What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 140 added, 78 removed, 797 unchanged (21% of the section changed)

24 unchanged sentences

Other long-term liabilities 30,507 37,720

Deferred tax liabilities, net 13,647 —

Total liabilities 1,680,029 1,649,462

6 unchanged sentences

300,000 shares authorized;

127,186 and 126,770 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

126,535 and 126,770 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 30,747 2,409

8 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Royalties $ 124,918 $ 111,740 $ 245,511 $ 211,380

11 unchanged sentences

Investment and other income, net

5,032 3,192 10,025 6,171

Interest expense ( 4,524 ) ( 4,494 ) ( 9,031 ) ( 9,037 )

12 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 93,245 $ 74,754 $ 170,068 $ 114,369

Other comprehensive income

Unrealized (loss) gain on marketable securities

Unrealized (loss) gain on marketable securities, net

( 150 ) ( 169 ) ( 463 ) 755

Foreign currency translation adjustment ( 15 ) 1 ( 7 ) 23

Unrealized gain on derivative instruments, net

Unrealized gain (loss) on derivative instruments, net

76 ( 1,425 ) 8,691 ( 1,425 )

Realized gain on derivative instruments, net ( 493 ) ( 46 ) ( 1,011 ) ( 46 )

4 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

5 unchanged sentences

Amortization of debt discount 3,665 3,652

Amortization of premium on marketable securities, net

Accretion of discount on marketable securities, net

( 5,399 ) ( 2,342 )

Realized gain on marketable securities

Lease payments deferred

Loss on disposal of equipment 1,678 517

Recognition of deferred revenue — ( 2,404 )

Lease payments recognized

Deferred income taxes 15,532 15,381

14 unchanged sentences

Repurchase of common stock — ( 150,083 )

Taxes paid related to net share settlement, net of proceeds from issuance of common stock under equity incentive plans

( 489 ) ( 1,048 )

Net cash used in financing activities

Proceeds from issuance of common stock under equity incentive plans, net of taxes paid related to net share settlement

Net cash provided by (used in) financing activities

8,993 ( 162,168 )

11 unchanged sentences

(in thousands)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Common Stock Additional

Capital Accumulated

Comprehensive (Loss) Income

Comprehensive Loss

Retained Earnings Total

1 unchanged sentence

Shares Amount

BALANCE AS OF MARCH 31, 2024 127,186 $ 127 $ 11,794 $ ( 1,486 ) $ 167,373 $ 177,808

Share-based compensation expense — — 9,471 — — 9,471

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan

415 1 9,481 — — 9,482

Repurchase of common stock

( 1,066 ) ( 1 ) 1 — —

Other comprehensive loss

— — — ( 582 ) — ( 582 )

Net income — — — — 93,245 93,245

BALANCE AS OF JUNE 30, 2024 126,535 $ 127 $ 30,747 $ ( 2,068 ) $ 260,618 $ 289,424

Six Months Ended June 30, 2024

Common Stock Additional

Capital Accumulated

Comprehensive (Loss) Income

Retained Earnings

Stockholders’

Shares Amount

BALANCE AS OF DECEMBER 31, 2023 126,770 $ 127 $ 2,409 $ ( 9,278 ) $ 90,550 $ 83,808

Share-based compensation expense — — 19,345 — — 19,345

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net 416 — ( 489 ) — — ( 489 )

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net and shares issued under the ESPP plan

831 1 8,992 — — 8,993

Repurchase of common stock ( 1,066 ) ( 1 ) 1 — —

Other comprehensive income

1 unchanged sentence

Net income — — — — 170,068 170,068

BALANCE AS OF MARCH 31, 2024 127,186 $ 127 $ 11,794 $ ( 1,486 ) $ 167,373 $ 177,808

Three Months Ended March 31, 2023

BALANCE AS OF JUNE 30, 2024 126,535 $ 127 $ 30,747 $ ( 2,068 ) $ 260,618 $ 289,424

Three Months Ended June 30, 2023

Common Stock Additional

Capital Accumulated

Comprehensive (Loss) Income

Comprehensive Income (Loss)

Retained Earnings

1 unchanged sentence

Shares Amount

BALANCE AS OF MARCH 31, 2023 131,662 $ 132 $ — $ 24 $ 65,694 $ 65,850

Share-based compensation expense — — 9,622 — — 9,622

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan

194 — 2,446 — — 2,446

Other comprehensive loss — — — ( 1,639 ) — ( 1,639 )

Net income — — — — 74,754 74,754

BALANCE AS OF JUNE 30, 2023 131,856 $ 132 $ 12,068 $ ( 1,615 ) $ 140,448 $ 151,033

Six Months Ended June 30, 2023

Common Stock Additional

Capital Accumulated

Comprehensive Loss Retained Earnings (Accumulated Deficit)

Stockholders’

Shares Amount

BALANCE AS OF DECEMBER 31, 2022 135,154 $ 135 $ 27,368 $ ( 922 ) $ 143,217 $ 169,798

2 unchanged sentences

289 — ( 126 ) — — ( 126 )

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net and shares issued under the ESPP plan

578 1 1,397 — — 1,398

Repurchase of common stock ( 4,165 ) ( 4 ) ( 34,159 ) ( 117,138 ) ( 151,301 )

Other comprehensive income — — — 946 — 946

Other comprehensive loss — — — ( 693 ) — ( 693 )

Net income — — — — 114,369 114,369

BALANCE AS OF MARCH 31, 2023 131,662 $ 132 $ — $ 24 $ 65,694 $ 65,850

BALANCE AS OF JUNE 30, 2023 131,856 $ 132 $ 12,068 $ ( 1,615 ) $ 140,448 $ 151,033

See accompanying notes to condensed consolidated financial statements.

4 unchanged sentences

is a biopharmaceutical company advancing disruptive solutions to improve patient experiences and outcomes for emerging and established therapies.

As the innovators of ENHANZE ® drug delivery technology (“ENHANZE”) with our proprietary enzyme, rHuPH20, our commercially validated solution is used to facilitate the subcutaneous (“SC”) delivery of injected drugs and fluids with the goal of reducing the treatment burden for patients.

We license our technology to biopharmaceutical companies to collaboratively develop products that combine ENHANZE with our partners’ proprietary compounds.

4 unchanged sentences

We refer to the application of rHuPH20 to facilitate the delivery of other drugs or fluids as ENHANZE.

We license our ENHANZE technology to form collaborations with biopharmaceutical companies that develop or market drugs requiring or benefiting from injection via the SC route of administration.

We license our ENHANZE technology to form collaborations with biopharmaceutical companies that develop and/or market drugs requiring or benefiting from injection via the SC route of administration.

In the development of proprietary intravenous (“IV”) drugs combined with our ENHANZE technology, data has been generated supporting the potential for ENHANZE to reduce patient treatment burden, as a result of shorter duration of SC administration with ENHANZE compared to IV administration.

12 unchanged sentences

In addition to receiving upfront licensing fees from our ENHANZE collaborations, we are entitled to receive event and sales-based milestone payments, revenues from the sale of bulk rHuPH20 and royalties from commercial sales of approved partner products co-formulated with ENHANZE.

We currently earn royalties from sales of seven commercial products including sales of one commercial product from each of the Takeda, Janssen and argenx collaborations and four commercial products products from the Roche collaboration.

We currently earn royalties from sales of eight commercial products including sales of one commercial product from each of the Takeda, Janssen and argenx collaborations and five commercial products from the Roche collaboration.

We have commercialized auto-injector products with several pharmaceutical companies including Teva Pharmaceutical Industries, Ltd.

25 unchanged sentences

Cash equivalents consist of highly liquid investments, readily convertible to cash, which mature within 90 days or less from the date of purchase.

As of March 31, 2024, our cash and cash equivalents consisted of money market funds, bank certificate of deposits, U.S.

As of June 30, 2024, our cash and cash equivalents consisted of money market funds, bank certificate of deposits, U.S.

treasury securities and demand deposits at commercial banks.

25 unchanged sentences

We believe the risk of accounts being uncollectible is minimal;

therefore, no significant allowances for doubtful accounts were established as of March 31, 2024 and December 31, 2023.

therefore, no significant allowances for doubtful accounts were established as of June 30, 2024 and December 31, 2023.

Inventories are stated at lower of cost or net realizable value.

4 unchanged sentences

We have entered into operating leases primarily for real estate and automobiles.

These leases have contractual terms which range from 3 years to 12 years.

These leases have contractual terms which range from three years to twelve years .

We determine if an arrangement contains a lease at inception.

30 unchanged sentences

No portion of our foreign currency forward contracts were excluded from the assessment of hedge effectiveness.

As of March 31, 2024, all hedges were determined to be highly effective.

As of June 30, 2024, all hedges were determined to be highly effective.

The assets or liabilities associated with our hedging contracts are recorded at fair market value in prepaid expense and other current assets, accrued expenses, or other long-term liabilities, respectively, in our condensed consolidated balance sheets.

4 unchanged sentences

We do not use derivatives for speculative or trading purposes.

As of March 31, 2024, amounts expected to be recognized as a net gain out of AOCI into our condensed consolidated statements of income during the next 12 months are not material.

As of June 30, 2024, amounts expected to be recognized as a net gain out of AOCI into our condensed consolidated statements of income during the next 12 months are not material.

Business Combinations

175 unchanged sentences

Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no right of return.

Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, such as volume-based pricing arrangements or profit-sharing arrangements, if any.

Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, such as volume-based pricing arrangements, if any.

We recognize revenue, including the estimated variable consideration we expect to receive for contract margin on future commercial sales, upon shipment of the goods to our partner.

21 unchanged sentences

On a quarterly basis, we assess the need for valuation allowance on our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of our DTAs will be realized.

We recorded a provision for income taxes of $ 19.2 million using an effective tax rate of 20 % for the three months ended March 31, 2024.

We recorded a provision for income taxes of $ 24.5 million and $ 43.7 million using an effective tax rate of 20.5 % and 19.1 % for the three and six months ended June 30, 2024.

The difference between our effective tax rate and the U.S.

20 unchanged sentences

Available-for-sale marketable securities consisted of the following (in thousands):

March 31, 2024

June 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

3 unchanged sentences

Agency bonds 5,199 — ( 12 ) 5,187

Commercial paper 4,954 — — 4,954

Total marketable securities, available-for-sale $ 341,475 $ 1 $ ( 310 ) $ 341,166

7 unchanged sentences

Total marketable securities, available-for-sale $ 217,475 $ 201 $ ( 46 ) $ 217,630

As of March 31, 2024, 33 available-for-sale marketable securities with a fair market value of $ 215.5 million were in a gross unrealized loss position of $ 0.2 million.

Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of March 31, 2024 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.

As of June 30, 2024, 41 available-for-sale marketable securities with a fair market value of $ 315.5 million were in a gross unrealized loss position of $ 0.3 million.

Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of June 30, 2024 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.

The estimated fair value of our contractual maturities of available-for-sale debt securities were as follows (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Due within one year $ 304,661 $ 197,633

2 unchanged sentences

The following table summarizes, by major security type, our cash equivalents and available-for-sale marketable securities measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Level 1 Level 2 Total Estimated Fair Value

18 unchanged sentences

Carrying amounts of the financial assets and liabilities are equal to the fair value.

As of March 31, 2024, the derivative assets and liabilities recorded within prepaid expenses and other current assets, prepaid expense and other assets and other long-term liabilities in our condensed consolidated balance sheets were $ 1.3 million , $ 0.3 million and $ 0.5 million , respectively.

We had no available for sale securities that were classified within Level 3 as of March 31, 2024 and December 31, 2023.

As of June 30, 2024, the derivative assets and liabilities recorded within prepaid expenses and other current assets, prepaid expense and other assets and other long-term liabilities in our condensed consolidated balance sheets were $ 1.2 million , $ 0.2 million and $ 0.7 million , respectively.

We had no available for sale securities that were classified within Level 3 as of June 30, 2024 and December 31, 2023.

Our disaggregated revenues were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Royalties $ 124,918 $ 111,740 $ 245,511 $ 211,380

9 unchanged sentences

Event-based development and regulatory milestones and other fees

25,500 33,000 39,500 33,000

Device licensing and development revenue

2,049 2,409 4,752 4,118

Total revenues under collaborative agreements 27,549 35,409 44,252 37,118

Total revenues $ 231,353 $ 221,038 $ 427,232 $ 383,181

During the three months ended March 31, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 134.6 million.

During the three months ended June 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 150.4 million.

This amount represents royalties earned in the current period in addition to $ 25.5 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved.

We also recognized revenue of $ 0.1 million during the three months ended March 31, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

We also recognized revenue of $ 0.5 million during the three months ended June 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

During the six months ended June 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 285.0 million.

This amount represents royalties earned in the current period in addition to $ 39.5 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved.

We also recognized revenue of $ 0.6 million during the six months ended June 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

Accounts receivable, other contract assets and deferred revenues (contract liabilities) from contracts with customers, including partners, consisted of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accounts receivable, net $ 210,416 $ 233,254

1 unchanged sentence

Deferred revenues 4,856 4,048

As of March 31, 2024, the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 77.3 million, of which $ 72.7 million relates to unfulfilled product purchase orders and $ 4.6 million has been collected and is reported as accrued expense and other long-term liabilities in our condensed consolidated balance sheets.

As of June 30, 2024, the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 89.2 million, of which $ 84.3 million relates to unfulfilled product purchase orders and $ 4.9 million has been collected and is reported as accrued expense and other long-term liabilities in our condensed consolidated balance sheets.

The unfulfilled product purchase orders are estimated to be delivered by the end of 2025.

Of the total deferred revenues of $ 4.9 million, $ 1.3 million is expected to be used by our customers within the next 12 months.

We recognized contract assets of $ 10.6 million as of March 31, 2024, which related to development milestones deemed probable of receipt for intellectual property licenses granted to partners in prior periods and for goods or services when control has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract.

We recognized contract assets of $ 4.1 million as of June 30, 2024, which related to development milestones deemed probable of receipt for intellectual property licenses granted to partners in prior periods and for goods or services when control has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract.

Certain Balance Sheet Items

11 unchanged sentences

$ 214,524 $ 234,210

Inventories, consisted of the following (in thousands):

Inventories, net consisted of the following (in thousands):

2024 December 31,

4 unchanged sentences

190,556 127,601

Less long-term portion (1)

Total inventories, net current

$ 159,312 $ 127,601

(1) Long-term portion of inventories, net represents inventory expected to remain on hand beyond one year and therefore is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

Prepaid expenses and other assets consisted of the following (in thousands):

3 unchanged sentences

Other assets (1)

21,304 16,677

Total prepaid expenses and other assets

106,168 66,429

Long-term portion ( 17,319 ) ( 17,816 )

Less long-term portion (1)

( 21,237 ) ( 17,816 )

Total prepaid expenses and other assets, current

$ 84,931 $ 48,613

(1) Excludes long-term inventories, net discussed in the table above.

Prepaid manufacturing expenses include raw materials, slot reservation fees and other amounts paid to contract manufacturing organizations.

10 unchanged sentences

Right of use of assets 34,791 36,836

Property and equipment, net

Total property and equipment, net

$ 75,000 $ 74,944

Depreciation and amortization expense was approximately $ 2.4 million and $ 2.6 million, inclusive of ROU asset amortization of $ 1.4 million and $ 1.4 million for the three months ended March 31, 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $ 2.6 million and $ 2.8 million, inclusive of ROU asset amortization of $ 1.4 million and $ 1.4 million for the three months ended June 30, 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $ 5.0 million and $ 5.4 million, inclusive of ROU asset amortization of $ 2.9 million and $ 2.8 million for the six months ended June 30, 2024 and 2023, respectively.

Accrued expenses consisted of the following (in thousands):

11 unchanged sentences

$ 117,930 $ 100,678

Expense associated with the accretion of the lease liabilities was approximately $ 0.6 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

Total lease expense for the three months ended March 31, 2024 and 2023 was $ 2.0 million and $ 2.1 million, respectively.

Cash paid for amounts related to leases for the three months ended March 31, 2024 and 2023 was $ 1.8 million and $ 1.7 million, respectively.

Expense associated with the accretion of the lease liabilities was approximately $ 0.6 million and $ 0.6 million for the three months ended June 30, 2024 and 2023, respectively and $ 1.2 million and $ 1.3 million for the six months ended June 30, 2024 and 2023, respectively.

Total lease expense for the three months ended June 30, 2024 and 2023 was $ 2.0 million and $ 2.0 million, respectively, and $ 4.0 million and $ 4.1 million for the six months ended June 30, 2024 and 2023, respectively.

Cash paid for amounts related to leases for the three months ended June 30, 2024 and 2023 was $ 1.7 million and $ 1.7 million, respectively, and $ 3.5 million and $ 3.4 million for the six months ended June 30, 2024 and 2023, respectively.

Goodwill and Intangible Assets

1 unchanged sentence

Balance as of December 31, 2023

Balance as of March 31, 2024

Balance as of June 30, 2024

Intangible Assets

Our acquired intangible assets are amortized using the straight-line method over their estimated useful lives of seven to ten years .

The following table shows the cost, accumulated amortization and weighted average useful life in years for our acquired intangible assets as of March 31, 2024 (in thousands).

The following table shows the cost, accumulated amortization and weighted average useful life in years for our acquired intangible assets as of June 30, 2024 (in thousands).

Weighted Average Useful Life (in years)

27 unchanged sentences

and (5) at any time from, and including, February 15, 2028 until the close of business on the second scheduled trading day immediately before the maturity date.

As of March 31, 2024, the 2028 Convertible Notes were not convertible.

As of June 30, 2024, the 2028 Convertible Notes were not convertible.

Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election.

1 unchanged sentence

The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.

As of March 31, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of June 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

Capped Call Transactions

2 unchanged sentences

The cap price of the Capped Call Transactions is initially $ 75.4075 per share of common stock, representing a premium of 75 % above the last reported sale price of $ 43.09 per share of common stock on August 15, 2022, and is subject to certain adjustments under the terms of the Capped Call Transactions.

As of March 31, 2024, no capped calls had been exercised.

As of June 30, 2024, no capped calls had been exercised.

Pursuant to their terms, the capped calls qualify for classification within stockholders’ equity in our condensed consolidated balance sheets, and their fair value is not remeasured and adjusted as long as they continue to qualify for stockholders’ equity classification.

16 unchanged sentences

and (5) at any time from, and including, September 1, 2026 until the close of business on the scheduled trading day immediately before the maturity date.

As of March 31, 2024, the 2027 Convertible Notes were not convertible.

As of June 30, 2024, the 2027 Convertible Notes were not convertible.

Upon conversion, we will pay cash for the settlement of principal and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election.

1 unchanged sentence

The conversion rate is subject to adjustment.

As of March 31, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of June 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

1.25 % Convertible Notes due 2024

34 unchanged sentences

The following table summarizes the components of interest expense and the effective interest rates for each of our Convertible Notes (in thousands).

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Coupon interest

16 unchanged sentences

2028 Convertible Notes 1.5 % 1.5 % 1.5 % 1.5 %

Revolving Credit and Term Loan Facilities (May 2022)

Revolving Credit and Term Loan Facilities

In May 2022, we entered into a credit agreement, which was subsequently amended in August 2022 (the “Amendment”), with Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other lenders and L/C Issuers party thereto (the “2022 Credit Agreement), evidencing a credit facility (the “2022 Facility”) that provides for (i) a $ 575 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $ 250 million term loan facility (the “Term Facility”).

8 unchanged sentences

The commitment fees range from 0.15 % to 0.35 % per annum based on our consolidated net leverage ratio.

As of March 31, 2024, the Revolving Credit Facility was undrawn.

As of June 30, 2024, the Revolving Credit Facility was undrawn.

We incurred a total of $ 3.6 million in third-party costs related to the 2022 Credit Agreement which are recorded as debt issuance cost within prepaid expenses and other assets in our condensed consolidated balance sheets.

As of March 31, 2024, the unamortized debt issuance cost related to the revolving credit facility was $ 2.1 million.

As of June 30, 2024, the unamortized debt issuance cost related to the revolving credit facility was $ 1.9 million.

Share-based Compensation

The following table summarized share-based compensation expense included in our condensed consolidated statements of income related to share-based awards (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Research and development $ 2,568 $ 3,670 $ 5,913 $ 6,771

2 unchanged sentences

Share-based compensation expense by type of share-based award was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Stock options $ 3,894 $ 4,190 $ 8,193 $ 7,645

1 unchanged sentence

Total share-based compensation expense $ 9,471 $ 9,622 $ 19,345 $ 17,588

We granted stock options to purchase approximately 0.5 million and 1.2 million shares of common stock during the three months ended March 31, 2024 and 2023, respectively.

We granted stock options to purchase approximately 0.1 million and 0.4 million shares of common stock during the three months ended June 30, 2024 and 2023, respectively and 0.6 million and 1.6 million during the six months ended June 30, 2024 and 2023, respectively.

The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant.

6 unchanged sentences

The assumptions used in the Black-Scholes Model were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Expected volatility 40.01 - 40.07 %

40.26 - 40.72 %

40.01 - 40.08 %

39.68 - 40.72 %

Average expected term (in years) 5.4 5.0 5.0 4.8

1 unchanged sentence

3.37 - 3.70 %

3.80 - 4.70 %

3.37 - 4.27 %

Expected dividend yield — — — —

2 unchanged sentences

Share purchases are funded through payroll deduction of at least 1 % and up to 15 % of an employee’s compensation for each payroll period, and no employee may purchase shares under the ESPP that exceeds $ 25,000 worth of our common stock for a calendar year.

As of March 31, 2024, 2,604,222 shares were available for future purchase.

As of June 30, 2024, 2,579,790 shares were available for future purchase.

The offering period is generally for a six-month period and the first offering period commenced on June 16, 2021.

Offering periods shall commence on or about the sixteenth day of June and December of each year and end on or about the fifteenth day of the next December and June, respectively, occurring thereafter.

During the six months ended June 30, 2024, 24,432 shares were issued pursuant to the ESPP.

Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized was as follows (in thousands, unless otherwise noted):

March 31, 2024

June 30, 2024

Expense Remaining

6 unchanged sentences

Stockholders’ Equity

During the three months ended March 31, 2024 and 2023, we issued an aggregate of 154,556 and 143,931 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 17.47 and $ 16.87 per share, respectively, for net proceeds of approximately $ 2.7 million and $ 2.4 million, respectively.

For the three months ended March 31, 2024 and 2023, we issued 262,195 and 239,919 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 and 70,733 RSUs and PSUs, respectively, to pay for minimum withholding taxes totaling approximately $ 6.0 million and $ 6.5 million, respectively.

Stock options and unvested restricted units totaling approximately 8.7 million and 7.8 million shares of our common stock were outstanding as of March 31, 2024 and December 31, 2023, respectively.

During the six months ended June 30, 2024 and 2023, we issued an aggregate of 475,828 and 240,223 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 23.90 and $ 17.66 per share, respectively, for net proceeds of approximately $ 11.4 million and $ 4.2 million, respectively.

For the six months ended June 30, 2024 and 2023, we issued 331,693 and 318,181 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 and 70,733 RSUs and PSUs, respectively, to pay for minimum withholding taxes totaling approximately $ 6.5 million and $ 7.0 million, respectively.

Stock options and unvested restricted units totaling approximately 8.0 million and 7.8 million shares of our common stock were outstanding as of June 30, 2024 and December 31, 2023, respectively.

Share Repurchases

In December 2021, the Board of Directors authorized a second capital return program to repurchase up to $ 750.0 million of outstanding stock over a three-year period.

During 2021, we repurchased 3.9 million shares of common stock for $ 150.0 million at an average price of $ 38.51 .

During 2022, we repurchased 4.5 million shares of common stock for $ 200.0 million at an average price of $ 44.44 .

We accelerated the initiation of our planned 2024 share repurchases and in November 2023, we entered into an Accelerated Share Repurchase (“ASR”) agreement with Bank of America, N.A.

to accelerate the remaining $ 250.0 million of share repurchases under the approved capital return program.

to accelerate the remaining $ 250.0 million of share repurchases remaining under the approved capital return program.

Pursuant to the agreement, at the inception of the ASR, we paid $ 250.0 million to Bank of America, N.A.

and took initial delivery of 5.5 million shares.

In June 2024, we finalized the transaction at an average price per share of $ 38.35 and received an additional 1.1 million shares.

Our December 2021 share repurchase program was completed in June 2024 with a total of 19.1 million shares repurchased over the three-year period at an average price per share of $ 39.31 .

All shares repurchased under our capital return programs have been retired and have resumed their status of authorized and unissued shares

We continued to execute share repurchases during the three months ended March 31, 2024 under our ASR agreement with Bank of America, N.A.

As of March 31, 2024, excluding the shares we received under the ASR, we have repurchased a total of 12.6 million shares for $ 500.0 million at an average price per share of $ 39.81 under our $ 750 million 3-year share repurchase plan.

In February 2024, our Board of Directors authorized a new capital return program to repurchase up to $ 750.0 million of our outstanding common stock.

6 unchanged sentences

A reconciliation of the numerators and the denominators of the basic and diluted earnings per share computations is as follows (in thousands, except per share amounts):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 93,245 $ 74,754 $ 170,068 $ 114,369

9 unchanged sentences

Shares which have been excluded from the calculation of diluted earnings per common share because their effect was anti-dilutive include the following (shares in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Anti-dilutive securities (1)

26.7 27.7 26.8 27.4

(1) The anti-dilutive securities include outstanding stock options, unvested RSUs, unvested PSUs, common shares expected to be issued under our ESPP and Convertible Notes .

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements