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ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS | 9 Months Ended
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Sep. 30, 2024
Acquisitions, Divestitures and Other Arrangements [Abstract] |
ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS | ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS Asset Acquisition Karuna On March 18, 2024, BMS acquired Karuna, a clinical-stage biopharmaceutical company driven to discover, develop, and deliver transformative medicines for people living with psychiatric and neurological conditions. The acquisition provided BMS with rights to Cobenfy (xanomeline and trospium chloride), formerly KarXT. Cobenfy is an antipsychotic with a novel mechanism of action and differentiated efficacy and safety, which was approved by the FDA on September 26, 2024 for the treatment of schizophrenia in adults. Cobenfy is also in registrational trials for both adjunctive therapy to existing standard of care agents in schizophrenia and the treatment of psychosis in patients with Alzheimer’s disease. BMS acquired all of the issued and outstanding shares of Karuna's common stock for $330.00 per share in an all-cash transaction for total consideration of $14.0 billion, or $12.9 billion net of cash acquired. The acquisition was funded primarily with debt proceeds (see "—Note 10. Financing Arrangements" for further detail). The transaction was accounted for as an asset acquisition since Cobenfy represented substantially all of the fair value of the gross assets acquired. As a result, $12.1 billion was expensed to Acquired IPRD during the nine months ended September 30, 2024. The following summarizes the total consideration transferred and allocation of consideration transferred to the assets acquired, liabilities assumed and Acquired IPRD expense:
Dollars in millions |
Cash consideration for outstanding shares | $ | 12,606 |
Cash consideration for equity awards | 1,421 |
Consideration to be paid | 14,027 |
Less: Charge for unvested stock awards(a) | (289) |
Transaction costs | 55 |
Total consideration allocated | $ | 13,793 |
Cash and cash equivalents | $ | 1,167 |
Other assets | 67 |
Intangible assets | 100 |
Deferred income tax asset | 542 |
Deferred income tax liability | (25) |
Other liabilities | (180) |
Total identifiable assets acquired, net | 1,671 |
Acquired IPRD expense | 12,122 |
Total consideration allocated | $ | 13,793 |
(a) Includes cash-settled unvested equity awards of $130 million expensed in Marketing, selling and administrative and $159 million expensed in Research and development during the nine months ended September 30, 2024. Business Combinations RayzeBio On February 26, 2024, BMS acquired RayzeBio, a clinical-stage radiopharmaceutical therapeutics ("RPT") company with actinium-based RPTs for solid tumors. The acquisition provided BMS with rights to RayzeBio’s actinium-based radiopharmaceutical platform and lead asset, RYZ101, which is in Phase III development for treatment of gastroenteropancreatic neuroendocrine tumors. BMS acquired all of the issued and outstanding shares of RayzeBio's common stock for $62.50 per share in an all-cash transaction for total consideration of $4.1 billion, or $3.6 billion net of cash acquired. The acquisition was funded through a combination of cash on hand and debt proceeds (see "—Note 10. Financing Arrangements" for further detail). The transaction was accounted for as a business combination requiring all assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. Total consideration for the acquisition consisted of the following:
Dollars in millions |
Cash consideration for outstanding shares | $ | 3,851 |
Cash consideration for equity awards | 296 |
Consideration paid | 4,147 |
Less: Unvested stock awards(a) | (274) |
Total consideration allocated | $ | 3,873 |
(a) Includes cash settlement for unvested equity awards of $159 million expensed in Marketing, selling and administrative and $115 million expensed in Research and development during the nine months ended September 30, 2024. The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective fair values summarized below:
Dollars in millions | Purchase Price Allocation
Cash and cash equivalents | $ | 501 |
Other assets | 70 |
Intangible assets | 3,700 |
Deferred income tax asset | 81 |
Deferred income tax liability | (798) |
Other liabilities | (109) |
Identifiable net assets acquired | $ | 3,445 |
Goodwill | 428 |
Total consideration allocated | $ | 3,873 |
Intangible assets included $1.7 billion of indefinite-lived IPRD and $2.0 billion of R&D technology. The estimated fair values for the indefinite-lived IPRD asset and the R&D technology were determined using an income approach valuation method. Goodwill resulted primarily from the recognition of deferred tax liabilities and is not deductible for tax purposes. Mirati On January 23, 2024, BMS acquired Mirati, a commercial stage targeted oncology company, obtaining the rights to commercialize lung cancer medicine Krazati, and several clinical assets, including PRMT5 Inhibitor (formerly MRTX1719). Krazati is an inhibitor of the KRAS G12C mutation approved by the FDA as a second-line treatment for patients with NSCLC and is in clinical development in combination with a PD-1 inhibitor as a first-line therapy for patients with NSCLC. Krazati also is in clinical development both as a single agent, and in combinations, for additional indications. PRMT5 Inhibitor is a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase I development. BMS obtained access to several other clinical and pre-clinical stage assets, including additional KRAS inhibitors and enabling programs. BMS acquired all of the issued and outstanding shares of Mirati's common stock for $58.00 per share in an all-cash transaction for total consideration of $4.8 billion, or $4.1 billion net of cash acquired. Mirati stockholders also received one non-tradeable contingent value right (CVR) for each share of Mirati common stock held, potentially worth $12.00 per share in cash for a total value of approximately $1.0 billion. The payout of the contingent value right is subject to the FDA acceptance of an NDA for PRMT5 Inhibitor for the treatment of specific indications within seven years of the closing of the transaction. The acquisition was funded through a combination of cash on hand and debt proceeds (see "—Note 10. Financing Arrangements" for further detail). The transaction was accounted for as a business combination requiring all assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. Total consideration for the acquisition consisted of the following:
Dollars in millions |
Cash consideration for outstanding shares | $ | 4,596 |
Cash consideration for equity awards | 205 |
Consideration paid | 4,801 |
Plus: Fair value of CVRs | 248 |
Less: unvested stock awards(a) | (114) |
Total consideration allocated | $ | 4,935 |
(a) Includes cash settlement of unvested equity awards of $60 million expensed in Marketing, selling and administrative and $54 million expensed in Research and development during nine months ended September 30, 2024. The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective fair values summarized below:
Dollars in millions | Purchase price allocation
Cash and cash equivalents | $ | 748 |
Inventories | 215 |
Other assets | 159 |
Intangible assets | 4,225 |
Deferred income tax assets | 734 |
Deferred income tax liabilities | (1,094) |
Other liabilities | (204) |
Identifiable net assets acquired | $ | 4,783 |
Goodwill | 152 |
Total consideration allocated | $ | 4,935 |
Inventories includes a fair value adjustment of $148 million. Intangible assets included $640 million of definite-lived Acquired marketed product rights (Krazati) and $3.5 billion of indefinite-lived IPRD assets. The estimated fair value of both definite-lived Acquired marketed product rights and indefinite-lived IPRD assets was determined using an income approach valuation method. Goodwill resulted primarily from the recognition of deferred tax liabilities and is not deductible for tax purposes. The results of operations and cash flows for Karuna, RayzeBio and Mirati were included in the consolidated financial statements commencing on their respective acquisition dates and were not material. Historical financial results of the acquired entities were not significant. Divestitures The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).
| Three Months Ended September 30,
| Net Proceeds |  | Divestiture (Gains)/Losses |  | Royalty Income
Dollars in millions | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Diabetes business - royalties | $ | 278 |  |  | $ | 220 |  |  | $ | — |  |  | $ | — |  |  | $ | (284) |  |  | $ | (217) |
Mature products and other | 3 |  |  | 3 |  |  | 5 |  |  | — |  |  | — |  |  | — |
Total | $ | 281 |  |  | $ | 223 |  |  | $ | 5 |  |  | $ | — |  |  | $ | (284) |  |  | $ | (217) |
| Nine Months Ended September 30,
| Net Proceeds |  | Divestiture (Gains)/Losses |  | Royalty Income
Dollars in millions | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Diabetes business - royalties | $ | 774 |  |  | $ | 621 |  |  | $ | — |  |  | $ | — |  |  | $ | (820) |  |  | $ | (623) |
Mature products and other | 3 |  |  | 10 |  |  | 5 |  |  | — |  |  | — |  |  | — |
Total | $ | 777 |  |  | $ | 631 |  |  | $ | 5 |  |  | $ | — |  |  | $ | (820) |  |  | $ | (623) |
Licensing and Other Arrangements The following table summarizes the financial impact of Keytruda* royalties, Tecentriq* royalties, upfront licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
Dollars in millions | 2024 |  | 2023 |  | 2024 |  | 2023
Keytruda* royalties | $ | (137) |  |  | $ | (315) |  |  | $ | (407) |  |  | $ | (878) |
Tecentriq* royalties | (12) |  |  | (24) |  |  | (35) |  |  | (78) |
Contingent milestone income | (13) |  |  | — |  |  | (38) |  |  | (36) |
Amortization of deferred income | (12) |  |  | (12) |  |  | (36) |  |  | (39) |
Other royalties and licensing income | (6) |  |  | (14) |  |  | (16) |  |  | (37) |
Royalty and licensing income | $ | (180) |  |  | $ | (365) |  |  | $ | (532) |  |  | $ | (1,068) |
Keytruda* Patent License Agreement BMS and Ono are parties to a global patent license agreement with Merck related to Merck's PD-1 antibody Keytruda*. Under the agreement, Merck paid ongoing royalties on global sales of Keytruda* of 6.5% through December 31, 2023 and is obligated to pay 2.5% from January 1, 2024 through December 31, 2026. The companies also granted certain rights to each other under their respective patent portfolios pertaining to PD-1. Payments and royalties are shared between BMS and Ono on a 75/25 percent allocation, respectively, after adjusting for each party's legal fees.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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