U.S. federal statutory rate of 21% primarily due to $389 million of non-deductible Acquired in-process research and development expenses recorded in connection with our acquisition of MiroBio.

Our effective income tax rate of 24.8% for the three months ended September 30, 2021 iswas higher than the U.S. federal statutory rate of 21% primarily due to remeasurement of certain deferred tax liabilities related to acquired intangible assets, partially offset by provision to return adjustments.

Our effective income tax rate of 22.5% for the nine months ended September 30, 2021 iswas higher than the U.S. federal statutory rate of 21% primarily due to remeasurement of certain deferred tax liabilities related to acquired intangible assets and unfavorable changes in the fair value of our equity investment in Galapagos that are non-deductible for income tax purposes, partially offset by provision to return adjustments.

Our ~~effective~~ income tax ~~rate of 57.2% for the three months ended September 30, 2020 differed from the U.S.~~returns are subject to audit by federal, ~~statutory rate of 21% primarily due to certain acquired IPR&D charges~~state and ~~unfavorable changes in the fair value of our equity investment in Galapagos that are non-deductible for income~~foreign tax ~~purposes, partially offset by a net discrete tax benefit related to a settlement with a taxing authority.~~

Our effective income tax rate of (903.4)% for the nine months ended September 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to a non-deductible $4.5 billion IPR&D charge recorded in connection with our second quarter 2020 acquisition of Forty Seven, in addition to the above mentioned amounts for the three months ended September 30, 2020.

authorities. We are currently under examination by the ~~U.S.~~ Internal Revenue Service and Irish tax authorities for ~~the tax years from~~our 2016 to 2018 ~~and by various state and foreign jurisdictions.~~tax years. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We ~~regularly~~periodically evaluate our exposures associated with our tax filing ~~positions to determine our assessment of unrecognized tax benefits in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes.~~positions.

3228

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The forward-looking statements are contained principally in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs, collaboration and licensing arrangements, ongoing litigation and investigation matters, statements regarding the anticipated future impact on our business of the ongoing coronavirus disease 2019 (“COVID-19”) and related public health measures and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions. We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under Risk Factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof unless otherwise specified. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not undertake and specifically decline any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in the section entitled Risk Factors under Part II, Item 1A of this Quarterly Report in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

~~You should read the~~ following ~~management’s~~ discussion and analysis is intended to provide material information around events and uncertainties known to management relevant to an assessment of ~~our~~the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and our unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, ~~2021~~2022 and related notes thereto (including Note 1. Organization and Summary of Significant Accounting Policies and Note 6. Acquisitions, Collaborations and Other Arrangements) and other disclosures (including ~~the disclosures under~~ Part II, Item ~~1A,~~ “1A. Risk ~~Factors~~”)Factors) included in this Quarterly Report on Form ~~10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles~~10-Q where other material events and uncertainties not otherwise discussed below are ~~presented in U.S. dollars.~~disclosed. Certain amounts and percentages herein may not sum or recalculate due to rounding.

MANAGEMENT OVERVIEW

Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California.

~~Our portfolio~~Key Business Updates(1)

Virology

•In October 2022, we announced that Merck & Co., Inc. (“Merck”) and Gilead plan to resume their Phase 2 study under an amended protocol. The study will evaluate an investigational once-weekly oral combination treatment regimen of ~~marketed products includes AmBisome~~®~~, Atripla~~®~~, Biktarvy~~®~~, Cayston~~®~~, Complera~~®~~/Eviplera~~®~~, Descovy~~®~~, Descovy for PrEP~~®~~, Emtriva~~®~~, Epclusa~~®~~, Genvoya~~®~~, Harvoni~~®~~, Hepcludex~~® ~~(bulevirtide), Hepsera~~®~~, Jyseleca~~®~~, Letairis~~®~~, Odefsey~~®~~, Ranexa~~®~~, Sovaldi~~®~~, Stribild~~®~~, Tecartus~~®~~, Trodelvy~~®~~, Truvada~~®~~, Truvada for PrEP~~®~~, Tybost~~®~~, Veklury~~®~~, Vemlidy~~®~~, Viread~~®~~, Vosevi~~®~~, Yescarta~~®Merck’s islatravir at a lower weekly dose and ~~Zydelig~~®. The approval status of Hepcludex and Jyseleca vary worldwide, and Hepcludex and Jyseleca are not approved in the United States. We also sell and distribute authorized generic versions of Epclusa and Harvoni in the United States through our separate subsidiary, Asegua Therapeutics, LLC. In addition, we sell and distribute certain products through our corporate partners under collaborative agreements.Gilead’s lenacapavir.

~~Business Highlights~~•~~(1)~~In August 2022, we announced that European Commission (“EC”) has granted Marketing Authorization for Sunlenca (lenacapavir) for the treatment of HIV infection, in combination with other antiretroviral(s), in adults with multi-drug resistant HIV infection for whom it is otherwise not possible to construct a suppressive antiviral regimen.

Oncology

•In October ~~2021,~~2022, we ~~entered into a clinical trial collaboration~~received European Marketing Authorization for Yescarta use in adults with second-line diffuse large B-cell lymphoma and ~~supply agreement with Merck & Co.~~high-grade B-cell lymphoma (“LBCL”). Additionally, EC granted Marketing Authorization for Tecartus for the treatment of adult relapsed or refractory (“r/r”) B-cell precursor acute lymphoblastic leukemia (“ALL”), ~~Inc. (“Merck”) to evaluate the efficacy~~and in Canada, we received conditional marketing authorization for Yescarta for r/r follicular lymphoma after two or more lines of ~~Trodelvy in combination with Merck’s anti-PD-1 therapy, Keytruda, as a first-line treatment for patients with locally advanced or metastatic triple-negative breast cancer (“TNBC”).~~systemic therapy.

•In October ~~2021,~~2022, we announced a strategic collaboration with MacroGenics, Inc. (“MacroGenics”) to develop bispecific antibodies to treat various cancers. The agreement includes an upfront payment by us of $60 million to MacroGenics and an exclusive option granted to us on MGD024, an investigational CD123 and CD3 bispecific.

•In October 2022, we announced that U.S. Food and Drug Administration (“FDA”) ~~approved Tecartus~~accepted for Priority Review the ~~treatment of adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia (“ALL”). Tecartus is the first and only CAR T cell therapy approved for adults with ALL.~~

•~~In September 2021, Kite Pharma Inc. (“Kite”), a Gilead Company, submitted a~~ supplemental Biologics License Application ~~to FDA for Yescarta to expand its current indication to include the treatment~~ of ~~adults with relapsed or refractory large B-cell lymphoma in the second-line setting.~~

•~~In September 2021, Health Canada approved~~ Trodelvy for the treatment of ~~adult~~ patients with ~~unresectable TNBC who~~pre-treated hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) metastatic breast cancer. Trodelvy has not been approved by any regulatory agency for the treatment of HR+/HER2- metastatic breast cancer, and its safety and efficacy have ~~received two or more therapies, at least one of them~~not been established for metastatic disease. Canada joins Australia, Great Britain, Switzerland and the United States among the countries that have approved Trodelvy for use under Project Orbis, a global collaborative review program for high impact oncology marketing applications across participating countries.this indication.

•In August ~~2021, Kite and Appia Bio, Inc. entered into a collaboration and license~~2022, we announced an agreement to ~~research~~acquire the remaining worldwide development and ~~develop hematopoietic stem cell derived cell therapies directed toward hematological malignancies.~~commercialization rights to Trodelvy from Everest Medicines in Greater China, South Korea, and other Asian markets.

~~Viral Diseases~~Inflammation

•In ~~October 2021, FDA approved~~September 2022, we completed the acquisition of MiroBio Ltd. (“MiroBio”) for $414 million in cash. MiroBio is a ~~new low-dose tablet dosage form of Biktarvy for pediatric patients weighing at least 14 kg to less than 25 kg who are virologically suppressed or new to antiretroviral therapy.~~U.K.-based biotechnology company focused on restoring immune balance with agonists targeting immune inhibitory receptors.

•

In August 2021, our Marketing Authorization Application for lenacapavir, an investigational, long-acting HIV-1 capsid inhibitor, was fully validated and is now under evaluation with the European Medicines Agency.

(1) ~~We announced and discussed these updates, subsequent~~Readers are encouraged to ~~the issuance of our Quarterly Report on Form 10-Q for the second quarter of 2021, in further detail in~~review all press releases available on our website at www.gilead.com. ~~Readers are also encouraged to review all other press releases available on our website mentioned above.~~ The content on the referenced ~~websites~~website does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q.

Quarterly Financial Highlights

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except percentages and per share amounts) 2021 2020 Change 2021 2020 Change
Total revenues $ 7,421 $ 6,577 13 % $ 20,061 $ 17,268 16 %
Net income (loss) attributable to Gilead $ 2,592 $ 360 NM $ 5,843 $ (1,428) NM
Diluted earnings (loss) per share $ 2.05 $ 0.29 NM $ 4.63 $ (1.14) NM

~~NM - Not Meaningful~~


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions, except percentages and per share amounts)	2022		2021		Change		2022		2021		Change
Total revenues	$	7,042	$	7,421	(5)	%	$	19,892	$	20,061	(1)	%
Net income attributable to Gilead	$	1,789	$	2,592	(31)	%	$	2,952	$	5,843	(49)	%
Net income per share attributable to Gilead common stockholders – diluted	$	1.42	$	2.05	(31)	%	$	2.34	$	4.63	(49)	%

Total revenues ~~increased~~decreased by ~~13%~~5% and 1% to ~~$7.4~~$7.0 billion and $19.9 billion for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to ~~$6.6 billion for~~ the same ~~period~~periods in ~~2020,~~2021, primarily due to ~~increased~~lower sales of Veklury, ~~our FDA-approved treatment for hospitalized patients with the coronavirus disease 2019 (“COVID-19”).~~partially offset by higher product sales in HIV, cell therapy and Trodelvy.

Net income attributable to Gilead was ~~$2.6~~$1.8 billion, or ~~$2.05~~$1.42 diluted earnings per share, for the three months ended September 30, ~~2021,~~2022, compared to ~~$360 million,~~$2.6 billion, or ~~$0.29~~$2.05 diluted earnings per share for the same period in ~~2020.~~2021. The ~~change~~decrease was primarily due to a charge of $389 million related to our acquisition of MiroBio, lower ~~acquired~~product sales and higher costs of goods sold, partially offset by lower income tax expense.

Net income attributable to Gilead was $3.0 billion, or $2.34 diluted earnings per share, for the nine months ended September 30, 2022, compared to $5.8 billion, or $4.63 diluted earnings per share for the same period in 2021. The decrease was primarily due to a partial in-process research and development (“IPR&D”) ~~charges, revenue growth and a decrease in unrealized losses from our equity investments primarily in Galapagos NV (“Galapagos”). Our IPR&D expenses for~~impairment charge of $2.7 billion during the three months ended ~~September 30,~~March 31, 2022 related to assets we acquired from Immunomedics, Inc. (“Immunomedics”) in 2020, ~~were $1.2 billion and~~a charge of $389 million related to our ~~collaborations~~acquisition of MiroBio, higher costs of goods sold and other investments with Arcus Biosciences, Inc. (“Arcus”), Pionyr Immunotherapeutics, Inc. (“Pionyr”), Tango Therapeutics (“Tango”) and Tizona Therapeutics, Inc. (“Tizona”). Our IPR&D expenses for the three months ended September 30, 2021 were not material.lower product sales, partially offset by lower income tax expense.

RESULTS OF OPERATIONS

~~Total~~ Revenues

The following table summarizes the period-over-period changes in our Total revenues:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,							Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
(in millions, except percentages)	(in millions, except percentages)	2021		2020		Change		2021		2020		Change		(in millions, except percentages)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total		Change
Product sales:	Product sales:													Product sales:
HIV	HIV	$	4,189	$	4,547	(8)	%	$	11,777	$	12,681	(7)	%	HIV	$	3,661	$	541	$	285	$	4,487	$	3,302	$	602	$	285	$	4,189	7	%
HCV		429		464		(8)	%	1,488		1,641		(9)	%
HBV/HDV		247		211		17	%	704		616		14	%
Veklury	Veklury	1,923		873		NM		4,208		873		NM		Veklury	336		130		458		925		1,527		109		287		1,923		(52)	%
Cell Therapy		222		147		51	%	632		444		42	%
Chronic hepatitis C virus (“HCV”)														Chronic hepatitis C virus (“HCV”)	283		143		98		524		224		94		111		429		22	%
Chronic hepatitis B virus (“HBV”) / hepatitis delta virus (“HDV”)														Chronic hepatitis B virus (“HBV”) / hepatitis delta virus (“HDV”)	131		28		106		264		104		29		114		247		7	%
Cell therapy														Cell therapy	270		111		17		398		135		78		9		222		79	%
Trodelvy	Trodelvy	101		—		NM		262		—		NM		Trodelvy	139		38		3		180		100		1		—		101		78	%
Other	Other	245		251		(2)	%	777		772		1	%	Other	80		75		46		200		87		84		74		245		(18)	%
Total product sales	Total product sales	7,356		6,493		13	%	19,848		17,027		17	%	Total product sales	4,900		1,064		1,013		6,978		5,479		997		880		7,356		(5)	%
Royalty, contract and other revenues	Royalty, contract and other revenues	65		84		(23)	%	213		241		(12)	%	Royalty, contract and other revenues	28		37		—		64		30		34		1		65		(1)	%
Total revenues	Total revenues	$	7,421	$	6,577	13	%	$	20,061	$	17,268	16	%	Total revenues	$	4,928	$	1,101	$	1,013	$	7,042	$	5,509	$	1,031	$	881	$	7,421	(5)	%


	Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
(in millions, except percentages)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total		Change
Product sales:
HIV	$	9,906	$	1,653	$	863	$	12,422	$	9,132	$	1,776	$	869	$	11,777	5	%
Veklury	1,179		560		1,166		2,905		2,763		761		684		4,208		(31)	%
HCV	745		332		294		1,371		809		322		357		1,488		(8)	%
HBV/HDV	311		85		337		733		275		76		353		704		4	%
Cell therapy	688		308		44		1,040		394		213		25		632		65	%
Trodelvy	379		98		8		485		261		1		—		262		85	%
Other	275		244		174		693		298		270		209		777		(11)	%
Total product sales	13,482		3,281		2,887		19,650		13,932		3,419		2,497		19,848		(1)	%
Royalty, contract and other revenues	140		98		4		242		70		140		3		213		14	%
Total revenues	$	13,622	$	3,378	$	2,891	$	19,892	$	14,002	$	3,559	$	2,500	$	20,061	(1)	%

~~NM - Not Meaningful~~See Note 2. Revenues of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further disaggregation of revenue by product.

~~For~~HIV

HIV product sales increased by 7% and 5% to $4.5 billion and $12.4 billion for the three and nine months ended September 30, ~~2021~~2022, respectively, compared to the same periods in 2021, primarily due to changes in product and channel mix leading to higher average realized price and continued higher demand for Biktarvy worldwide, partially offset by lower demand for Truvada driven by the loss of exclusivity in the U.S., and for Genvoya, primarily due to patients switching to Biktarvy.

Veklury

Veklury product sales decreased by 52% and 31% to $925 million and $2.9 billion for the three and nine months ended September 30, ~~2020~~2022, respectively, compared to the same periods in 2021, primarily due to lower demand driven by reduced hospitalization rates in the U.S., partially offset by higher demand in Other International. Sales of Veklury are generally affected by coronavirus disease 2019 (“COVID-19”) related rates of infections and hospitalizations as well as the availability, uptake and effectiveness of vaccinations and alternative treatments for COVID-19. As a result, future sales of Veklury are difficult to predict and may vary significantly from one period to the next.

~~Total Product Sales~~HCV

~~Total~~HCV product sales increased by ~~13%~~22% to ~~$7.4 billion~~$524 million for the three months ended September 30, 2021, compared to $6.5 billion for the same period in 2020, primarily due to increased sales of Veklury. The three months ended September 30, 2021 also reflects the continued growth of Biktarvy and the continued uptake of Trodelvy in the United States and Cell Therapy products in the United States and Europe. We obtained Trodelvy through the fourth quarter 2020 acquisition of Immunomedics, Inc. (“Immunomedics”). The increases were partially offset by lower HIV product sales, as expected, primarily due to the continued generic competition following the October 2020 loss of exclusivity of Truvada and Atripla in the United States.

~~HIV~~

HIV product sales decreased by 8% to $4.2 billion for the three months ended September 30, 2021, compared to $4.5 billion for the same period in 2020. The decline was primarily due to the anticipated decline in sales volume of our Truvada (emtricitabine (“FTC”) and tenofovir disoproxil fumarate (“TDF”))-based products driven by the continued generic competition following the October 2020 loss of exclusivity of Truvada and Atripla in the United States. Truvada and Atripla product sales were $528 million lower for the three months ended September 30, 2021,2022, compared to the same period in ~~2020. The decrease was also impacted by lower channel inventory,~~2021, primarily ~~driven by pandemic-related stocking as compared~~due to ~~the same period~~a favorable resolution of a prior year rebate claim in ~~2020 as well as lower sales of Descovy driven by lower average net selling price~~Europe and lower sales of Genvoya driven by volume. The decline was partially offset by an increase in Biktarvy product sales driven by higher demand and higher average net selling price. We expect Truvada sales to continue to decline for the remainder of 2021 and beyond as multiple generics are expected to enter the market.

~~The COVID-19 pandemic continues to impact our HIV business. In the United States, as anticipated, we continued to see a modest recovery~~other favorable pricing dynamics in the ~~HIV treatment market volume in the third quarter of 2021; however, it may take several quarters for the~~ U.S. ~~treatment market to return to pre-pandemic levels.~~

~~HCV~~

HCV product sales decreased by 8% to ~~$429 million~~$1.4 billion for the ~~three~~nine months ended September 30, ~~2021,~~2022, compared to ~~$464 million for~~ the same period in ~~2020,~~2021, primarily ~~driven by~~due to fewer patient starts ~~due to the impact of the COVID-19 pandemic~~ and lower average net selling ~~price.~~price, partially offset by a favorable resolution of a prior year rebate claim in Europe.

~~Hepatitis B Virus (“HBV”)~~HBV / ~~Hepatitis Delta Virus (“HDV”)~~HDV

HBV and HDV product sales increased by ~~17%~~7% and 4% to ~~$247~~$264 million and $733 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to ~~$211 million for~~ the same ~~period~~periods in ~~2020,~~2021, primarily due to higher demand for Vemlidy ~~sales volume driven by increased demand primarily~~and the continued uptake of Hepcludex in ~~geographies outside the United States. Hepcludex sales were $12 million as launch activities continued across Europe following our first quarter 2021 acquisition of MYR GmbH (“MYR”).~~

~~Veklury~~

Veklury product sales were $1.9 billion for the three months ended September 30, 2021, compared to $873 million for the same period in 2020. The increase was primarily due to higher hospital demand consistent with the recent surge in COVID-19 cases. While sales of Veklury are generally affected by, among other things, COVID-19 related rates of infections, hospitalizations and vaccinations, and will continue to be subject to significant volatility and uncertainty, we expect Veklury sales to reduce significantly in the fourth quarter of 2021 as hospitalization rates decline.Europe.

Cell Therapy

Cell ~~Therapy~~therapy product sales increased by ~~51%~~79% and 65% to ~~$222~~$398 million and $1.0 billion for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to ~~$147 million for~~ the same ~~period~~periods in ~~2020,~~2021, primarily due to the continued ~~demand~~uptake of Yescarta for the treatment of ~~relapsed or refractory large B-cell lymphoma and strong uptake in relapsed or refractory indolent follicular lymphoma~~r/r LBCL in the ~~United States~~U.S. and Europe. The increase was also driven by higher Tecartus sales ~~volume~~volumes resulting from expansion of use in the U.S. and Europe for ~~the treatment of~~ mantle cell lymphoma and continued adoption in adult patients with r/r ALL in the ~~United States and Europe.~~U.S.

Trodelvy

Trodelvy product sales ~~were $101~~increased by 78% and 85% to $180 million ~~in the United States~~ and ~~Europe~~$485 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, ~~following~~primarily due to the ~~full FDA approval~~continued uptake in the second- and third-line setting for ~~second-line~~the treatment of metastatic ~~TNBC~~triple-negative breast cancer in the U.S. and ~~accelerated approval for~~Europe as well as second-line metastatic urothelial cancer ~~both~~ in ~~April 2021.~~the U.S.

Other ~~Product Sales~~

Other product sales ~~which include AmBisome, Cayston, Jyseleca, Letairis, Ranexa and Zydelig,~~ decreased by 2%18% and 11% to ~~$245~~$200 million and $693 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to ~~$251 million for~~ the same ~~period~~periods in ~~2020,~~2021, primarily due to lower demand for AmBisome and lower demand for Letairis ~~sales, as anticipated, due to continued generic competition following~~driven by the loss of ~~exclusivity in 2019, partially offset by higher AmBisome sales volume driven by higher demand in geographies outside the United States.~~exclusivity.

~~Product Sales by Geographic Area~~Foreign Currency Exchange Impact

~~Of our total product sales, 26% and 22% were generated outside the United States for the three months ended September 30, 2021 and 2020, respectively.~~ We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures.

Of our total product sales, 30% and 26% were generated outside the U.S. for the three months ended September 30, 2022 and 2021, respectively. Foreign currency exchange, net of hedges, had an ~~immaterial~~unfavorable impact on our total product sales of $205 million for the three months ended September 30, ~~2021,~~2022, based on a comparison using foreign currency exchange rates from ~~the~~ three months ended September 30, ~~2020.~~2021.

Product sales in the United States increased by 8% to $5.5 billion for the three months ended September 30, 2021, compared to $5.1 billion for the same period in 2020, primarily due to increased sales of Veklury as well as the continued growth of Biktarvy, and the continued uptake of Trodelvy and Cell Therapy products. The increases were partially offset by the loss of exclusivity in 2020 of Truvada and Atripla, as expected, and lower sales of Letairis, as anticipated, due to the loss of exclusivity in 2019.

Product sales in Europe increased by 14% to $997 million for the three months ended September 30, 2021, compared to $877 million for the same period in 2020, primarily due to the continued growth of Biktarvy, increased sales of Veklury and higher Cell Therapy sales driven by continued growth of Yescarta and Tecartus.

Product sales in other locations increased by 63% to $880 million for the three months ended September 30, 2021, compared to $540 million for the same period in 2020, primarily due to higher sales volumes of Veklury, AmBisome, Biktarvy and Vemlidy.

~~For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020~~

~~Total Product Sales~~

~~Total~~Of our total product sales, ~~increased by 17% to $19.8 billion~~31% and 30% were generated outside the U.S. for the nine months ended September 30, 2022 and 2021, ~~compared to $17.0 billion for the same period in 2020, primarily~~ ~~due to increased~~ respectively. Foreign currency exchange, net of hedges, had an unfavorable impact on our total product sales of Veklury. The nine months ended September 30, 2021 also reflects the continued growth of Biktarvy in all geographies and the continued uptake of Trodelvy and Cell Therapy and HBV/HDV products. The increases were partially offset by a decline in HIV product sales, as well as lower HCV product sales driven by fewer patient starts. The decrease in HIV product sales, as expected, was primarily due to the continued generic competition following the October 2020 loss of exclusivity of Truvada and Atripla in the United States.

~~HIV~~

HIV product sales decreased by 7% to $11.8 billion for the nine months ended September 30, 2021, compared to $12.7 billion for the same period in 2020, primarily due to the anticipated decline in sales volume of our Truvada (FTC/TDF)-based products driven by the continued generic competition following the October 2020 loss of exclusivity of Truvada and Atripla in the United States. Truvada and Atripla product sales were $1.2 billion lower for the nine months ended September 30, 2021, compared to the same period in 2020. The decrease was also impacted by lower sales of Descovy driven by lower average net selling price and lower sales of Genvoya driven by volume. The decline was partially offset by an increase in Biktarvy product sales driven by higher demand.

~~HCV~~

~~HCV product sales decreased by 9% to $1.5 billion for the nine months ended September 30, 2021, compared to $1.6 billion for the same period in 2020, primarily due to fewer patient starts.~~

~~HBV/HDV~~

~~HBV and HDV product sales increased by 14% to $704~~$386 million for the nine months ended September 30, 2021, compared to $616 million for the same period in 2020, primarily due to higher Vemlidy sales volume. The nine months ended September 30, 2021 also reflects $25 million of Hepcludex sales following the completion of our first quarter 2021 acquisition of MYR.

~~Veklury~~

Veklury product sales were $4.2 billion for the nine months ended September 30, 2021, compared to $873 million for the same period in 2020. The increase was primarily due to higher hospital demand. Veklury became commercially available in the third quarter of 2020 resulting in partial year sales for the nine months ended September 30, 2020.

~~Cell Therapy~~

Cell Therapy product sales increased by 42% to $632 million for the nine months ended September 30, 2021, compared to $444 million for the same period in 2020, primarily due to higher sales volume of Yescarta and Tecartus in the United States and Europe.

~~Trodelvy~~

~~Trodelvy product sales were $262 million in the United States and Europe for the nine months ended September 30, 2021, following the completion of our fourth quarter 2020 acquisition of Immunomedics.~~

~~Other Product Sales~~

Other product sales, which include AmBisome, Cayston, Jyseleca, Letairis, Ranexa and Zydelig, increased by 1% to $777 million for the nine months ended September 30, 2021, compared to $772 million for the same period in 2020. The increase was primarily due to higher AmBisome sales volume driven by higher demand in geographies outside the United States, partially offset by lower Letairis sales, as anticipated, due to continued generic competition following the loss of exclusivity in 2019.

~~Product Sales by Geographic Area~~

Of our total product sales, 30% and 25% were generated outside the United States for the nine months ended September 30, 2021 and 2020, respectively. We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures. Foreign currency exchange, net of hedges, had a favorable impact on our product sales of $160 million for the nine months ended September 30, 2021,2022, based on a comparison using foreign currency exchange rates from ~~the~~ nine months ended September 30, ~~2020.~~

~~Product sales in the United States increased by 9% to $13.9 billion for the nine months ended September 30, 2021, compared to $12.8 billion for the same period in 2020, primarily due to~~ ~~increased~~ sales of Veklury, the growth of Biktarvy, the continued uptake of Trodelvy, and the continued growth of Cell Therapy products. The increases were partially offset by the loss of exclusivity of Truvada and Atripla, as expected, the anticipated decline in sales volume of Letairis following the loss of exclusivity in 2019 and lower HCV sales driven by lower demand.

Product sales in Europe increased by 35% to $3.4 billion for the nine months ended September 30, 2021, compared to $2.5 billion for the same period in 2020, primarily due to increased sales of Veklury, the continued growth of Biktarvy, higher AmBisome sales driven by higher demand, and the continued growth of Cell Therapy products. HCV sales volume decreased due to the impact of the COVID-19 pandemic, partially offset by a favorable government rebate adjustment. Foreign currency exchange, net of hedges, had a favorable impact on our Europe product sales of $101 million for the nine months ended September 30, 2021, based on a comparison using foreign currency exchange rates from the nine months ended September 30, 2020.

Product sales in other locations increased by 50% to $2.5 billion for the nine months ended September 30, 2021, compared to $1.7 billion for the same period in 2020, primarily due to higher sales volumes of Veklury, Biktarvy, Vemlidy and AmBisome, partially offset by lower HCV sales volume.

~~The following table summarizes the period-over-period changes in our product sales:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except percentages) 2021 2020 Change 2021 2020 Change
HIV Products
Descovy (FTC/TAF) Based Products
Biktarvy – U.S. $ 1,875 $ 1,584 18 % $ 4,926 $ 4,346 13 %
Biktarvy – Europe 254 194 31 % 707 528 34 %
Biktarvy – Other International 147 113 30 % 461 314 47 %
2,276 1,891 20 % 6,094 5,188 17 %
Descovy – U.S. 355 424 (16) % 994 1,124 (12) %
Descovy – Europe 42 49 (14) % 128 156 (18) %
Descovy – Other International 36 35 3 % 105 103 2 %
433 508 (15) % 1,227 1,383 (11) %
Genvoya – U.S. 576 669 (14) % 1,633 1,927 (15) %
Genvoya – Europe 100 116 (14) % 306 376 (19) %
Genvoya – Other International 68 61 11 % 184 183 1 %
744 846 (12) % 2,123 2,486 (15) %
Odefsey – U.S. 275 309 (11) % 773 851 (9) %
Odefsey – Europe 112 116 (3) % 336 341 (1) %
Odefsey – Other International 12 12 — % 39 36 8 %
399 437 (9) % 1,148 1,228 (7) %
Revenue share – Symtuza(1) – U.S.
86 82 5 % 261 244 7 %
Revenue share – Symtuza(1) – Europe
41 34 21 % 125 112 12 %
Revenue share – Symtuza(1) – Other International
3 2 50 % 8 6 33 %
130 118 10 % 394 362 9 %
Total Descovy (FTC/TAF) Based Products – U.S. 3,167 3,068 3 % 8,587 8,492 1 %
Total Descovy (FTC/TAF) Based Products – Europe 549 509 8 % 1,602 1,513 6 %
Total Descovy (FTC/TAF) Based Products – Other International 266 223 19 % 797 642 24 %
3,982 3,800 5 % 10,986 10,647 3 %
Truvada (FTC/TDF) Based Products
Atripla – U.S. 21 99 (79) % 96 275 (65) %
Atripla – Europe 2 5 (60) % 10 17 (41) %
Atripla – Other International 4 9 (56) % 12 19 (37) %
27 113 (76) % 118 311 (62) %
Complera / Eviplera – U.S. 28 26 8 % 73 77 (5) %
Complera / Eviplera – Europe 31 35 (11) % 104 124 (16) %
Complera / Eviplera – Other International 5 9 (44) % 12 17 (29) %
64 70 (9) % 189 218 (13) %
Stribild – U.S. 28 27 4 % 94 100 (6) %
Stribild – Europe 11 13 (15) % 33 42 (21) %
Stribild – Other International 3 2 50 % 12 12 — %
42 42 — % 139 154 (10) %
Truvada – U.S. 55 492 (89) % 268 1,245 (78) %
Truvada – Europe 5 6 (17) % 18 20 (10) %
Truvada – Other International 7 11 (36) % 24 37 (35) %
67 509 (87) % 310 1,302 (76) %

Total Truvada (FTC/TDF) Based Products – U.S. 132 644 (80) % 531 1,697 (69) %
Total Truvada (FTC/TDF) Based Products – Europe 49 59 (17) % 165 203 (19) %
Total Truvada (FTC/TDF) Based Products – Other International 19 31 (39) % 60 85 (29) %
200 734 (73) % 756 1,985 (62) %
Other HIV(2) – U.S.
3 10 (70) % 14 24 (42) %
Other HIV(2) – Europe
4 1 NM 9 4 NM
Other HIV(2) – Other International
— 2 (100) % 12 21 (43) %
7 13 (46) % 35 49 (29) %
Total HIV – U.S. 3,302 3,722 (11) % 9,132 10,213 (11) %
Total HIV – Europe 602 569 6 % 1,776 1,720 3 %
Total HIV – Other International 285 256 11 % 869 748 16 %
4,189 4,547 (8) % 11,777 12,681 (7) %
HCV Products
Ledipasvir / Sofosbuvir(3) – U.S.
14 36 (61) % 63 113 (44) %
Ledipasvir / Sofosbuvir(3) – Europe
5 11 (55) % 24 26 (8) %
Ledipasvir / Sofosbuvir(3) – Other International
26 37 (30) % 76 124 (39) %
45 84 (46) % 163 263 (38) %
Sofosbuvir / Velpatasvir(4) – U.S.
173 170 2 % 649 646 — %
Sofosbuvir / Velpatasvir(4) – Europe
77 74 4 % 234 253 (8) %
Sofosbuvir / Velpatasvir(4) – Other International
82 86 (5) % 272 330 (18) %
332 330 1 % 1,155 1,229 (6) %
Other HCV(5) – U.S.
37 35 6 % 97 100 (3) %
Other HCV(5) – Europe
12 13 (8) % 64 37 73 %
Other HCV(5) – Other International
3 2 50 % 9 12 (25) %
52 50 4 % 170 149 14 %
Total HCV – U.S. 224 241 (7) % 809 859 (6) %
Total HCV – Europe 94 98 (4) % 322 316 2 %
Total HCV – Other International 111 125 (11) % 357 466 (23) %
429 464 (8) % 1,488 1,641 (9) %
HBV/HDV Products
Vemlidy – U.S. 103 99 4 % 266 248 7 %
Vemlidy – Europe 9 8 13 % 25 22 14 %
Vemlidy – Other International 96 70 37 % 298 194 54 %
208 177 18 % 589 464 27 %
Viread – U.S. 1 3 (67) % 8 10 (20) %
Viread – Europe 7 8 (13) % 22 27 (19) %
Viread – Other International 18 21 (14) % 55 100 (45) %
26 32 (19) % 85 137 (38) %
Other HBV/HDV(6) – U.S.
— — NM 1 9 (89) %
Other HBV/HDV(6) – Europe
13 2 NM 29 6 NM
13 2 NM 30 15 NM
Total HBV/HDV – U.S. 104 102 2 % 275 267 3 %
Total HBV/HDV – Europe 29 18 61 % 76 55 38 %
Total HBV/HDV – Other International 114 91 25 % 353 294 20 %
247 211 17 % 704 616 14 %
Veklury
Veklury – U.S. 1,527 785 95 % 2,763 785 NM
Veklury – Europe 109 60 82 % 761 60 NM
Veklury – Other International 287 28 NM 684 28 NM
1,923 873 NM 4,208 873 NM

Cell Therapy Products
Tecartus – U.S. 35 5 NM 94 5 NM
Tecartus – Europe 12 4 NM 25 5 NM
47 9 NM 119 10 NM
Yescarta – U.S. 100 85 18 % 300 283 6 %
Yescarta – Europe 66 51 29 % 188 144 31 %
Yescarta – Other International 9 2 NM 25 7 NM
175 138 27 % 513 434 18 %
Total Cell Therapy – U.S. 135 90 50 % 394 288 37 %
Total Cell Therapy – Europe 78 55 42 % 213 149 43 %
Total Cell Therapy – Other International 9 2 NM 25 7 NM
222 147 51 % 632 444 42 %
Trodelvy
Trodelvy – U.S. 100 — NM 261 — NM
Trodelvy– Europe 1 — NM 1 — NM
101 — NM 262 — NM
Other Products
AmBisome – U.S. 7 18 (61) % 32 46 (30) %
AmBisome – Europe 67 58 16 % 202 166 22 %
AmBisome – Other International 69 35 97 % 186 113 65 %
143 111 29 % 420 325 29 %
Letairis – U.S. 46 78 (41) % 157 241 (35) %
Ranexa – U.S. — — NM 5 9 (44) %
Zydelig – U.S. 6 8 (25) % 22 24 (8) %
Zydelig – Europe 7 9 (22) % 27 30 (10) %
Zydelig – Other International — — NM 1 1 — %
13 17 (24) % 50 55 (9) %
Other(7) – U.S.
28 32 (13) % 82 103 (20) %
Other(7) – Europe
10 10 — % 41 32 28 %
Other(7) – Other International
5 3 67 % 22 7 NM
43 45 (4) % 145 142 2 %
Total Other – U.S. 87 136 (36) % 298 423 (30) %
Total Other – Europe 84 77 9 % 270 228 18 %
Total Other – Other International 74 38 95 % 209 121 73 %
245 251 (2) % 777 772 1 %
Total product sales – U.S. 5,479 5,076 8 % 13,932 12,835 9 %
Total product sales – Europe 997 877 14 % 3,419 2,528 35 %
Total product sales – Other International 880 540 63 % 2,497 1,664 50 %
$ 7,356 $ 6,493 13 % $ 19,848 $ 17,027 17 %

~~NM - Not Meaningful~~

~~(1)~~ Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited Company.

~~(2)~~ ~~Includes Emtriva and Tybost.~~

~~(3)~~ ~~Amounts consist of sales of Harvoni and the authorized generic version of Harvoni sold by our separate subsidiary, Asegua Therapeutics LLC.~~

~~(4)~~ ~~Amounts consist of sales of Epclusa and the authorized generic version of Epclusa sold by our separate subsidiary, Asegua Therapeutics LLC.~~

~~(5)~~ ~~Includes Vosevi and Sovaldi.~~

~~(6)~~ ~~Includes Hepcludex and Hepsera.~~

~~(7)~~ ~~Includes Cayston and Jyseleca.~~

2021.

Costs and Expenses

The following table summarizes the period-over-period changes in our costs and expenses:


		Three Months Ended								Nine Months Ended									Three Months Ended								Nine Months Ended
		September 30,								September 30,									September 30,								September 30,
(in millions, except percentages)	(in millions, except percentages)	2021			2020			Change		2021			2020			Change		(in millions, except percentages)	2022			2021			Change		2022			2021			Change
Cost of goods sold	Cost of goods sold	$	1,223		$	1,141		7	%	$	3,974		$	3,174		25	%	Cost of goods sold	$	1,395		$	1,223		14	%	$	4,261		$	3,974		7	%
Product gross margin	Product gross margin	83.4		%	82.4		%	100 bps		80.0		%	81.4		%	-140 bps		Product gross margin	80.0		%	83.4		%	-337 bps		78.3		%	80.0		%	-166 bps
Research and development (“R&D”) expenses		$	1,147		$	1,158		(1)	%	$	3,336		$	3,461		(4)	%
Acquired IPR&D expenses		$	19		$	1,171		(98)	%	$	177		$	5,792		(97)	%
Selling, general and administrative (“SG&A”) expenses		$	1,190		$	1,106		8	%	$	3,596		$	3,421		5	%
Research and development expenses																		Research and development expenses	$	1,149		$	1,101		4	%	$	3,429		$	3,243		6	%
Acquired in-process research and development expenses																		Acquired in-process research and development expenses	$	448		$	65		NM		$	786		$	270		NM
In-process research and development impairment																		In-process research and development impairment	$	—		$	—		NM		$	2,700		$	—		NM
Selling, general and administrative expenses																		Selling, general and administrative expenses	$	1,213		$	1,190		2	%	$	3,653		$	3,596		2	%

NM - Not Meaningful

~~Cost of Goods Sold and~~ Product Gross Margin

Cost of goods sold for the three and nine months ended September 30, 2021 increased by $82 million and $800 million, or 7% and 25%, respectively, compared to the same periods in 2020, primarily due to higher acquisition-related expenses from amortization of finite-lived intangible assets and inventory step-up charges driven by our acquisitions of Immunomedics and MYR, as well as higher product sales and inventory reserves. The increases were partially offset by the reversal of a previously recorded $175 million litigation reserve following a favorable court decision and a decrease in royalty expenses primarily due to lower sales of products containing emtricitabine and elvitegravir.

Product gross margin for the three months ended September 30, ~~2021,~~2022 decreased to 80.0% compared to 83.4% for the same period in ~~2020, increased~~2021, primarily due to a favorable court decision in the third quarter of 2021 that led to the reversal of the previously recorded $175 million litigation reserve during that period, higher royalty expenses driven by Biktarvy royalties and changes in product mix, partially offset by lower inventory reserve adjustments.

Product gross margin for the nine months ended September 30, 2022 decreased to 78.3% compared to 80.0% for the same period in 2021, primarily due to the reversal of the aforementioned previously recorded litigation reserve following a favorable court decision, ~~lower~~higher royalty expenses ~~and change~~driven by Biktarvy royalties, changes in product mix ~~partially offset by higher amortization expense of finite-lived intangible assets.~~

~~Product gross margin~~and restructuring costs for the ~~nine months ended September 30, 2021, compared to the same period in 2020, decreased primarily due to higher amortization expense~~closing of ~~finite-lived intangible assets,~~a New Jersey manufacturing site, partially offset by lower ~~royalty expenses.~~inventory reserve adjustments.

Research and Development Expenses

~~R&D~~Research and development expenses ~~consist primarily of clinical studies performed~~increased by ~~contract research organizations, materials~~4% and ~~supplies, payments related~~6% to ~~collaborative~~$1.1 billion and other arrangements including milestone payments, licenses and fees, expense reimbursements to the collaboration partners, personnel costs including salaries, benefits and stock-based compensation expense, and overhead allocations including various support and infrastructure costs.

We do not track total R&D expenses by product candidate, therapeutic area or development phase. However, we manage our R&D expenses by identifying the R&D activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data, probability of technical and regulatory successful development, market potential, available human and capital resources and other considerations. We continually review our R&D projects based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities that we believe will best support the long-term growth of our business.

~~The following table provides a period-over-period breakout of our R&D expenses by major cost type:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except percentages) 2021 2020 Change 2021 2020 Change
Clinical studies and outside services $ 538 $ 532 1 % $ 1,241 $ 1,517 (18) %
Personnel, infrastructure and other expenses 533 547 (3) % 1,880 1,615 16 %
Stock-based compensation expenses 76 79 (4) % 215 329 (35) %
Total $ 1,147 $ 1,158 (1) % $ 3,336 $ 3,461 (4) %

~~R&D expenses~~$3.4 billion, for the three and nine months ended September 30, ~~2021 decreased by 1% and 4%,~~2022, respectively, compared to the same periods in ~~2020,~~2021, primarily due to ~~lower expenses largely driven by wind-down or completion of certain remdesivir and inflammation~~higher clinical development spend related ~~clinical programs, partially offset by higher investments in~~mostly to Trodelvy and ~~magrolimab clinical activities. R&D expenses for~~ the ~~nine months ended September 30, 2020 included stock-based compensation expense related to our second quarter 2020 acquisition of Forty Seven,~~Arcus Biosciences, Inc. ~~(“Forty Seven”).~~collaboration.

4132

Acquired In-Process Research and Development Expenses

Acquired ~~IPR&D~~in-process research and development expenses reflect IPR&D impairments as well as the initial costs of externally developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and other payments related to various collaborations and the initial costs of rights to IPR&D projects. IPR&D assets capitalized are tested for impairment in the fourth quarter of each year, or earlier if impairment indicators exist. No IPR&D impairment charges were ~~recorded during the three and nine months ended September 30, 2021 and 2020.~~

~~Acquired IPR&D expenses of $19~~$448 million and ~~$177~~$786 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, ~~were~~primarily related to a $389 million charge associated with our acquisition of MiroBio in September 2022 and a $300 million upfront payment associated with the collaboration with Dragonfly Therapeutics, Inc., which we entered into in April 2022. Expenses for the three and nine months ended September 30, 2021 were primarily related to smaller licensing, collaboration, investment and other arrangements we entered into during the periods. ~~Acquired~~See Note6. Acquisitions, Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

In-Process Research and Development Impairment

In connection with our acquisition of Immunomedics in 2020, we allocated a portion of the purchase price to acquired IPR&D ~~expenses~~intangible assets. Approximately $8.8 billion was assigned to IPR&D intangible assets related to Trodelvy for treatment of ~~$1.2~~patients with HR+/HER2- metastatic breast cancer. In March 2022, we received data from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with HR+/HER2- metastatic breast cancer who have received prior endocrine therapy, CDK4/6 inhibitors and two to four lines of chemotherapy (“third-line plus patients”). Based on our evaluation of the study results, and in connection with the preparation of the financial statements for the first quarter, we updated our estimate of the fair value of our HR+/HER2- IPR&D intangible asset to $6.1 billion as of March 31, 2022. Our estimate of fair value used a probability-weighted income approach that discounts expected future cash flows to the present value. The expected cash flows included cash flows from HR+/HER2- metastatic breast cancer for third-line plus patients and patients in earlier lines of therapy which are the subject of separate clinical studies. Our revised discounted cash flows were lower primarily due to a delay in launch timing for third-line plus patients which caused a decrease in our market share assumptions based on the expected competitive environment. There were no changes in our plans or assumptions related to our estimated cash flows for patients in the earlier lines of therapy. We determined the revised estimated fair value was below the carrying value of the asset and, as a result, we recognized a partial impairment charge of $2.7 billion in In-process research and development impairment on our Condensed Consolidated Statements of Income during the three months ended ~~September 30, 2020 included charges~~March 31, 2022. The remaining balance of the IPR&D intangible asset for the HR+/HER2- metastatic breast cancer indication can be ascribed to cash flows from earlier lines of therapy, where we have Phase 3 pivotal studies in development, in addition to the revised cash flows related to the third-line plus patient setting. If future events result in adverse changes in the key assumptions used in determining fair value, including the timing of product launches, information on the competitive landscape of treatments in this indication, changes to the probability of technical or regulatory success, failure to obtain anticipated regulatory approval or discount rate, among others, additional impairments may be recorded and could be material to our ~~collaborations and~~financial statements. No other ~~investments we entered into during the quarter with Arcus, Pionyr, Tango and Tizona. Acquired~~ IPR&D ~~expenses of $5.8 billion for~~impairment charges were recorded during both the three and nine months ended September 30, ~~2020 also included a $4.5 billion charge recorded in connection with the second quarter 2020 acquisition of Forty Seven.~~2022 and 2021.

Selling, General and Administrative Expenses

SG&A expenses relate to sales and marketing, finance, human resources, legal and other administrative activities, including information technology investments. Expenses consist primarily of personnel costs, facilities and overhead costs, outside marketing, advertising and legal expenses and otherSelling, general and administrative ~~costs. SG&A expenses also include the branded prescription drug fee.~~

~~SG&A~~ expenses for the three ~~months ended September 30, 2021 increased by $84 million or 8%, compared to the same period in 2020, primarily due to higher promotional~~ and ~~marketing activities across all geographies, partially offset by lower commercial activities in inflammation.~~

~~SG&A expenses for the~~ nine months ended September 30, ~~2021, increased by $175 million or 5%,~~2022 remained relatively unchanged compared to the same ~~period~~periods in ~~2020,~~2021. Slightly higher expenses in 2022 related primarily ~~due~~ to ~~an expense of $212 million related to the donation of certain equity securities at fair value~~increased spending on promotional and marketing activities and information technology projects, partially offset by a reduction in donations to the Gilead Foundation, a California nonprofit organization (the “Foundation”), during the second quarter of 2021. SG&A expenses for nine months ended September 30, 2020 included a second quarter 2020 charge of $97 million related to a Department of Justice investigation, which settled in the third quarter of 2020.Foundation.

Interest Expense and Other Income (Expense), Net ~~and Interest Expense~~

The following table summarizes the period-over-period changes in ~~our~~Interest expense and Other income (expense), ~~net~~net:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions, except percentages)	2022		2021		Change		2022		2021		Change
Interest expense	$	(229)	$	(250)	(9)	%	$	(709)	$	(763)	(7)	%
Other income (expense), net	$	(176)	$	(154)	15	%	$	(571)	$	(696)	(18)	%

Interest expense for the three and ~~Interest expense:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except percentages) 2021 2020 Change 2021 2020 Change
Other income (expense), net $ (154) $ (940) (84) % $ (696) $ (848) (18) %
Interest expense $ (250) $ (236) 6 % $ (763) $ (717) 6 %
nine months ended September 30, 2022 decreased by 9% and 7% to $229 million and $709 million, respectively, compared to the same periods in 2021, primarily due to lower outstanding debt balances.

The changes in Other income (expense), net for the three and nine months ended September 30, ~~2021,~~2022 compared to the same periods in ~~2020,~~2021 primarily reflect ~~a decrease in~~higher and lower net unrealized losses from ~~fair value adjustments of our investments in~~ equity securities, ~~largely driven by our investment in Galapagos, partially offset by lower~~respectively, as well as higher interest ~~income.~~

~~Interest expense for the three and nine months ended September 30, 2021 increased by $14 million and $46 million, or 6% and 6%, respectively, compared to the same periods in 2020, primarily~~income due to ~~an increase in borrowing related to the fourth quarter 2020 acquisition of Immunomedics, partially offset by favorable effects from debt maturities and repayments.~~rising interest rates.

Income Taxes

The following table summarizes the period-over-period changes in ~~our~~ Income tax expense:

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except percentages) 2021 2020 Change 2021 2020 Change
Income (loss) before income taxes $ 3,438 $ 825 $ 2,613 $ 7,519 $ (145) $ 7,664
Income tax expense $ (852) $ (472) $ 380 $ (1,694) $ (1,310) $ 384
Effective tax rate 24.8 % 57.2 % NM 22.5 % (903.4) % NM

~~NM - Not Meaningful~~


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
(in millions, except percentages)	2022			2021			Change			2022			2021			Change
Income before income taxes	$	2,432		$	3,438		$	(1,006)		$	3,783		$	7,519		$	(3,736)
Income tax expense	$	(646)		$	(852)		$	(206)		$	(850)		$	(1,694)		$	(844)
Effective tax rate	26.6		%	24.8		%	1.8		%	22.5		%	22.5		%	—		%

Our effective tax rate ~~and provision differed~~increased for the three months ended September 30, ~~2021,~~2022 compared to the same period in ~~2020,~~2021, primarily due to ~~certain acquired IPR&D charges~~$389 million of non-deductible Acquired in-process research and ~~unfavorable changes in the fair value of our equity investment in Galapagos that are non-deductible for income tax purposes, recorded in the three months ended September 30, 2020.~~

~~Our effective tax rate and provision differed for the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to a non-deductible $4.5 billion IPR&D charge~~development expenses recorded in connection with our ~~second quarter 2020~~ acquisition of ~~Forty Seven, in addition to the above mentioned amounts for the three months ended September 30, 2020.~~MiroBio.

LIQUIDITY AND CAPITAL RESOURCES

~~We believe that our existing capital resources, supplemented by our cash flows generated from operating activities, will be adequate to satisfy our capital needs for the foreseeable future.~~

~~The following table summarizes our cash, cash equivalents and marketable debt securities and working capital:~~

(in millions) September 30, 2021 December 31, 2020
Cash, cash equivalents and marketable debt securities $ 6,837 $ 7,910
Working capital $ 3,746 $ 4,599

~~Cash, Cash Equivalents and Marketable Debt Securities~~

Cash, cash equivalents and marketable debt securities as of September 30, ~~2021~~2022 decreased by ~~$1.1 billion,~~$887 million or ~~14%~~11%, compared to December 31, 2020. During the nine months ended September 30, 2021, we generated $8.2 billion in operating cash flow, made debt repayments of $3.75 billion, utilized $1.2 billion for our first quarter 2021 acquisition of MYR, paid cash dividends of $2.7 billion, utilized $497 million on open market repurchases of our common stock and had additional investing cash outlays of approximately $1.1 billion.

~~Working Capital~~

Working capital, which is current assets less current liabilities, decreased by $853 million, or 19%, compared to December 31, 2020, primarily due to the utilization of cash, cash equivalents and marketable debt securities and other activities as noted above.

~~Accounts receivable decreased by $326 million, compared to December 31, 2020, primarily due to collections of Veklury receivables during the nine months ended September 30, 2021.~~

Accrued and other current liabilities decreased by $555 million compared to December 31, 2020, primarily reflecting the timing of accruals and payments, as well as estimated and transition tax payments made to taxing authorities during the nine months ended September 30, 2021.

Cash Flows

The following table summarizes our cash flow activities:


		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Cash provided by (used in):
Net cash provided by (used in):						Net cash provided by (used in):
Operating activities	Operating activities	$	8,179	$	6,252	Operating activities	$	6,505	$	8,179
Investing activities	Investing activities	$	(2,853)	$	(5,638)	Investing activities	$	(2,091)	$	(2,853)
Financing activities	Financing activities	$	(6,935)	$	639	Financing activities	$	(4,915)	$	(6,935)

Operating Activities

~~Cash~~Net cash provided by operating activities ~~represents the cash receipts and disbursements related to all activities other than investing and financing activities. Operating cash flow~~ is derived by adjusting our net income for non-cash items and changes in operating assets and liabilities. ~~Cash~~Net cash provided by operating activities ~~increased by $1.9 billion to $8.2~~was $6.5 billion for the nine months ended September 30, ~~2021,~~2022 compared to $8.2 billion for the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~revenue growth from sales~~the $1.25 billion payment made in the first quarter of ~~Veklury~~2022 in connection with the legal settlement related to bictegravir litigation as well as higher ~~collections of receivables during the nine months ended September 30, 2021.~~

income tax payments made in 2022.

Investing Activities

~~Cash~~Net cash used in investing activities primarily consists of purchases, sales and maturities of our marketable debt securities, capital expenditures, acquisitions, including IPR&D, net of cash acquired, purchases of equity securities and other investments. Cash used in investing activities decreased by $2.8 billion to $2.9was $2.1 billion for the nine months ended September 30, ~~2021,~~2022 compared to $2.9 billion for the same period in ~~2020.~~2021. The ~~change in cash used in investing activities~~decrease was primarily due to ~~$1.2 billion~~lower net purchases of ~~payments made for our first quarter 2021 acquisition of MYR, compared to $4.7 billion of payments made for our second quarter 2020 acquisition of Forty Seven.~~marketable debt and equity securities, partially offset by higher capital expenditures.

Financing Activities

~~Cash~~Net cash used in financing activities was $4.9 billion for the nine months ended September 30, ~~2021 was~~2022 compared to $6.9 billion ~~compared to cash provided by financing activities of $639 million~~ for the same period in ~~2020.~~2021. During the nine months ended September 30, 2022, we utilized cash for $1.5 billion of debt repayments, $2.8 billion of dividend payments and $604 million of common stock repurchases. During the nine months ended September 30, 2021, we utilized cash for ~~$3.8~~$3.75 billion of debt repayments, $2.7 billion of dividend payments and $497 million common stock repurchases. During the nine months ended September 30, 2020, we obtained $7.2 billion in proceeds from the September 2020 senior unsecured notes offering, net of issuance costs, in anticipation of our fourth quarter 2020 Immunomedics acquisition, partially offset by cash utilized for $2.6 billion dividend payments, $2.5 billion debt repayments and $1.6 billion common stock repurchases. In October 2021, the Board of Directors declared a quarterly dividend of $0.71 per share of common stock ~~which is payable in December 2021. Future dividends will be subject to Board approval.~~repurchases.

Debt and Credit Facilities

A summary of our ~~borrowings~~borrowing activities, balances and compliance with certain debt covenants under various financing arrangements is included in Note ~~10.~~9. Debt and Credit Facilities of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q. We may choose to repay certain of our long-term debt obligations prior to maturity dates based on our assessment of current and long-term liquidity and capital requirements.

~~During the nine months ended September 30, 2021, we repaid $3.75 billion of debt. We repaid $1.0 billion of senior unsecured notes due April 2021 in the first quarter of 2021~~

Capital Resources and $1.25 billion of senior unsecured notes due December 2021 in the third quarter of 2021. Additionally, we repaid $1.0 billion principal amount outstanding under our three-year $1.0 billion senior unsecured term loan facility due October 2023 and $500 millionMaterial Cash Requirements

A summary of our ~~senior unsecured floating rate notes due September 2021 upon maturity. In October 2021, we exercised our option to call $500 million~~capital resources and material cash requirements is presented in Part II, Item 7 of our ~~floating rate senior unsecured notes~~Annual Report on Form 10-K for the year ended December 31, 2021. As of January 1, 2022, for U.S. tax purposes, research and ~~$500 million~~development expenses are required to be capitalized and amortized rather than immediately deducted. Absent a change in law, the isolated impact of the required capitalization creates incremental cash tax liabilities. See Notes 6. Acquisitions, Collaborations and Other Arrangements, 9. Debt and Credit Facilities, 10. Commitments and Contingencies and 13. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for any other material changes to our ~~0.75% senior unsecured notes, both having a final maturity of September 2023. The notes will be repaid in November 2021.~~

~~No new debt was issued~~capital resources and material cash requirements during the three and nine months ended September 30, ~~2021. We are required to comply with certain covenants under our note indentures governing our senior unsecured notes. As of September 30, 2021, we were in compliance with all covenants.~~2022.

CRITICAL ACCOUNTING ~~POLICIES,~~ ESTIMATES ~~AND JUDGMENTS~~

The preparation of our Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current ~~information, such as the economic considerations related to the impact that the ongoing COVID-19 pandemic could have on our significant accounting estimates.~~information. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2020. There~~2021. With the exception of our revised estimates related to our HR+/HER2- IPR&D intangible assets as described in “Result of Operations” above, there were no material changes to our critical accounting policies and estimates during the nine months ended September 30, ~~2021.~~2022.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~There have been no new accounting pronouncements issued nor adopted during the nine months ended September 30, 2021 that are of significance to us.~~

~~ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS~~

See Note 6. Acquisitions and Note 9. Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There have been no material changes in~~Information about our market risk ~~during the three and nine months ended September 30, 2021 compared to the disclosures~~is presented in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. See Notes 3. Fair Value Measurements, 4. Available-For-Sale Debt Securities and Equity Securities and 5. Derivative Financial Instruments of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for any material changes to these disclosures.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation as of September 30, ~~2021~~2022 was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures,” which are defined in Rule 13a-15(e) under the U.S. Securities Exchange Act of 1934, as amended (the ~~Exchange Act)~~“Exchange Act”), as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2021.~~2022.

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2021,~~2022, and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.

4535

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

For a description of our significant pending legal proceedings, please see Note ~~11.~~10. Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q.

Item 1A. RISK FACTORS

In evaluating our business, you should carefully consider the following discussion of material risks, events and uncertainties that make an investment in us speculative or risky in addition to the other information in this Quarterly Report on Form 10-Q. A manifestation of any of the following risks and uncertainties could, in circumstances we may or may not be able to accurately predict, materially and adversely affect our business and operations, growth, reputation (including the commercial or scientific reputation of our products), prospects, product pipeline and sales, operating and financial results, financial condition, cash flows, liquidity and stock price. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors; our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.

Product and Commercialization Risks

Certain of our products subject us to additional or heightened risks.

HIV ~~Products~~

We receive a substantial portion of our revenue from sales of our products for the treatment and prevention of HIV infection. During the nine months ended September 30, ~~2021,~~2022, sales of our HIV products accounted for approximately ~~59%~~63% of our total product sales. We may be unable to sustain or increase sales of our HIV products for any number of reasons, including market share gains by competitive products, including generics, or the inability to introduce new HIV medications necessary to remain competitive. In such case, we may need to scale back our operations, including our future drug development and spending on research and development (“R&D”) efforts. For example, ~~most~~many of our HIV products contain tenofovir alafenamide (“TAF”), ~~tenofovir disoproxil fumarate (“TDF”) and/or emtricitabine (“FTC”),~~ which ~~belong~~belongs to the nucleoside class of antiviral therapeutics, and any changes to the treatment paradigm for HIV may cause nucleoside-based therapeutics to fall out of favor.

Veklury

We face risks related to our supply and distribution of Veklury, which was approved by the U.S. Food and Drug Administration (“FDA”) in October 2020 as a treatment for patients hospitalized with coronavirus disease 2019 (“COVID-19”), in January 2022 as a treatment for non-hospitalized adult and adolescent patients who are at high risk of progression to severe COVID-19, including hospitalization or death, and in April 2022 as a treatment for pediatric patients who are older than 28 days, weighing at least 3 kg, and are either hospitalized with ~~COVID-19.~~COVID-19 or have mild-to-moderate COVID-19 and are considered high risk for progression to severe COVID-19, including hospitalization or death. While the utilization of Veklury has largely tracked rates of COVID-19 ~~infections,~~ hospitalizations, ~~and vaccinations,~~ we are unable to accurately predict our revenues or supply needs over the short and long term due to the dynamic nature of the pandemic, including the ~~potential for new and better therapeutics, the~~ availability, uptake and effectiveness of vaccines and alternative treatments for COVID-19, fluctuating hospital utilization rates, ~~and~~ the emergence of new ~~variants.~~variants and timing of surges in infection. If we ~~are unable to~~do not accurately forecast demand or manufacture Veklury at levels sufficient to meet ~~actual~~ demand, then ~~this~~we may ~~result in~~experience product shortages or build excess inventory that may be written off. We also remain subject to significant public attention and scrutiny over the complex decisions made regarding ~~the~~ clinical data, supply, allocation, distribution and pricing of Veklury, all of which affects our corporate reputation.

Cell Therapy

Advancing a novel and personalized therapy such as ~~Yescarta~~Tecartus or ~~Tecartus,~~Yescarta, which are ~~Chimeric Antigen Receptor~~chimeric antigen receptor (“CAR”) ~~T cell~~T-cell therapies, creates significant challenges, including:

•educating and certifying medical personnel regarding the procedures and the potential side effects, such as cytokine release syndrome and neurologic toxicities, in compliance with the Risk Evaluation and Mitigation Strategy program required by FDA;

•securing sufficient supply of other medications to manage side effects, such as tocilizumab and corticosteroids, which may not be available in sufficient quantities, may not adequately control the side effects and/or may have detrimental impacts on the efficacy of cell therapy;

•developing and maintaining a robust and reliable process for engineering a patient’s T cells in our facilities and infusing them back into the patient; and

•conditioning patients with chemotherapy in advance of administering our therapy, which may increase the risk of adverse side effects.

The use of engineered T cells as a potential cancer treatment is a recent development and may not be broadly accepted by physicians, patients, hospitals, cancer treatment centers, payers and others in the medical community. ~~We may not be able~~While FDA has approved some cell therapies, including Tecartus and Yescarta, we must continue to demonstrate to the medical community ~~and payers~~ the potential advantages of cell therapy compared to existing and future therapeutics. For challenges related to the reimbursement of ~~Yescarta~~Tecartus and ~~Tecartus,~~Yescarta, see also “Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and other discounts on our products and other pricing pressures.”

We rely on third-party sites to collect patients’ white blood cells, known as apheresis centers, as well as shippers, couriers, and hospitals for the logistical collection of patients’ white blood cells and ultimate delivery of Tecartus and Yescarta ~~or Tecartus~~ to patients. These vendors may encounter disruptions or difficulties that could result in product loss and regulatory action. Apheresis centers may also choose not to participate in our quality certification process, or we may be unable to complete such certification in a timely manner or at all, which could delay or constrain our manufacturing and commercialization efforts.

We operate a new automated CAR T-cell therapy manufacturing facility in Frederick, Maryland, which received FDA approval for commercial production in April 2022. We have not previously manufactured our products in an automated facility on a commercial scale, and as a result, we may require additional time and resources in order to effectively increase manufacturing capacity. We also operate a new retroviral vector manufacturing facility in Oceanside, California, which received FDA approval for commercial production in October 2022. We also have not previously manufactured viral vectors on a commercial scale, and as a result, we may require additional time and resources in order to effectively increase manufacturing capacity. In addition, we may not be able to produce or otherwise obtain an amount of viral vector supply sufficient to satisfy demand for our finished products. If we are unable to meet product demand, we will have difficulty meeting sales forecasts for our finished products.

Our success depends on developing and commercializing new products or expanding the indications for existing products.

If we are unable to launch commercially successful new products or new indications for existing products, our business will be adversely impacted. The launch of commercially successful products is necessary to grow our business, cover our substantial R&D expenses, and offset revenue losses when existing products lose market share due to factors such as competition and loss of patent exclusivity. There are many difficulties and uncertainties inherent in drug development and the introduction of new products. The product development cycle is characterized by significant investments of resources, long lead times and unpredictable outcomes due to the nature of developing medicines for human use. We expend significant time and resources on our product pipeline without any assurance that we will recoup our investments or that our efforts will be commercially successful. A high rate of failure is inherent in the discovery and development of new products, and failure can occur at any point in the process, including late in the process after substantial investment.

We face challenges in accurately forecasting sales because of the difficulties in predicting demand for our products and fluctuations in purchasing patterns or wholesaler inventories.

We may be unable to accurately predict demand for our products, including the uptake of new products, as demand depends on a number of factors. For example, product demand may be adversely affected if physicians do not see the benefit of our products. Additionally, the non-retail sector in the United States, which includes government institutions, including state AIDS Drug Assistance Programs, the U.S. Department of Veterans Affairs, correctional facilities and large health maintenance organizations, tends to be less consistent in terms of buying patterns and often causes quarter-over-quarter fluctuations that do not necessarily mirror patient demand for our products. Federal and state budget pressures, as well as the annual grant cycles for federal and state funds, may cause purchasing patterns to not reflect patient demand for our products. We expect to continue to experience fluctuations in the purchasing patterns of our non-retail customers. In light of the budget crises faced by many European countries, we have observed variations in purchasing patterns induced by cost containment measures in Europe. We believe these measures have caused some government agencies and other purchasers to reduce inventory of our products in the distribution ~~channels. We~~channels, and we may continue to see this trend in the future.

We sell and distribute most of our products in the United States exclusively through the wholesale channel. For the nine months ended September 30, ~~2021,~~2022, approximately ~~92%~~90% of our product sales in the United States were to three wholesalers, AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation. The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine ~~end user~~end-user demand and may not be completely effective in matching their inventory levels to actual ~~end user~~end-user demand. As a result, changes in inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to these wholesalers do not match ~~end user~~end-user demand. In addition, inventory is held at retail pharmacies and other non-wholesaler locations with whom we have no inventory management agreements and no control over buying patterns. Adverse changes in economic conditions, increased competition or other factors may cause retail pharmacies to reduce their inventories of our products, which would reduce their orders from wholesalers and, consequently, the wholesalers’ orders from us, even if ~~end user~~end-user demand has not changed. In addition, we have observed that strong wholesaler and sub-wholesaler purchases of our products in the fourth quarter typically results in inventory draw-down by wholesalers and sub-wholesalers in the subsequent first quarter. As inventory in the distribution channel fluctuates from quarter to quarter, we may continue to see fluctuations in our earnings and a mismatch between prescription demand for our products and our revenues.

We face significant competition from global pharmaceutical and biotechnology companies, specialized pharmaceutical firms and generic drug manufacturers.

New branded or generic products entering major markets affects our ability to maintain pricing and market share. Our products compete with other available products based primarily on efficacy, safety, tolerability, acceptance by doctors, ease of patient compliance, ease of use, price, insurance and other reimbursement coverage, distribution and marketing. A number of companies are pursuing the development of technologies which are competitive with our existing products or research programs. These competing companies include large pharmaceutical and biotechnology companies and specialized pharmaceutical firms acting either independently or together with other such companies. Furthermore, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection or may establish collaborative arrangements for competitive products or programs. We may be adversely impacted if any of these competitors gain market share as a result of new technologies, commercialization strategies or otherwise.

Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and other discounts on our products and other pricing pressures.

Product Reimbursements

Successful commercialization of our products depends, in part, on the availability of third-party payer reimbursement for the cost of such products and related treatments and medical services in the markets where we sell our products. Government health authorities, private health insurers and other organizations generally provide reimbursement. As our products mature, pricing pressures from private insurers and government payers often ~~reduce~~result in a reduction of the ~~amount they will reimburse patients for these products, which increases pressure on us to reduce~~net product prices.

Legislative and regulatory actions affecting government prescription drug procurement and reimbursement programs occur relatively frequently. For example, in September 2020, FDA issued a final rule implementing a pathway for the importation of certain prescription drugs from Canada. This rule is subject to ongoing litigation. In addition, in November 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued an interim final rule that would substantially alter the Medicare Part B reimbursement system for physician-administered medicines as of January 1, 2021. This rule is subject to ongoing litigation and CMS has been preliminarily enjoined from implementing the rule. We may be adversely impacted by any such legislative and regulatory actions, though it is difficult to predict the impact, if any, on the use and reimbursement of our products.

Product Pricing, Discounts and Rebates

In the United States, the European Union (“EU”) and other significant or potentially significant markets for our products and product candidates, government authorities and third-party payers are increasingly attempting to limit or regulate the price of medical products and services. In the United States, the volume of drug pricing-related ~~bills~~legislation has dramatically increased in recent years. For example, Congress has ~~proposed bills to require~~enacted laws requiring manufacturer refunds on certain amounts of discarded drug from single-use vials beginning in 2023 and eliminating the existing cap on Medicaid rebate amounts beginning in 2024. Also, in August 2022 Congress enacted the Inflation Reduction Act of 2022 (the “Act”), which, among other changes, requires the Department of Health and Human Services to negotiate Medicare prices for certain drugs, ~~change the~~imposes an inflation-based rebate on Medicare Part B and D utilization, restructures the Medicare Part D benefit ~~to impose an inflation-based rebate when list prices for drugs grow faster than inflation,~~and increase manufacturer contributions in some or all of the Medicare Part D benefit ~~phases~~phases. We are continuing to evaluate the impact of the Act on our business, but it is possible that the Act could have the effect of limiting the prices we can charge and ~~require manufacturer refunds~~increasing the rebates we must provide government programs for our products, thereby reducing our profitability and negatively impacting our financial results. We cannot be sure whether additional legislation or rulemaking related to the Act will be issued or enacted, or what impact, if any, such changes will have on ~~discarded drug from single-use vials.~~the profitability of our business in the future. In addition, many state legislatures are considering, or have already passed into law, legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as requiring manufacturers to publicly report proprietary pricing information, creating review boards for prices to state agencies, and encouraging the use of generic drugs. ~~Such~~These initiatives and such other legislation may cause added pricing pressures on our products, and the resulting impact on our business is uncertain. Many countries outside the United States, including the ~~European Union~~EU member states, have established complex and lengthy procedures to obtain price approvals and coverage reimbursement and periodically review their pricing and reimbursement decisions. The outcome of ~~this review~~these reviews cannot be predicted and could have an adverse effect on the pricing and reimbursement of our ~~medicinal~~medical products in the ~~European Union~~EU member states. Reductions in the pricing of our ~~medicinal~~medical products in one member state could affect the price in other member states and have a negative impact on our financial results.

A substantial portion of our product sales is subject to significant discounts from list price, including rebates that we may be required to pay state Medicaid agencies and discounts provided to 340B covered entities. Changes to the 340B program or the Medicaid program at the federal or state level could have a material adverse effect on our business. For example, ~~in December 2020, CMS issued a final rule that will make certain changes~~the continued growth of the 340B program limits the prices we may charge on an increasing percentage of sales. Changes to the calculation of rebates under the Medicaid Drug Rebate Program. Among other changes, effective January 1, 2023, the final rule will change the requirements for excluding manufacturer co-pay coupons from the Medicaid “best price.” These changes are subject to ongoing litigation. If these changes go into effect, theyprogram could substantially increase our Medicaid rebate obligations and decrease the prices we charge 340B covered entities. ~~The continued growth~~

We recently implemented a contract pharmacy integrity initiative for our branded hepatitis C virus (“HCV”) products. This integrity initiative will not involve any products from Asegua Therapeutics LLC. Our integrity initiative requires covered entities that enter into 340B bill to/ship to arrangements with contract pharmacies for our branded HCV products to provide claims level data for units dispensed from such contract pharmacies; covered entities without an in-house pharmacy that choose not to participate in the initiative can designate a single contract pharmacy for shipment. Certain manufacturers that have implemented other contract pharmacy integrity programs have received enforcement letters from the U.S. Department of Health and Human Services (“HHS”) asserting that those programs violate the 340B statute, have been referred to the HHS Office of Inspector General for assessment of civil monetary penalties, and have been subject to administrative dispute resolution proceedings brought on behalf of covered entities. These manufacturers are currently challenging HHS’ position in ongoing litigation. Although we believe that our integrity initiative complies with the requirements of the 340B statute, additional legal or legislative developments with respect to the 340B program, ~~also limits the prices we~~including potential litigation with HHS, may ~~charge on an increasing percentage of sales.~~

negatively impact our ability to implement or continue our integrity initiative.

In addition, standard reimbursement structures may not adequately reimburse for innovative therapies. For example, beginning in fiscal year 2021, CMS established a new ~~severity adjusted diagnosis related~~severity-adjusted diagnosis-related group (“DRG”) 018 for Medicare inpatient reimbursement of CAR TT-cell products such as Yescarta and Tecartus. While the new DRG has a significantly higher base payment amount than the prior DRG 016, the payment available may not be sufficient to reimburse some hospitals for their cost of care for patients receiving Yescarta and Tecartus. When reimbursement is not aligned well to account for treatment costs, Medicare beneficiaries may be denied access as this misalignment could impact the willingness of some hospitals to offer the therapy and of doctors to recommend the therapy. Additionally, in the ~~European Union,~~EU, there are barriers to reimbursement in individual countries that could limit the uptake of Yescarta and Tecartus.

~~In addition,~~Moreover, we estimate the rebates we will be required to pay in connection with sales during a particular quarter based on claims data from prior quarters. In the United States, actual rebate claims are typically made by payers one to three quarters in arrears. Actual claims and payments may vary significantly from our estimates.

We may experience adverse impacts resulting from ~~imports from countries where~~the importation of our products ~~are available at~~from lower ~~prices~~price markets or the ~~unlawful~~ distribution of ~~generic~~illegally diverted or counterfeit versions of our products.

Prices for our products are based on local market economics and competition and sometimes differ from country to country. Our sales in countries with relatively higher prices may be reduced if products can be imported and resold into those countries from lower price markets. For example, U.S. sales could also be affected if FDA permits importation of drugs from Canada. We have entered into agreements with generic drug manufacturers as well as licensing agreements with the Medicines Patent Pool, a United Nations-backed public health organization, which ~~allows~~allow generic drug manufacturers to manufacture generic versions of certain of our products for distribution in certain low- and middle-income countries. We may be adversely affected if any generic versions of our products, whether or not produced and/or distributed under these agreements, are exported to the United States, Europe or markets with higher prices.

In the ~~European Union,~~EU, we are required to permit products purchased in one ~~European Union~~EU member state to be sold in another member state. Purchases of our products in ~~countries~~member states where our selling prices are relatively low for resale in ~~countries~~member states in which our selling prices are relatively high can affect the inventory level held by our wholesalers and can cause the relative sales levels in the various countries to fluctuate from quarter to quarter and not reflect the actual consumer demand in any given quarter.

Additionally, diverted products may be used in countries where they have not been approved and patients may source the diverted products outside the legitimate supply chain. These diverted products may be handled, shipped and stored inappropriately, which may affect the efficacy of the products and could harm patients and adversely impact us.

We are also aware of the existence of various ~~“Buyers Clubs”~~suppliers around the world that, ~~promote the personal importation of~~without Gilead’s authorization, purport to source our products and generic versions of our products ~~that~~and sell them for use in countries where those products have not been ~~approved for use in the countries into which they are imported.~~approved. As a result, patients may be at risk of taking unapproved medications that may not be what they purport to be, may not have the potency they claim to have or may contain harmful substances, which could harm patients and adversely impact us.

Further, third parties have illegally distributed and sold, and may continue to illegally distribute and sell, illegally diverted and counterfeit versions of our medicines, which do not meet the rigorous quality standards of our manufacturing and supply chain. For example, as part of a U.S. investigation in coordination with law enforcement, and pursuant to court order, we seized thousands of bottles of Gilead-labeled medication with counterfeit supply chain documentation. Our investigation revealed that pharmaceutical distributors that are not authorized by Gilead to sell Gilead medicine sold purportedly genuine Gilead medicine sourced from an illegal counterfeiting scheme to independent pharmacies nationwide.

Illegally diverted and counterfeit versions of Gilead-branded medicines exist and may pose a serious risk to patient health and ~~safety and may raise the risk of product recalls.~~safety. Our actions to stop or prevent the distribution and sale of illegally diverted and counterfeit versions of our medicines around the world may be costly and ~~not successful,~~unsuccessful, which may adversely affect patients and our reputation and business, including our product revenues and financial results.

Product Development and Supply Chain Risks

We face risks in our clinical trials, including the potential for unfavorable results, delays in anticipated timelines and disruption.

We are required to demonstrate the safety and efficacy of ~~products~~product candidates that we develop for each intended use through extensive preclinical studies and clinical trials. The results from ~~preclinical and early clinical~~these studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products. If any of our product candidates fails to achieve its primary endpoint in clinical trials, if safety issues arise or if the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, commercialization of that product candidate could be delayed or halted. In addition, we may also face challenges in clinical trial protocol design.

~~We may be adversely impacted if the clinical trials for any of the product candidates in our pipeline are delayed or terminated.~~ We face numerous risks and uncertainties with our ~~product candidates~~clinical trials that could result in delays or prevent completion of the development and approval of ~~these~~our product ~~candidates. These risks include~~candidates, including challenges in clinical trial protocol design, our ability to enroll patients in clinical trials, the possibility of unfavorable or inadequate trial results to support further development of our product candidates, including failure to meet a trial’s primary endpoint, safety issues arising from our clinical trials, and the need to modify or delay our clinical trials or to perform additional trials. For example, in October 2022, we announced that FDA issued a complete response letter for our biologics license application for bulevirtide for the treatment of adults with hepatitis delta virus infection. We also previously announced that FDA placed clinical holds on studies evaluating (i) lenacapavir in combination with islatravir, (ii) injectable lenacapavir and (iii) magrolimab, and issued a complete response letter for our new drug application for lenacapavir.The clinical holds relating to injectable lenacapavir and magrolimab have since been lifted by FDA, and we have resubmitted a new drug application for lenacapavir in response to the complete response letter. See Note 7. Goodwill and Intangible Assets of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q for a discussion of the partial in-process research and development impairment charge of $2.7 billion during the three months ended March 31, 2022 related to assets we acquired from Immunomedics, Inc. (“Immunomedics”) in 2020.

As a result, we may be unable to successfully complete our clinical trials ~~and the risk of failing to obtain~~on our anticipated timelines, or at all. Based on trial results, it is possible that FDA and other regulatory ~~agency approvals. As a result,~~authorities do not approve our product candidates, ~~may never be successfully commercialized.~~or that any market approvals include significant limitations on the products’ use. In addition, clinical trials involving our commercial products can raise new safety issues for our existing products, which could adversely impact our business. Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. WeTherefore, our product candidates may never be successfully commercialized, and we may be ~~adversely impacted if~~unable to recoup the significant R&D and clinical trial expenses incurred. We expect to expend significant time and resources on our clinical trial activities without any assurance that we ~~do not have favorable results from clinical studies and other programs~~will recoup our investments or that our efforts will be commercially successful.

There are also risks associated with the use of third parties in our ~~pipeline cannot be completed on a timely basis or at all. In addition,~~ clinical ~~trials involving our commercial products could raise new safety issues for our existing products.~~

~~In addition, we~~trial activities. We extensively outsource our clinical trial activities and usually perform only a small portion of the start-up activities in-house. We rely on independent third-party contract research organizations (“CROs”) to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training, program management, patient enrollment, ongoing monitoring, site management and bioanalytical analysis. Many important aspects of the services performed for us by the CROs are out of our direct control. If there is any dispute or disruption in our relationship with our CROs, our clinical trials may be delayed. Moreover, in our regulatory submissions, we rely on the quality and validity of the clinical work performed by third-party CROs. If any of our CROs’ processes, methodologies or results were determined to be invalid or inadequate, our own clinical data and results and related regulatory approvals may be adversely affected.

We may face manufacturing difficulties, delays or interruptions, including at our third-party manufacturers and corporate partners.

Our products, which are manufactured at our own facilities or by third-party manufacturers and corporate partners, are the result of complex, highly regulated manufacturing processes. We depend on third-party manufacturers and corporate partners to perform manufacturing activities effectively and on a timely basis for the majority of our active pharmaceutical ingredients and drug products. These third parties are independent entities subject to their own unique operational and financial risks that are out of our control. We and our third-party manufacturers and corporate partners are subject to Good Manufacturing Practices (“GMP”), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by FDA and the European Medicines Agency (“EMA”), as well as comparable regulations in other jurisdictions. Manufacturing operations are also subject to routine inspections by regulatory agencies.

Any adverse developments affecting or resulting from our manufacturing operations or the operations of our third-party manufacturers and corporate partners may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products. We ~~may also need~~have incurred, and will continue to ~~take~~incur, inventory ~~write-offs~~write-off charges and ~~incur~~ other ~~charges and~~ expenses for products that fail to meet specifications and quality standards, and we may need to undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us to lose revenues or market share and damage our reputation. In addition, manufacturing issues may cause delays in our clinical trials and applications for regulatory approval. For example, if we are unable to remedy any deficiencies cited by FDA or other regulatory agencies in their inspections, our existing products and the timing of regulatory approval of product candidates in development could be adversely affected. Further, there is risk that regulatory agencies in other countries where marketing applications are pending will undertake similar additional reviews or apply a heightened standard of review, which could delay the regulatory approvals for products in those countries. Our business may be adversely affected if approval of any of our product candidates were delayed or if production of our products were interrupted.

We may not be able to obtain materials or supplies necessary to conduct clinical trials or to manufacture and sell our products, which could limit our ability to generate revenues.

We need access to certain supplies and products to conduct our clinical trials and to manufacture and sell our products. If we are unable to purchase ~~sufficient quantities~~enough of these materials or find suitable alternative materials in a timely manner, our development efforts for our product candidates may be delayed or our ability to manufacture and sell our products could be limited.

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Suppliers of key components and materials must be named in the new drug application or marketing authorization application filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required. Even after a manufacturer is qualified by the regulatory authority, the manufacturer must continue to expend time, money and effort in the area of production and quality control to maintain full compliance with GMP. Manufacturers are subject to regular periodic inspections by regulatory authorities following initial approval. If, as a result of these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing operations. If the manufacturing operations of any of the single suppliers for our products are suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market demand. In addition, if deliveries of materials from our suppliers ~~were~~are interrupted for any reason, we may be unable to ship certain of our products for commercial supply or to supply our product candidates in development for clinical trials. Also, some of our products and the materials that we utilize in our operations are manufactured by only one supplier or at only one facility, which we may not be able to replace in a timely manner and on commercially reasonable terms, or at all. Problems with any of the single suppliers or facilities we depend on, including in the event of a disaster, such as an earthquake, equipment failure or other difficulty, may negatively impact our development and commercialization efforts.

A significant portion of the raw materials and intermediates used to manufacture our antiviral products are supplied by third-party manufacturers and corporate partners outside of the United States. As a result, any political or economic factors in a specific country or region, including any changes in or interpretations of trade regulations, compliance requirements or tax legislation, that would limit or prevent third parties outside of the United States from supplying these materials could adversely affect our ability to manufacture and supply our antiviral products to meet market needs and have a material and adverse effect on our operating results.

If we were to encounter any of these difficulties, our ability to conduct clinical trials on product candidates and to manufacture and sell our products could be impaired.

Regulatory and Other Legal Risks

Our operations depend on compliance with complex FDA and comparable international regulations. Failure to obtain broad approvals on a timely basis or to maintain compliance could delay or halt commercialization of our products.

The products we develop must be approved for marketing and sale by regulatory authorities and, once approved, are subject to extensive regulation by FDA, EMA and comparable regulatory agencies in other countries. We have filed, and anticipate that we will file, for marketing approval in additional countries and for additional indications and products over the next several years. These and any future marketing applications we file may not be approved by the regulatory authorities on a timely basis, or at all. Even if marketing approval is granted for these products, there may be significant limitations on their use. We cannot state with certainty when or whether any of our product candidates under development will be approved or launched; whether we will be able to develop, license or acquire additional product candidates or products; or whether any products, once launched, will be commercially successful.

Further, how we manufacture and sell our products is subject to extensive regulation and review. For example, under FDA rules, we are often required to conduct post-approval clinical studies to assess a known serious risk, signals of serious risk or to identify an unexpected serious risk. In certain circumstances, we may be required to implement a Risk Evaluation and Mitigation Strategy program for our products, which could include a medication guide, patient package insert, a communication plan to healthcare providers, restrictions on distribution or use of a product and other elements FDA deems necessary to assure safe use of the drug. Discovery of previously unknown problems with our marketed products or product candidates, including serious safety, resistance or drug interaction issues, or problems with our manufacturing, safety reporting or promotional activities, may result in regulatory approvals being delayed, denied or granted with significant restrictions on our products, including limitations on or the withdrawal of the products from the market.

Failure to comply with these or other requirements imposed by FDA could result in significant civil monetary penalties, fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecutions.

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We are impacted by evolving laws, regulations and legislative or regulatory actions applicable to the ~~health care~~healthcare industry.

The ~~health care~~healthcare industry is subject to various federal, state and international laws and regulations pertaining to drug reimbursement, rebates, price reporting, ~~health care~~healthcare fraud and abuse, and data privacy and security. In the United States, these laws include anti-kickback and false claims laws, laws and regulations relating to the Medicare and Medicaid programs and other federal and state programs, such as the Medicaid Rebate Statute and the 340B statute, laws that regulate written and verbal communications about our products, individual state laws relating to pricing and sales and marketing practices, the Health Insurance Portability and Accountability Act and other federal and state laws relating to the privacy and security of health information. Actual or alleged violations of these laws or any related regulations may be punishable by criminal and/or civil sanctions, including, in some instances, substantial fines, civil monetary penalties, exclusion from participation in federal and state ~~health care~~healthcare programs, including Medicare, Medicaid and Department of Veterans Affairs and Department of Defense health programs, actions against executives overseeing our business and significant remediation measures, negative publicity or other consequences. These laws and regulations are broad in scope and subject to changing and evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our sales or marketing practices. The resulting impact on our business is uncertain and could be material.

In addition, government price reporting and payment regulations are complex, and we are continually assessing the methods by which we calculate and report pricing in accordance with these obligations. Our methodologies for calculations are inherently subjective and may be subject to review and challenge by various government agencies, which may disagree with our interpretation. If the government disagrees with our reported calculations, we may need to restate previously reported data and could be subject to additional financial and legal liability.

There also continues to be enhanced scrutiny of company-sponsored patient assistance programs, including co-pay assistance programs, and manufacturer donations to third-party charities that provide such assistance. There has also been enhanced scrutiny by governments on reimbursement and other patient support offerings, clinical education programs and promotional speaker programs. If we, or our agents and vendors, are deemed to have failed to comply with laws, regulations or government guidance in any of these areas, we could be subject to criminal or civil sanctions. Any similar violations by our competitors could also negatively impact our industry reputation and increase scrutiny over our business and our products.

For a description of our government investigations and related litigation, see Note ~~11.~~10. Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q.

We are subject to risks if significant safety issues arise for our marketed products or our product candidates.

As additional studies are conducted ~~subsequent to~~after obtaining marketing approval for our products, and as our products are used over longer periods of time by many patients, including patients with underlying health problems or ~~patients~~those taking other medicines, we expect to continue finding new issues related to safety, resistance or drug interactions. Any such issues may require changes to our product labels, such as additional warnings, contraindications or even narrowed indications, or to halt sales of a product.

Regulatory authorities have been moving towards more active and transparent pharmacovigilance and are making greater amounts of stand-alone safety information and clinical trial data directly available to the public through websites and other means, such as periodic safety update report summaries, risk management plan summaries and various adverse event data. Safety information, without the appropriate context and expertise, may be misinterpreted and lead to misperception or legal action.

Our success depends to a significant degree on our ability to obtain and defend our patents and other intellectual property rights both domestically and internationally, and to operate without infringing upon the patents or other proprietary rights of third parties.

Patents and other proprietary rights are very important to our business. As part of our business strategy, we actively seek patent protection both in the United States and internationally and file additional patent applications, when appropriate, to cover improvements in our compounds, products and technology. Our success depends to a significant degree on our ability to:

•obtain patents and licenses to patent rights;

•preserve trade secrets and internal know-how;

•defend against infringement of our patents and efforts to invalidate them; and

•operate without infringing on the intellectual property of others.

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~~Since~~Because patent applications are confidential for a period of time before a patent is issued, we may not know if our competitors have filed patent applications for technology covered by our pending applications or if we were the first to invent or first to file an application directed toward the technology that is the subject of our patent applications. If competitors file patent applications covering our technology, we may have to participate in litigation, post-grant proceedings before the U.S. Patent and Trademark Office or other proceedings to determine the right to a patent or validity of any patent granted. Such litigation and proceedings are unpredictable and expensive, and could divert management attention from other operations, such that, even if we are ultimately successful, we may be adversely impacted.

Generic manufacturers have sought, and may continue to seek, FDA approval to market generic versions of our products through an abbreviated new drug application (“ANDA”), the application process typically used by manufacturers seeking approval of a generic drug. For a description of our ANDA litigation, see Note ~~11.~~10. Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q. ~~The~~ANDA litigation and related settlement agreements, in some cases, may result in a loss of exclusivity for our patents sooner than we would otherwise expect, and the entry of generic versions of our products has, and may in the future, lead to market share and price erosion.

If we are found to infringe the valid patents of third parties, we may be required to pay significant monetary damages or we may be prevented from commercializing products or may be required to obtain licenses from these third parties. We may not be able to obtain alternative technologies or any required license on commercially reasonable terms or at all. If we fail to obtain these licenses or alternative technologies, we may be unable to develop or commercialize some or all of our products.

We For example, we are aware of patents and patent applications owned by third parties that such parties may claim cover the use of sofosbuvir, axicabtagene ciloleucel or bictegravir, as well as certain uses of combinations of ~~FTC~~emtricitabine (“FTC”) and ~~TDF~~tenofovir disoproxil fumarate (“TDF”) or TAF. For example, in February 2018, ViiV Healthcare Company (“ViiV”) filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the commercialization of bictegravir, sold commercially in combination with TAF and FTC as Biktarvy, infringes on ViiV’s U.S. Patent No. 8,129,385 (the “’385 patent”), covering ViiV’s dolutegravir. Bictegravir is structurally different from dolutegravir, and we believe that bictegravir does not infringe the claims of the ’385 patent. The court has set a trial date of January 2022 for this lawsuit. ViiV is seeking billions of dollars for alleged damages comprised of ViiV’s lost profits and a royalty on sales of bictegravir from launch through the trial. In addition, should a court find that we are liable for infringement, we expect ViiV will seek a royalty on sales after the trial. ViiV calculates these damages based on the cumulative U.S. revenues from Biktarvy since launch, which have totaled $16.4 billion through September 30, 2021. Although we cannot predict with certainty the ultimate outcome of this litigation, an adverse judgment could result in substantial monetary damages, including ViiV’s lost profits and royalties through trial, and a going-forward royalty stream on future sales. See a description of our pending patent litigation, ~~related to these and other matters in~~see Note ~~11.~~10. Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q.

Furthermore, we also rely on unpatented trade secrets and improvements, unpatented internal know-how and technological innovation. For example, a great deal of our liposomal manufacturing expertise, which is a key component of our liposomal technology, is not covered by patents but is instead protected as a trade secret. We protect these rights mainly through confidentiality agreements with our corporate partners, employees, consultants and vendors. We cannot be certain that these parties will comply with these confidentiality agreements, that we have adequate remedies for any breach or that our trade secrets, internal know-how or technological innovation will not otherwise become known or be independently discovered by our competitors. Under some of our R&D agreements, inventions become jointly owned by us and our corporate partner and in other cases become the exclusive property of one party. In certain circumstances, it can be difficult to determine who owns a particular invention and disputes could arise regarding those inventions. We could be adversely affected if our trade secrets, internal know-how, technological innovation or confidential information become known or independently discovered by competitors or if we enter into disputes over ownership of inventions.

We face potentially significant liability and increased expenses from litigation and government investigations relating to our products and operations.

We are involved in a number of litigation, investigation and other dispute-related matters that require us to expend substantial internal and financial ~~resources, including ongoing litigation with ViiV related to bictegravir in which ViiV is seeking billions of dollars of alleged damages in a trial scheduled to begin in January 2022.~~resources. These matters could require us to pay significant monetary ~~damages,~~amounts, including royalty payments for past and future sales. For example, on February 1, 2022, we reached an agreement with ViiV Healthcare Company and related parties (collectively, “ViiV”) for a global resolution of all claims related to our sales of Biktarvy, pursuant to which (1) Gilead agreed to make a one-time payment of $1.25 billion and an ongoing royalty at a rate of 3% on future sales of Biktarvy and the bictegravir component of bictegravir-containing products in the United States until October 5, 2027, and (2) ViiV granted Gilead a broad worldwide license and covenant not to sue relating to any past, present or future development or commercialization of bictegravir.

We expect these matters will continue to require a high level of internal and financial resources for the foreseeable future. These matters have reduced, and are expected to continue to reduce, our earnings and require significant management attention.

In addition, the testing, manufacturing, marketing and use of our commercial products, as well as product candidates in development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare providers, pharmaceutical companies or others. We have limited insurance for product liabilities that may arise and claims may exceed our coverage.

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For a description of our litigation, investigation and other dispute-related matters, see Note ~~11.~~10. Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I1 of this Quarterly Report on Form 10-Q. The outcome of such legal proceedings or any other legal proceedings that may be brought against us, the investigations or any other investigations that may be initiated and any other dispute-related matters, are inherently uncertain, and adverse developments or outcomes can result in significant expenses, monetary damages, penalties or injunctive relief against us.

Operational Risks

Our business has been, and may in the future be, adversely affected by outbreaks of epidemic, pandemic or contagious diseases, including the ongoing COVID-19 ~~outbreak.~~pandemic.

Actual or threatened outbreaks of epidemic, pandemic or contagious diseases, such as COVID-19, may significantly disrupt our global operations and adversely affect our business, financial condition and results of operations. For example, the COVID-19 pandemic has caused significant volatility and uncertainty in U.S. and international markets and has resulted in increased risks and adverse impacts to our operations, including as described below. ~~In addition to the developments discussed in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we~~We are monitoring a number of risks related to the pandemic, including the following:

•Supply Chain: The pandemic could result in disruptions to our global supply chain and distribution in the future. For example, quarantines, shelter-in-place and other governmental orders and policies, travel restrictions, airline capacity and route reductions, safety guidelines and health impacts of the pandemic could impact the availability or productivity of products and personnel at manufacturers, distributors, freight carriers and other necessary components of our supply chain. In addition, there may be unfavorable changes in the availability or cost of raw materials, intermediates and other materials necessary for production, which may result in higher costs, disruptions in our supply chain and interruptions in our distribution capabilities.

•Clinical Trials: ~~This~~The pandemic has adversely affected and may continue to adversely affect certain of our clinical trials, including our ability to initiate and complete our clinical trials within the anticipated timelines. For ongoing trials, clinical trial sites have imposed restrictions on patient visits to limit risks of possible COVID-19 exposure, and we may experience issues with participant compliance with clinical trial protocols as a result of quarantines, travel restrictions and interruptions to healthcare services. There is also a risk that closures at clinical sites may be necessary as the pandemic and related guidance and restrictions continue to evolve. For the foregoing reasons, we have experienced delays with new subject enrollment for most clinical trials during the course of the pandemic, and may continue to experience overall delays in our clinical trials. There is also the risk of biased data collection if only certain clinical trial sites remain open. As a result of these challenges, our anticipated filing and marketing timelines for certain products may be adversely impacted.

•Regulatory Reviews: The operations of FDA, EMA or other regulatory agencies may be adversely affected. We may also experience delays in necessary interactions with regulatory authorities around the world, including with respect to any anticipated filing, which together with other factors resulting from the pandemic may adversely impact our ability to launch new commercial products.

•Access to Healthcare Providers: The pandemic has limited patients’ ability or willingness to access and seek care from healthcare providers and initiate or continue therapies, which has resulted in lower demand for our products during the course of the pandemic, particularly with respect to HCV treatment and HIV treatment and ~~prevention and hepatitis C virus (“HCV”) treatment.~~prevention. For example, we have ~~seen a reduction~~observed lower levels of patient visits and testing volumes in ~~prescription refills for HIV treatment and prevention as a result of higher discontinuations. We~~HCV, resulting in fewer patient starts. In addition, at times during the pandemic, we have ~~also observed~~seen lower levels of screening and diagnosis for HIV, resulting in fewer treatment ~~initiations. In addition, with~~initiations, as well as higher levels of discontinuations, resulting in a reduction in prescription refills. With increased levels of unemployment at times during ~~the course of~~ the pandemic, we have also experienced ~~a shift~~shifts in payer mix towards more government-funded coverage and the uninsured segment. Our field personnel have also had reduced access to healthcare personnel during the pandemic, including fewer in-person interactions, which has adversely impacted and may continue to adversely impact our commercial activities.

•Employees: We face risks related to the health, safety, morale and productivity of our employees, including the safe occupancy of our sites during the pandemic. In the fourth quarter of 2021, we transitioned to a return-to-site phase for our U.S. flexible location employees. Our job site enhancements and risk protocols, which include health screenings and COVID-19 testing and vaccine requirements, do not guarantee that we can maintain the continued safe occupancy of our sites and may adversely impact employee recruitment and retention. ~~On-site employees testing positive for COVID-19 could lead to mandatory quarantines and potential site shutdowns.~~

•Financial: The pandemic has had, and may continue to have, an adverse financial impact in the ~~short-term~~short term and potentially beyond. ~~In particular, our HIV treatment and HCV businesses have been and continue to be adversely impacted.~~ For example, we have observed ~~a reduction~~reductions in the overall U.S. HCV treatment, HIV treatment ~~volume in~~and HIV pre-exposure prophylaxis (“PrEP”) volumes at times during the ~~second half of 2020 and the first quarter of 2021, and it is uncertain when treatment volume will return to pre-pandemic levels. In HCV, patient starts have also remained below pre-pandemic levels.~~pandemic. We may continue to experience fluctuating revenues as infection rates rise and fall and as pandemic restrictions are periodically tightened and eased. We have also experienced, and may continue to experience, volatility in our short-term revenues due to fluctuations in inventory channel purchases during the pandemic. We could also have additional unexpected expenses related to the pandemic, which could negatively affect our results of operations. These factors together with the overall uncertainty and disruption caused by the pandemic could result in increased volatility and decreased predictability in our results of operations and volatility in our stock price.

The pandemic has also amplified many of the other risks described throughout the “Risk Factors” section of this Quarterly Report on Form 10-Q. The extent to which the pandemic impacts our business and results will depend on future developments, which are uncertain and cannot be predicted with confidence, including any potential future waves of the pandemic, new variants of the virus that impact the severity and duration of the pandemic, the development, distribution, effectiveness and public acceptance of vaccines, and any other ongoing and future actions taken to contain the pandemic.

We face risks associated with our global operations.

Our global operations are accompanied by certain financial, political, economic and other risks, including those listed below:

•Foreign Currency Exchange: For the nine months ended September 30, ~~2021,~~2022, approximately ~~30%~~31% of our product sales were outside the United States. Because a significant percentage of our product sales is denominated in foreign currencies, primarily the Euro, we face exposure to adverse movements in foreign currency exchange rates. Overall, we are a net receiver of foreign currencies, and therefore, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar. Our hedging program does not eliminate our exposure to currency fluctuations. We have been and may continue to be adversely impacted if the U.S. dollar ~~appreciates~~continues to appreciate significantly against certain currencies and our hedging program does not sufficiently offset the effects of such appreciation. For example, see Part I, Item 2 of this Quarterly Report on Form 10-Q for a discussion of our exposure to movements in foreign currency exchange rates, primarily in the Euro, and the impacts from foreign currency exchange, net of hedges, for the three and nine months ended September 30, 2022.

•Interest Rates and Inflation: We hold interest-generating assets and interest-bearing liabilities, including our available-for-sale debt securities and our senior unsecured notes and credit facilities. Fluctuations in interest rates,including the U.S. Federal Reserve’s recent increases in interest rates, could expose us to increased financial risk. In addition, high inflation, such as what we are seeing in the current economic environment, could also adversely impact our business and financial results.

•Anti-Bribery: We are subject to the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws that govern our international operations with respect to payments to government officials. Our international operations are heavily regulated and require significant interaction with foreign officials. We operate in parts of the world that have experienced governmental corruption to some degree. In certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices or may require us to interact with doctors and hospitals, some of which may be ~~state controlled,~~state-controlled, in a manner that is different than local custom. It is possible that certain of our practices may be challenged under these laws. In addition, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees and agents. Enforcement activities under anti-bribery laws could subject us to administrative and legal proceedings and actions, which could result in civil and criminal sanctions, including monetary penalties and exclusion from healthcare programs.

Other risks inherent in conducting a global business include:

•Restrictive government actions against our intellectual property and other foreign assets such as nationalization, expropriation, the imposition of compulsory licenses or similar actions, including waiver of intellectual property protections.

•Protective economic policies taken by foreign governments, such as trade protection measures and import and export licensing requirements, which may result in the imposition of trade sanctions or similar restrictions by the United States or other governments.

•Business interruptions stemming from natural or man-made disasters, such as climate change, earthquakes, hurricanes, flooding, fires, extreme heat, drought or actual or threatened public health emergencies, or efforts taken by third parties to prevent or mitigate such disasters, such as public safety power shutoffs and facility shutdowns, for which we may ~~be uninsured or inadequately insured.~~not have sufficient insurance. For example, our corporate headquarters in Foster City and certain R&D and manufacturing facilities are located in California, a seismically active region. In the event of a major earthquake, we may not carry ~~adequate~~sufficient earthquake insurance and significant recovery time could be required to resume operations.

•Political instability or disruption in a geographic region where we operate, regardless of cause, including war, terrorism, social unrest and political ~~changes. For example, on January 31, 2020, the United Kingdom withdrew from the European Union, which initiated a renegotiation of the United Kingdom~~changes, including in China, Russia and the European Union’s future relationship. There continues to be uncertainty concerning any changes in the laws and regulations governing the conduct of clinical trials and marketing of medicinal products in the United Kingdom following the country’s exit from the European Union. This uncertainty may lead to significant complexity and risks for our company and our ability to research, develop and market medicinal products in the European Union and the United Kingdom.Ukraine.

Our aspirations, goals and disclosures related to environmental, social and governance (“ESG”) matters expose us to numerous risks, including risks to our reputation and stock price.

Institutional and individual investors are increasingly using ESG screening criteria to determine whether Gilead qualifies for inclusion in their investment portfolios. We are frequently asked by investors and other stakeholders to set ambitious ESG goals and provide new and more robust disclosure on goals, progress toward goals and other matters of interest to ESG stakeholders. In response, we have adapted the tracking and reporting of our corporate responsibility program to various evolving ESG frameworks, and we have established and announced goals and other objectives related to ESG matters. These goal statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these goals and objectives present numerous operational, reputational, financial, legal and other risks, any of which could have a material negative impact, including on our reputation and stock price.

Our ability to achieve any goal or objective, including with respect to environmental and diversity initiatives, is subject to numerous risks, many of which are outside of our control. Examples of such risks include: (1) the availability and cost of low- or non-carbon-based energy sources and technologies, (2) evolving regulatory requirements affecting ESG standards or disclosures, (3) the availability of suppliers that can meet our sustainability, diversity and other standards, (4) our ability to recruit, develop and retain diverse talent in our labor markets and (5) the impact of our organic growth and acquisitions or dispositions of businesses or operations.

The standards for tracking and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve. Our selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of consistent or meaningful comparative data from period to period. In addition, ~~our~~regulatory authorities may impose mandatory disclosure requirements with respect to ESG matters. For example, in March 2022, the SEC proposed rule changes that would require companies to make certain climate-related disclosures, including information about climate-related risks, greenhouse gas emissions and certain climate-related financial statement metrics. Our processes and controls may not ~~always comply with~~reflect evolving standards for identifying, measuring and reporting ESG ~~metrics,~~matters, immediately or at all, our interpretation of reporting standards may differ from those of others and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals. In addition, enhancements to our processes and controls to reflect evolving reporting standards may be costly and require additional resources.

If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees and our attractiveness as an investment, business partner or acquiror could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

We depend on relationships with third parties for sales and marketing performance, technology, development, logistics and commercialization of products. Failure to maintain these relationships, poor performance by these companies or disputes with these third parties could negatively impact our business.

We rely on a number of collaborative relationships with third parties for our sales and marketing performance in certain territories. For example, we have collaboration arrangements with Janssen Sciences Ireland UC for Odefsey, Complera/Eviplera and Symtuza. In some countries, we rely on international distributors for sales of certain of our products. Some of these relationships also involve the clinical development of these products by our partners. Reliance on collaborative relationships poses a number of risks, including the risk that:

•we are unable to control the resources our corporate partners devote to our programs or products;

•disputes may arise with respect to the ownership of rights to technology developed with our corporate partners;

•disagreements with our corporate partners could cause delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration;

•contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform;

•our corporate partners have considerable discretion in electing whether to pursue the development of any additional products and may pursue alternative technologies or products either on their own or in collaboration with our competitors;

•our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products than they do to products of their own development; and

•our distributors and our corporate partners may be unable to pay us.

Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed or revenues from products could decline.

Due to the specialized and technical nature of our business, the failure to attract, develop and retain highly qualified personnel could adversely impact us.

Our future success will depend in large part on our continued ability to attract, develop and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization. Our ability to do so also depends in part on how well we maintain a strong workplace culture that is attractive to employees. In addition, competition for qualified personnel in the biopharmaceutical field is intense, and there is a limited pool of qualified potential employees to recruit. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. Additionally, changes to U.S. immigration and work authorization laws and regulations could make it more difficult for employees to work in or transfer to one of the jurisdictions in which we operate.

~~We are dependent on information technology systems, infrastructure~~Significant cybersecurity incidents could give rise to legal liability and regulatory action under data ~~which may be subject to cyberattacks, security breaches~~protection and ~~legal claims.~~privacy laws and adversely affect our business and operations.

We are dependent upon information technology systems, infrastructure and data, including our Kite Konnect platform, which is critical to maintain chain of identity and chain of custody of Yescarta and Tecartus. The multitude and complexity of our computer systems make them inherently vulnerable to service interruption or destruction, malicious intrusion and ransomware attack. Likewise, data privacy or security breaches by employees or others ~~pose a risk that~~can result in the exposure of sensitive data, including our intellectual property or trade secrets or the personal information of our employees, patients, customers or other business partners ~~may be exposed~~ to unauthorized persons or to the public. ~~Cyberattacks~~Cybersecurity incidents are increasing in their frequency, sophistication and ~~intensity, including during the pandemic. Cyberattacks~~intensity. Cybersecurity incidents include, for example, the deployment of harmful malware, ransomware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business and technology partners face similar risks and any security breach of their systems could adversely affect our security posture.

Like many companies, we have experienced cybersecurity incidents, including data breaches and service interruptions. When cybersecurity incidents occur, our policy is to respond and address them in accordance with applicable governmental regulations and other legal requirements, including our cybersecurity protocols. There can be no assurance that our efforts ~~or the efforts of~~in response to cybersecurity incidents, as well as our ~~partners and vendors,~~investments to ~~invest in the protection of~~protect our information technology infrastructure and data, will shield us from significant losses and potential liability or prevent any future ~~service interruptions~~interruption or ~~identify breaches in~~breach of our systems. Such ~~interruptions or breaches could~~cybersecurity incidents can cause the loss of critical or sensitive information, including personal ~~information. In addition, our insurance may not be sufficient in type or amount~~information, and could give rise to ~~cover the losses that may result from an interruption or breach of our systems.~~legal liability and regulatory action under data protection and privacy laws.

Regulators globally are also imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations. For example, the General Data Protection Regulation (“GDPR”) ~~that became effective in Europe in 2018~~ established regulations regarding the handling of personal data, and non-compliance with the GDPR may result in monetary penalties of up to four percent of worldwide revenue. In addition, new domestic data privacy and security laws, such as the California Consumer Privacy Act ~~(“CCPA”) that became effective in January 2020,~~ and the California Privacy Rights Act ~~(the “CPRA”)~~and other laws that ~~was approved by voters in November 2020, and others that~~have been or may be passed, similarly introduce requirements with respect to personal information, and non-compliance with ~~CCPA, CPRA or other~~such laws may result in liability through private actions (subject to statutorily defined damages in the event of certain data breaches) and enforcement. ~~The GDPR, CCPA, CPRA and other~~Other changes or new laws or regulations associated with the enhanced protection of personal information, including, in some cases, healthcare data or other personal information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions in which we operate.

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Strategic and Financial Risks

We are subject to risks associated with engaging in business acquisitions, licensing arrangements, collaborations, options, equity investments, asset divestitures and other strategic transactions.

We have engaged in, and may in the future engage in, such transactions as part of our business strategy. We may not identify suitable transactions in the future and, if we do, we may not complete such transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits. If we are successful in making an acquisition or closing a licensing arrangement or collaboration, the products, intellectual property and technologies that are acquired or licensed may not be successful or may require significantly greater resources and investments than anticipated. As part of our annual impairment testing of our goodwill and other indefinite-lived intangible assets in the fourth quarter, and earlier if impairment indicators exist, as required under U.S. generally accepted accounting principles, we may need to recognize impairment charges ifrelated to the products, intellectual property and technologies that are acquired or ~~licensed are not successful.~~licensed. For example, as a result of an impairment analysis we conducted following our receipt of data from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with hormone receptor-positive, human epidermal growth receptor 2-negative metastatic breast cancer, we recognized a partial impairment charge of $2.7 billion in In-process research and development impairment on our Condensed Consolidated Statements of Income during the three months ended March 31, 2022. For option structured deals, there is no assurance that we will elect to exercise our option right, and it is possible that disagreements, uncertainties or other circumstances may arise, including with respect to whether our option rights have been appropriately triggered, which may hinder our ability to realize the expected benefits. For equity investments in our strategic transactions, such as in connection with our ~~collaboration~~collaborations with Arcus Biosciences, Inc. and Galapagos NV, the value of our equity investments may fluctuate and decline in value. If we are not successful in the execution or implementation of these transactions, our financial condition, cash flows and results of operations may be adversely affected, and our stock price could decline.

We have paid substantial amounts of cash and incurred additional debt to finance our strategic transactions. Additional indebtedness and a lower cash balance could result in a downgrade of our credit ratings, limit our ability to borrow additional funds or refinance existing debt on favorable terms, increase our vulnerability to adverse economic or industry conditions, and reduce our financial flexibility to continue with our capital investments, stock repurchases and dividend payments. For example, as a result of the cash used and the debt issued in connection with our acquisition of Immunomedics in 2020, S&P Global Ratings downgraded our credit rating. We may be adversely impacted by any failure to overcome these additional risks.

Changes in our effective income tax rate could reduce our earnings.

We are subject to income taxes ~~and tax return audits and reviews~~ in the United States and various foreign ~~jurisdictions, including Germany and Ireland.~~jurisdictions. Due to economic and political conditions, various countries are actively considering and have made changes to existing tax laws, and we cannot predict the form or timing of such changes. ~~For example,~~Our effective tax rates are affected by changes in the ~~current U.S. Presidential administration has proposed~~mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, the introduction of new taxes, and changes in tax laws, regulations, administrative practices and interpretations, including in the United States, Germany and Ireland.

We are also subject to ~~increase~~the examination of our tax returns and other tax matters by the U.S. ~~corporate income~~Internal Revenue Service and tax ~~rate from its current 21%, implement a minimum tax on book income and increase taxation of international business operations, among numerous other corporate tax reform proposals.~~authorities in various foreign jurisdictions. There are differing interpretations of tax laws and regulations and, as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We may be adversely affected by the resolution of one or more of these exposures in any reporting period.

In addition, significant judgment is required in determining our worldwide provision for income taxes. Various factors may have favorable or unfavorable effects on our income tax rate including, but not limited to, our portion of the non-deductible annual branded prescription drug fee, the accounting for stock options and other share-based awards, mergers/acquisitions and restructurings, ability to maintain manufacturing and other operational activities in our Irish facilities, changes in the mix of earnings in the various tax jurisdictions in which we operate, changes in overall levels of pre-tax earnings, resolution of federal, state and foreign income tax audits. The impact on our income tax provision resulting from the above mentioned factors may be significant.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The table below summarizes our stock repurchase activity for the three months ended September 30, ~~2021:~~2022:

Total Number of Shares Purchased (in thousands) Average Price Paid per Share (in dollars)
Total Number of Shares Purchased as Part of Publicly Announced Program(1) (in thousands)
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) (in millions)
July 1 - July 31, 2021 750 $ 68.57 716 $ 6,414
August 1 - August 31, 2021 1,212 $ 70.19 727 $ 6,363
September 1 - September 30, 2021 653 $ 71.29 623 $ 6,318
Total 2,615 (2) $ 70.00 2,066 (2)


	Total Number of Shares Purchased (in thousands)		Average Price Paid per Share (in dollars)		Total Number of Shares Purchased as Part of Publicly Announced Program(1) (in thousands)		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) (in millions)
July 1 - July 31, 2022	887		$	61.62	842		$	5,793
August 1 - August 31, 2022	1,627		$	63.08	1,112		$	5,723
September 1 - September 30, 2022	1,058		$	64.65	899		$	5,665
Total	3,572	(2)	$	63.18	2,853	(2)

Certain amounts may not sum due to rounding.

(1)In the first quarter of 2016, our Board of Directors authorized a $12.0 billion share repurchase program (“2016 Program”)., with no fixed expiration. Shares purchased during the period were made under the 2016 Program. In January 2020, our Board of Directors authorized a new $5.0 billion stock repurchase program, with no fixed expiration, which will commence upon the completion of the 2016 Program. Share repurchases under both programs may be made in the open market or in privately negotiated transactions.

(2)The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced program is due to shares of common stock withheld by us from employee restricted stock awards in order to satisfy applicable tax withholding obligations.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

Item 6. EXHIBITS

Reference is made to the Exhibit Index included herein.

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Exhibit Index

Exhibit
Footnote Exhibit Number Description of Document
(1) 2.1
Agreement and Plan of Merger, dated September 13, 2020, among Immunomedics, Inc., Gilead Sciences, Inc. and Maui Merger Sub, Inc.
(2) 3.1
Restated Certificate of Incorporation of Registrant
(2) 3.2
Amended and Restated Bylaws of Registrant
4.1 Reference is made to Exhibit 3.1 and Exhibit 3.2
(3) 4.2
Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee
(3) 4.3
First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)
(4) 4.4
Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2041 Note)
(5) 4.5
Third Supplemental Indenture related to Senior Notes, dated as of March 7, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2024 Note and Form of 2044 Note)
(6) 4.6
Fourth Supplemental Indenture related to Senior Notes, dated as of November 17, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2025 Note and Form of 2045 Note)
(7) 4.7
Fifth Supplemental Indenture, dated as of September 14, 2015, between Registrant and Wells Fargo Bank, National Association, as Trustee (including Form of 2026 Note, Form of 2035 Note and Form of 2046 Note)
(8) 4.8
Sixth Supplemental Indenture, dated as of September 20, 2016, between Registrant and Wells Fargo Bank, National Association, as Trustee (including Form of 2023 Note, Form of 2027 Note, Form of 2036 Note and Form of 2047 Note)
(9) 4.9
Eighth Supplemental Indenture, dated as of September 30, 2020, between the Company and Wells Fargo Bank, National Association, as Trustee (including form of notes)
(10) 4.10
Description of Registrant’s Securities
(11) 10.1*
Gilead Sciences, Inc. 2004 Equity Incentive Plan, amended and restated May 10, 2017
(12) 10.2*
Amendment No. 1 to Gilead Sciences, Inc. 2004 Equity Incentive Plan, amended and restated May 10, 2017
(13) 10.3*
Form of employee stock option agreement under 2004 Equity Incentive Plan (for grants made in 2011 through 2018)
(14) 10.4*
Form of employee stock option agreement under 2004 Equity Incentive Plan (for grants made in 2019)
(15) 10.5*
Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2019)
(16) 10.6*
Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2020)
(17) 10.7*
Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants commencing in 2021)
(18) 10.8*
Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2009 through 2012)
(19) 10.9*
Form of non-employee director stock option agreement (U.S.) under 2004 Equity Incentive Plan (for grants made in 2013)
(19) 10.10*
Form of non-employee director stock option agreement (non-U.S.) under 2004 Equity Incentive Plan (for grants made in 2013)
(20) 10.11*
Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2014 through 2018)
(14) 10.12*
Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2019)
(21) 10.13*
Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2020)
(14) 10.14*
Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2019)
(16) 10.15*
Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2020)
(17) 10.16*
Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants commencing in 2021)
(14) 10.17*
Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2019)
(16) 10.18*
Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2020)
(17) 10.19*
Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants commencing in 2021)
(13) 10.20*
Form of employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (for grants made in 2011 through 2018)
(14) 10.21*
Form of employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (for grants made in 2019)
(15) 10.22*
Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2019)
(16) 10.23*
Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2020)


Exhibit Footnote	Exhibit Number	Description of Document
(1)	3.1	Restated Certificate of Incorporation of Registrant

(1)	3.2	Amended and Restated Bylaws of Registrant

	4.1	Reference is made to Exhibit 3.1 and Exhibit 3.2

(2)	4.2	Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee

(2)	4.3	First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)

(3)	4.4	Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2041 Note)

(4)	4.5	Third Supplemental Indenture related to Senior Notes, dated as of March 7, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2024 Note and Form of 2044 Note)

(5)	4.6	Fourth Supplemental Indenture related to Senior Notes, dated as of November 17, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2025 Note and Form of 2045 Note)

(6)	4.7	Fifth Supplemental Indenture, dated as of September 14, 2015, between Registrant and Wells Fargo Bank, National Association, as Trustee (including Form of 2026 Note, Form of 2035 Note and Form of 2046 Note)

(7)	4.8	Sixth Supplemental Indenture, dated as of September 20, 2016, between Registrant and Wells Fargo Bank, National Association, as Trustee (including Form of 2023 Note, Form of 2027 Note, Form of 2036 Note and Form of 2047 Note)

(8)	4.9	Eighth Supplemental Indenture, dated as of September 30, 2020, between the Registrant and Wells Fargo Bank, National Association, as Trustee (including form of notes)

(9)	4.10	Description of Registrant’s Securities

(10)	10.1*	Gilead Sciences, Inc. 2004 Equity Incentive Plan, amended and restated May 10, 2017

(11)	10.2*	Amendment No. 1 to Gilead Sciences, Inc. 2004 Equity Incentive Plan, amended and restated May 10, 2017

(12)	10.3*	Gilead Sciences, Inc. 2022 Equity Incentive Plan

(13)	10.4*	Form of employee stock option agreement under 2004 Equity Incentive Plan (for grants made in 2011 through 2018)

(14)	10.5*	Form of employee stock option agreement under 2004 Equity Incentive Plan (for grants made in 2019)

(15)	10.6*	Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2019)

(16)	10.7*	Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2020)

(17)	10.8*	Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2021)

(18)	10.9*	Form of global employee stock option agreement under 2004 Equity Incentive Plan (4 year vest) (for certain grants made in 2022)

(19)	10.10*	Form of global employee stock option agreement under 2022 Equity Incentive Plan (4 year vest) (for certain grants commencing in 2022)

(20)	10.11*	Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2009 through 2012)

(21)	10.12*	Form of non-employee director stock option agreement (U.S.) under 2004 Equity Incentive Plan (for grants made in 2013)

(21)	10.13*	Form of non-employee director stock option agreement (non-U.S.) under 2004 Equity Incentive Plan (for grants made in 2013)

(22)	10.14*	Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2014 through 2018)

(14)	10.15*	Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2019)

(23)	10.16*	Form of non-employee director stock option agreement under 2004 Equity Incentive Plan (for grants made in 2020 and 2021)

(19)	10.17*	Form of non-employee director stock option agreement under 2022 Equity Incentive Plan (for grants commencing in 2022)

(14)	10.18*	Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2019)

(16)	10.19*	Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2020)

(17)	10.20*	Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2021)

(18)	10.21*	Form of performance share award agreement - TSR Goals (U.S.) under 2004 Equity Incentive Plan (for grants commencing in 2022)

(14)	10.22*	Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2019)

(16)	10.23*	Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2020)

(21)	10.24*	Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants made in 2021)

6051

~~(17)~~(18)

10.24*10.25*

Form of performance share award agreement - Revenue Goals (U.S.) under 2004 Equity Incentive Plan (for grants commencing in 2022)

(13)

10.26*

Form of employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (for grants made in 2011 through 2018)

(14)

10.27*

Form of employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (for grants made in 2019)

(15)

10.28*

Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for grants ~~commencing~~made in 2019)

(16)

10.29*

Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2020)

(17)

10.30*

Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for grants made in 2021)

~~(21)~~(18)

10.25*10.31*

Form of global employee restricted stock unit issuance agreement under 2004 Equity Incentive Plan (4 year vest) (for certain grants made in 2022)

(19)

10.32*

Form of global employee restricted stock unit agreement under 2022 Equity Incentive Plan (4 year vest) (for certain grants commencing in 2022)

(23)

10.33*

Form of non-employee director restricted stock unit issuance agreement under 2004 Equity Incentive Plan (for grants made in ~~2020)~~2020 and 2021)

~~(21)~~(19)

10.26*10.34*

Form of non-employee director restricted stock unit agreement under 2022 Equity Incentive Plan (for grants commencing in 2022)

(23)

10.35*

Gilead Sciences, Inc. 2018 Equity Incentive Plan, amended and restated April 7, 2020

~~(22)~~(24)

10.27*10.36*

Gilead Sciences, Inc. Employee Stock Purchase Plan, amended and restated January 22, 2015

(14)

10.28*10.37*

Gilead Sciences, Inc. 2005 Deferred Compensation Plan, amended and restated April 19, 2016

~~(21)~~(23)

10.29*10.38*

Gilead Sciences, Inc. Severance Plan, amended and restated May 5, 2020

(16)

10.30*10.39*

Gilead Sciences, Inc. Corporate Annual Incentive Plan, amended and restated January 1, 2020

~~(24)~~(26)

10.31*10.40*

Offer Letter between Registrant and Daniel O’Day, dated November 30, 2018

(14)

10.32*10.41*

Stock option agreement for Daniel O’Day under 2004 Equity Incentive Plan

(14)

10.33*10.42*

Performance share award agreement for Daniel O’Day (for TSR Goals in 2019) under 2004 Equity Incentive Plan

(14)

10.34*10.43*

Performance share award agreement for Daniel O’Day (for Revenue Goals in 2019) under 2004 Equity Incentive Plan

(14)

10.35*10.44*

Form of restricted stock unit issuance agreement for Daniel O’Day (in 2019) under 2004 Equity Incentive Plan

(14)

10.36*10.45*

Offer Letter between Registrant and Johanna Mercier, dated May 21, 2019

~~(21)~~(23)

10.37*10.46*

Letter Agreement between Registrant and Johanna Mercier, dated May 4, 2020

(16)

10.38*10.47*

Global stock option agreement for Johanna Mercier (in 2019) under 2004 Equity Incentive Plan

(16)

10.39*10.48*

Restricted stock unit issuance agreement for Johanna Mercier (for Performance Objectives in 2019-2020) under 2004 Equity Incentive Plan

(16)

10.40*10.49*

Global restricted stock unit issuance agreement for Johanna Mercier (in 2019) under 2004 Equity Incentive Plan

(16)

10.41*10.50*

Offer Letter between Registrant and Merdad Parsey, dated September 29, 2019

(16)

10.42*10.51*

Global stock option agreement for Merdad Parsey (in 2019) under 2004 Equity Incentive Plan

(16)

10.43*10.52*

Global restricted stock unit issuance agreement for Merdad Parsey (in 2019) under 2004 Equity Incentive Plan

~~(25)~~(27)

10.44*10.53*

Form of Indemnity Agreement entered into between Registrant and its directors and executive officers

~~(25)~~(27)

10.45*10.54*

Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

~~(26)~~(28)

10.46*10.55*

Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised September 2006)

~~+(27)~~+(29)

~~10.47~~10.56

Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement); the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement); and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

~~+(28)~~+(30)

~~10.48~~10.57

Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000, amending the 1991 License Agreement and the December 1992 License Agreement

~~+(29)~~+(31)

~~10.49~~10.58

Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006, amending the October 1992 License Agreement and the December 1992 License Agreement

~~+(30)~~+(32)

~~10.50~~10.59

Seventh Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated July 1, 2013, amending the October 1992 License Agreement and the December 1992 License Agreement

~~+(31)~~+(33)

~~10.51~~10.60

Exclusive License Agreement by and between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

~~+(32)~~+(34)

~~10.52~~10.61

Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

~~+(32)~~+(34)

~~10.53~~10.62

Amended and Restated License Agreement by and between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005

++~~(33)~~(35)

~~10.54~~10.63

Amended and Restated EVG License Agreement by and between Japan Tobacco Inc. and Registrant, dated November 29, 2018

++~~(33)~~(35)

~~10.55~~10.64

Master Agreement by and between Registrant, Gilead Sciences K.K. and Japan Tobacco Inc., dated November 29, 2018

~~+(34)~~+(36)

~~10.56~~10.65

Amended and Restated Collaboration Agreement by and among Registrant, Gilead Sciences Ireland UC (formerly Gilead Sciences Limited) and Janssen R&D Ireland, dated December 23, 2014

~~+(35)~~+(37)

~~10.57~~10.66

License Agreement by and among Kite Pharma, Inc., Cabaret Biotech Ltd. and Dr. Zelig Eshhar, dated December 12, 2013

++(15)

~~10.58~~10.67

Option, License and Collaboration Agreement by and between Galapagos NV and Registrant, dated July 14, 2019

31.1**

Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2**

Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32***

Certifications of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)

101.INS**

XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH**

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 in Inline XBRL (included as Exhibit 101)

(1) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on ~~September 14, 2020, and incorporated herein by reference.~~

~~(2) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on~~ May 9, 2019, and incorporated herein by reference.

~~(3)~~(2) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.

~~(4)~~(3) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.

~~(5)~~(4) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 7, 2014, and incorporated herein by reference.

~~(6)~~(5) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on November 17, 2014, and incorporated herein by reference.

~~(7)~~(6) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 14, 2015, and incorporated herein by reference.

~~(8)~~(7) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 20, 2016, and incorporated herein by reference.

~~(9)~~(8) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 30, 2020, and incorporated herein by reference.

~~(10)~~(9) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and incorporated herein by reference.

~~(11)~~(10) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 12, 2017, and incorporated herein by reference.

~~(12)~~(11) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and incorporated herein by reference.

(12) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 5, 2022, and incorporated herein by reference.

(13) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by reference.

(14) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, and incorporated herein by reference.

(15) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.

(16) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and incorporated herein by reference.

(17) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and incorporated herein by reference.

(18) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and incorporated herein by reference.

(19) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and incorporated herein by reference

(20) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.

~~(19)~~(21) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and incorporated herein by reference

~~(20)~~(22) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, and incorporated herein by reference.

~~(21)~~(23) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and incorporated herein by reference.

~~(22)~~(24) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 8, 2015, and incorporated herein by reference.

~~(23)~~(25) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and incorporated herein by reference.

~~(24)~~(26) Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on December 10, 2018, and incorporated herein by reference.

~~(25)~~(27) Filed as an exhibit to Registrant’s Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.

~~(26)~~(28) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and incorporated herein by reference.

~~(27)~~(29) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and incorporated herein by reference.

~~(28)~~(30) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference.

~~(29)~~(31) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and incorporated herein by reference.

~~(30)~~(32) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.

~~(31)~~(33) Filed as an exhibit to Triangle Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q/A filed on November 3, 1999, and incorporated herein by reference.

~~(32)~~(34) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference.

~~(33)~~(35) Filed as an exhibit to Registrant’s Amendment No. 1 to Annual Report on Form 10-K/A filed on April 18, 2019, and incorporated herein by reference.

~~(34)~~(36) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.

~~(35)~~(37) Filed as an exhibit to Kite Pharma, Inc.’s Registration Statement on Form S-1/A (No. 333-196081) filed on June 17, 2014, and incorporated herein by reference.

* Management contract or compensatory plan or arrangement.

** Filed herewith.

*** Furnished herewith.

+ Certain confidential portions of this Exhibit were omitted by means of marking such portions with an asterisk (the Mark). This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the Mark pursuant to Registrant’s Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

++ Certain confidential portions of this Exhibit were omitted by means of marking such portions with the Mark because the identified confidential portions are (i) not material and (ii) would be competitively harmful if publicly disclosed.

6253

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		GILEAD SCIENCES, INC.
		(Registrant)

Date:	November ~~3, 2021~~2, 2022	/s/ DANIEL P. O’DAY
		Daniel P. O’Day Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	November ~~3, 2021~~2, 2022	/s/ ANDREW D. DICKINSON
		Andrew D. Dickinson Chief Financial Officer (Principal Financial Officer)

6354



							Gross Amounts Not Offset on our Condensed Consolidated Balance Sheets
(in millions)	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset on our Condensed Consolidated Balance Sheets		Amounts of Assets/Liabilities Presented on our Condensed Consolidated Balance Sheets		Derivative Financial Instruments		Cash Collateral Received/ Pledged		Net Amount (Legal Offset)
As of September 30, 2021
Derivative assets	$	55	$	—	$	55	$	(7)	$	—	$	48
Derivative liabilities	$	(8)	$	—	$	(8)	$	7	$	—	$	(1)
As of December 31, 2020
Derivative assets	$	12	$	—	$	12	$	(12)	$	—	$	—
Derivative liabilities	$	(121)	$	—	$	(121)	$	12	$	—	$	(109)


(in millions)	Amount
2021 (remaining three months)	$	441
2022	1,764
2023	1,764
2024	1,764
2025	1,759
Thereafter	10,288
Total	$	17,780


Total Truvada (FTC/TDF) Based Products – U.S.	132	644	(80)	%	531	1,697	(69)	%
Total Truvada (FTC/TDF) Based Products – Europe	49	59	(17)	%	165	203	(19)	%
Total Truvada (FTC/TDF) Based Products – Other International	19	31	(39)	%	60	85	(29)	%
	200	734	(73)	%	756	1,985	(62)	%

Other HIV(2) – U.S.	3	10	(70)	%	14	24	(42)	%
Other HIV(2) – Europe	4	1	NM		9	4	NM
Other HIV(2) – Other International	—	2	(100)	%	12	21	(43)	%
	7	13	(46)	%	35	49	(29)	%

Total HIV – U.S.	3,302	3,722	(11)	%	9,132	10,213	(11)	%
Total HIV – Europe	602	569	6	%	1,776	1,720	3	%
Total HIV – Other International	285	256	11	%	869	748	16	%
	4,189	4,547	(8)	%	11,777	12,681	(7)	%
HCV Products
Ledipasvir / Sofosbuvir(3) – U.S.	14	36	(61)	%	63	113	(44)	%
Ledipasvir / Sofosbuvir(3) – Europe	5	11	(55)	%	24	26	(8)	%
Ledipasvir / Sofosbuvir(3) – Other International	26	37	(30)	%	76	124	(39)	%
	45	84	(46)	%	163	263	(38)	%

Sofosbuvir / Velpatasvir(4) – U.S.	173	170	2	%	649	646	—	%
Sofosbuvir / Velpatasvir(4) – Europe	77	74	4	%	234	253	(8)	%
Sofosbuvir / Velpatasvir(4) – Other International	82	86	(5)	%	272	330	(18)	%
	332	330	1	%	1,155	1,229	(6)	%

Other HCV(5) – U.S.	37	35	6	%	97	100	(3)	%
Other HCV(5) – Europe	12	13	(8)	%	64	37	73	%
Other HCV(5) – Other International	3	2	50	%	9	12	(25)	%
	52	50	4	%	170	149	14	%

Total HCV – U.S.	224	241	(7)	%	809	859	(6)	%
Total HCV – Europe	94	98	(4)	%	322	316	2	%
Total HCV – Other International	111	125	(11)	%	357	466	(23)	%
	429	464	(8)	%	1,488	1,641	(9)	%
HBV/HDV Products
Vemlidy – U.S.	103	99	4	%	266	248	7	%
Vemlidy – Europe	9	8	13	%	25	22	14	%
Vemlidy – Other International	96	70	37	%	298	194	54	%
	208	177	18	%	589	464	27	%

Viread – U.S.	1	3	(67)	%	8	10	(20)	%
Viread – Europe	7	8	(13)	%	22	27	(19)	%
Viread – Other International	18	21	(14)	%	55	100	(45)	%
	26	32	(19)	%	85	137	(38)	%

Other HBV/HDV(6) – U.S.	—	—	NM		1	9	(89)	%
Other HBV/HDV(6) – Europe	13	2	NM		29	6	NM
	13	2	NM		30	15	NM

Total HBV/HDV – U.S.	104	102	2	%	275	267	3	%
Total HBV/HDV – Europe	29	18	61	%	76	55	38	%
Total HBV/HDV – Other International	114	91	25	%	353	294	20	%
	247	211	17	%	704	616	14	%
Veklury
Veklury – U.S.	1,527	785	95	%	2,763	785	NM
Veklury – Europe	109	60	82	%	761	60	NM
Veklury – Other International	287	28	NM		684	28	NM
	1,923	873	NM		4,208	873	NM


Cell Therapy Products
Tecartus – U.S.	35		5		NM		94		5		NM
Tecartus – Europe	12		4		NM		25		5		NM
	47		9		NM		119		10		NM

Yescarta – U.S.	100		85		18	%	300		283		6	%
Yescarta – Europe	66		51		29	%	188		144		31	%
Yescarta – Other International	9		2		NM		25		7		NM
	175		138		27	%	513		434		18	%

Total Cell Therapy – U.S.	135		90		50	%	394		288		37	%
Total Cell Therapy – Europe	78		55		42	%	213		149		43	%
Total Cell Therapy – Other International	9		2		NM		25		7		NM
	222		147		51	%	632		444		42	%

Trodelvy
Trodelvy – U.S.	100		—		NM		261		—		NM
Trodelvy– Europe	1		—		NM		1		—		NM
	101		—		NM		262		—		NM
Other Products
AmBisome – U.S.	7		18		(61)	%	32		46		(30)	%
AmBisome – Europe	67		58		16	%	202		166		22	%
AmBisome – Other International	69		35		97	%	186		113		65	%
	143		111		29	%	420		325		29	%

Letairis – U.S.	46		78		(41)	%	157		241		(35)	%

Ranexa – U.S.	—		—		NM		5		9		(44)	%

Zydelig – U.S.	6		8		(25)	%	22		24		(8)	%
Zydelig – Europe	7		9		(22)	%	27		30		(10)	%
Zydelig – Other International	—		—		NM		1		1		—	%
	13		17		(24)	%	50		55		(9)	%

Other(7) – U.S.	28		32		(13)	%	82		103		(20)	%
Other(7) – Europe	10		10		—	%	41		32		28	%
Other(7) – Other International	5		3		67	%	22		7		NM
	43		45		(4)	%	145		142		2	%

Total Other – U.S.	87		136		(36)	%	298		423		(30)	%
Total Other – Europe	84		77		9	%	270		228		18	%
Total Other – Other International	74		38		95	%	209		121		73	%
	245		251		(2)	%	777		772		1	%

Total product sales – U.S.	5,479		5,076		8	%	13,932		12,835		9	%
Total product sales – Europe	997		877		14	%	3,419		2,528		35	%
Total product sales – Other International	880		540		63	%	2,497		1,664		50	%
	$	7,356	$	6,493	13	%	$	19,848	$	17,027	17	%