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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS 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:
|  | March 31, 2024 |  | December 31, 2023
(in millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale debt securities(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 426 |  |  | $ | — |  |  | $ | — |  |  | $ | 426 |
U.S. government agencies securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 127 |  |  | — |  |  | 127 |
Non-U.S. government securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10 |  |  | — |  |  | 10 |
Certificates of deposit |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 45 |  |  | — |  |  | 45 |
Corporate debt securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,451 |  |  | — |  |  | 1,451 |
Residential mortgage and asset-backed securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 367 |  |  | — |  |  | 367 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | 1,550 |  |  | — |  |  | — |  |  | 1,550 |  |  | 4,465 |  |  | — |  |  | — |  |  | 4,465 |
Publicly traded equity securities(2) |  | 1,808 |  |  | — |  |  | — |  |  | 1,808 |  |  | 1,458 |  |  | — |  |  | — |  |  | 1,458 |
Deferred compensation plan |  | 318 |  |  | — |  |  | — |  |  | 318 |  |  | 284 |  |  | — |  |  | — |  |  | 284 |
Foreign currency derivative contracts |  | — |  |  | 39 |  |  | — |  |  | 39 |  |  | — |  |  | 7 |  |  | — |  |  | 7 |
Total |  | $ | 3,676 |  |  | $ | 39 |  |  | $ | — |  |  | $ | 3,715 |  |  | $ | 6,633 |  |  | $ | 2,007 |  |  | $ | — |  |  | $ | 8,639 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liability for MYR GmbH (“MYR”) contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 222 |  |  | $ | 222 |  |  | $ | — |  |  | $ | — |  |  | $ | 228 |  |  | $ | 228 |
Deferred compensation plan |  | 318 |  |  | — |  |  | — |  |  | 318 |  |  | 283 |  |  | — |  |  | — |  |  | 283 |
Foreign currency derivative contracts |  | — |  |  | 10 |  |  | — |  |  | 10 |  |  | — |  |  | 59 |  |  | — |  |  | 59 |
Total |  | $ | 318 |  |  | $ | 10 |  |  | $ | 222 |  |  | $ | 549 |  |  | $ | 283 |  |  | $ | 59 |  |  | $ | 228 |  |  | $ | 570 |
_______________________________ (1) During the three months ended March 31, 2024, we sold all of our available-for-sale debt securities and used the proceeds to partially fund our acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) discussed in Note 6. Acquisitions, Collaborations and Other Arrangements. (2) Publicly traded equity securities include investments in Galapagos NV (“Galapagos”) of $535 million and Arcellx, Inc. (“Arcellx”) of $467 million as of March 31, 2024, which are subject to contractual sale restrictions until August 2024 and June 2025, respectively. Level 2 Inputs Available-for-Sale Debt Securities For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of the measurement date and by 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. Foreign Currency Derivative Contracts Our foreign currency derivative contracts have maturities of 18 months or less 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 utilizing 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, Secured Overnight Financing Rate (“SOFR”) and swap rates. These inputs, where applicable, are observable at commonly quoted intervals. Senior Unsecured Notes The following table summarizes the total estimated fair value and carrying value of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values:
(in millions) |  | March 31, 2024 |  | December 31, 2023
Fair value |  | $ | 21,930 |  |  | $ | 22,567 |
Carrying value |  | $ | 23,838 |  |  | $ | 23,834 |
Level 3 Inputs Contingent Consideration Liability In connection with our first quarter 2021 acquisition of MYR, we are subject to a potential contingent consideration payment of up to €300 million, subject to customary adjustments, which is revalued each reporting period using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of Hepcludex until the related contingency is resolved. The following table summarizes the change in fair value of our contingent consideration liability:
|  | Three Months Ended |  |  |
|  | March 31, |  |  |
(in millions) |  | 2024 |  | 2023 |  |  |  |  |
Beginning balance |  | $ | 228 |  |  | $ | 275 |  |  |  |  |  |
Changes in valuation assumptions(1) |  | — |  |  | (3) |  |  |  |  |  |
Effect of foreign exchange remeasurement(2) |  | (6) |  |  | 5 |  |  |  |  |  |
Ending balance(3) |  | $ | 222 |  |  | $ | 277 |  |  |  |  |  |
________________________________ (1) Included in Research and development expenses on our Condensed Consolidated Statements of Operations. The change in 2023 primarily related to an update in expected payment dates. (2) Included in Other (income) expense, net on our Condensed Consolidated Statements of Operations. (3) Included in Other long-term obligations on our Condensed Consolidated Balance Sheets. Liability Related to Future Royalties We recorded a liability related to future royalties as part of 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 value of the liability related to future royalties was approximately $1.2 billion as of March 31, 2024 and December 31, 2023, and the carrying value was $1.2 billion as of March 31, 2024 and December 31, 2023. Liability Related to Assumed Financing Arrangement As part of the CymaBay acquisition, we assumed a liability for a financing arrangement (see Note 6. Acquisitions, Collaborations and Other Arrangements). The fair value of the liability approximates its carrying value of $199 million. Nonrecurring Fair Value Measurements During the three months ended March 31, 2024, we recorded a partial impairment charge of $2.4 billion related to certain acquired in-process research and development (“IPR&D”) assets. See Note 7. Intangible Assets for additional information. Fair Value Level Transfers There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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