Investments

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of interest-bearing securities, which are considered available-for-sale, by type of security were as follows (in millions):


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









Money market mutual funds	8,323		—		—		8,323
Other short-term interest-bearing securities	1		—		—		1


Total interest-bearing securities	$	12,275	$	—	$	—	$	12,275


Types of securities as of December 31, 2020	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	$	129	$	1	$	—	$	130
U.S. Treasury bills	4,948		—		—		4,948









Money market mutual funds	4,765		—		—		4,765
Other short-term interest-bearing securities	2		—		—		2
Total interest-bearing securities	$	9,844	$	1	$	—	$	9,845

The fair values of interest-bearing securities by location in the Condensed Consolidated Balance Sheets were as follows (in millions):


Condensed Consolidated Balance Sheets locations	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	11,323	$	5,464
Marketable securities	952		4,381
Total interest-bearing securities	$	12,275	$	9,845

Cash and cash equivalents in the above table excludes bank account cash of $646 million and $802 million as of September 30, 2021 and December 31, 2020, respectively.

The fair values of available-for-sale investments by contractual maturity were as follows (in millions):


Contractual maturities	September 30, 2021		December 31, 2020
Maturing in one year or less	$	12,275	$	9,795
Maturing after one year through three years	—		50




Total available-for-sale investments	$	12,275	$	9,845

For the three and nine months ended September 30, 2021 and 2020, realized gains and losses on interest-bearing securities were not material. Realized gains and losses on interest-bearing securities are recorded in Other income, net, in the Condensed Consolidated Statements of Income. The cost of securities sold is based on the specific-identification method.

The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

Equity securities

We held investments in equity securities with readily determinable fair values (publicly traded securities) of $608 million and $477 million as of September 30, 2021 and December 31, 2020, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. For the three months ended September 30, 2021 and 2020, net unrealized gains on publicly traded securities were $135 million and $60 million, respectively. For the nine months ended September 30, 2021 and 2020, net unrealized gains on publicly traded securities were $104 million and $65 million, respectively. Realized gains and losses on sales of publicly traded securities for the three and nine months ended September 30, 2021 and 2020 were not material.

We held investments of $255 million and $203 million in equity securities without readily determinable fair values as of September 30, 2021 and December 31, 2020, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. For the three months ended September 30, 2021 and 2020, gains due to upward adjustments on these securities were $94 million and $12 million, respectively. For the nine months ended September 30, 2021 and 2020, gains due to upward adjustments on these securities were $129 million and $20 million, respectively. Downward adjustments on these securities were not material. Adjustments were based on observable price transactions.

Equity method investments

BeiGene, Ltd.

As of September 30, 2021, we had an ownership interest of approximately 20.3% in BeiGene, Ltd. (BeiGene), which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting. We amortize the difference between the fair value of equity securities acquired and our proportionate share of the carrying value of the underlying net assets of BeiGene over the useful lives of the assets that gave rise to this basis difference. This amortization and our share of the results of operations of BeiGene are included in Other income, net, in the Condensed Consolidated Statements of Income one quarter in arrears, which began in the second quarter of 2020.

During the three and nine months ended September 30, 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net loss of $98 million and $181 million, respectively, and amortization of the basis difference of $44 million and $128 million, respectively. During the three and nine months ended September 30, 2021, the carrying value increased by $18 million and $56 million, respectively, from the impact of BeiGene ownership transactions. In addition, during the three and nine months ended September 30, 2021, we increased the carrying value by $50 million as a result of our purchase of additional shares directly from BeiGene. As of September 30, 2021, the carrying value and fair value of our investment in BeiGene totaled $2.7 billion and $6.9 billion, respectively. As of September 30, 2021, we believe the carrying value of our equity investment in BeiGene is fully recoverable.

Neumora Therapeutics, Inc.

On September 30, 2021, we acquired approximately 25.9% ownership interest in Neumora Therapeutics, Inc. (Neumora), a privately held company, for $257 million, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets, in exchange for a $100 million cash payment and $157 million in noncash consideration primarily related to future services. Although our equity investment provides us with the ability to exercise significant influence over Neumora, we have elected the fair value option to account for our equity investment. Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period. We believe the fair value option best reflects the economics of the underlying transaction.

Limited partnerships

We held limited partnership investments of $556 million and $496 million as of September 30, 2021 and December 31, 2020, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. These investments, primarily investment funds of early-stage biotechnology companies, are accounted for by using the equity method of accounting and are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships as a practical expedient. These investments are typically redeemable only through distributions upon liquidation of the underlying assets. As of September 30, 2021, unfunded additional commitments to be made for these investments during the next several years were not material. For the three months ended September 30, 2021 and 2020, net unrealized gains and losses on our limited partnership investments were a net loss of $43 million and a net gain of $63 million, respectively. For the nine months ended September 30, 2021 and 2020, net unrealized gains from our limited partnership investments were $122 million and $73 million, respectively.