What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-06 · 103 added, 97 removed, 368 unchanged (35% of the section changed)

36 unchanged sentences

We currently earn royalties from the 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.

We have commercialized auto-injector products with Teva Pharmaceutical Industries, Ltd.

(“Teva”) and Otter Pharmaceuticals, LLC (“Otter”).

1 unchanged sentence

Our commercial portfolio of proprietary products includes Hylenex ® , utilizing rHuPH20, and our specialty product XYOSTED ® , utilizing our auto-injector technology.

Our second quarter of 2024 and recent key events are as follows:

• In July, 2024, Janssen announced that the U.S.

Food and Drug Administration (“FDA”) approved DARZALEX FASPRO for an additional indication in newly diagnosed multiple myeloma patients who are eligible for autologous stem cell transplant in combination with bortezomib, lenalidomide, and dexamethasone.

• In July 2024, argenx announced the National Medical Products Administration (“NMPA”) approved the Biologics License Application (“BLA”) of efgartigimod SC for generalized myasthenia gravis (“gMG”) in China.

• In July 2024, Acumen initiated a Phase 1 study of sabirnetug (“ACU193”) co-formulated with ENHANZE for the treatment of early Alzheimer’s disease, resulting in a $3.0 million milestone payment recognized in June 2024 when it was concluded the development milestone was expected to be achieved.

• In June 2024, argenx announced the FDA approved VYVGART Hytrulo with ENHANZE for the treatment of chronic inflammatory demyelinating polyneuropathy (“CIDP”), and completed the regulatory submissions of VYVGART SC for CIDP in Japan, Europe, and China during the second quarter of 2024.

Submission to Canadian Health Authorities for regulatory approval is expected in 2024.

• In June 2024, Roche announced the European Commission (“EC”) granted marketing authorization in the EU for Ocrevus (ocrelizumab) SC for the treatment of relapsing multiple sclerosis (“RMS”) and primary progressive multiple sclerosis (“PPMS”), and in July 2024, Roche announced the approval in the same indications by the Medicines and Healthcare products Regulatory Agency (“MHRA”) in Great Britain marking our eight approved partner product with ENHANZE.

• In June 2024, Takeda announced that Health Canada approved HyQvia as a replacement therapy for primary humoral immunodeficiency and a secondary humoral immunodeficiency in pediatric patients two years of age and older.

• In May 2024, BMS announced the FDA accepted its BLA for the SC formulation of Opdivo (nivolumab) co-formulated with ENHANZE, resulting in a $15.0 million milestone payment.

The FDA assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of February 28, 2025, and subsequently assigned an updated PDUFA goal date of December 29, 2024.

In June 2024, BMS announced the European Medicines Agency (“EMA”) validated its Extension Application for the SC formulation of Opdivo (nivolumab) co-formulated with ENHANZE, resulting in a $7.0 million milestone payment.

• In May 2024, Janssen announced the submission of a marketing authorization application to the EMA for the SC formulation of RYBREVANT (amivantamab) with ENHANZE for the treatment of patients with epidermal growth factor receptor (“EGFR”) mutated non-small cell lung cancer (“NSCLC”), and in June 2024, Janssen announced the submission of a BLA to the FDA for amivantamab SC co-formulated with ENHANZE also for EGFR-mutated NSCLC.

• In April 2024, Roche announced the FDA accepted its BLA submission of orcelizumab SC with a PDUFA goal date of September 13, 2024.

• In April 2024, Roche’s MabThera SC was approved by China’s NMPA to treat diffuse large B-cell lymphoma (“DLBCL”).

• In June 2024, we announced the issuance of a new European Patent covering the ENHANZE rHuPH20 product obtained from our ENHANZE manufacturing methods that we provide to our licensees.

The newly granted patent maintains the original royalty rate on sales of DARZALEX SC in 37 European countries until expiration of the patent in March 2029.

• In June 2024, we completed the $250 million ASR that was initiated in November of 2023, resulting in a total repurchase of 6.5 million shares at a price of $38.35 per share which concluded our December 2021 share repurchase program resulting in a total of 19.1 million shares repurchased over the three-year period at an average price per share of $39.31.

Our third quarter of 2024 and recent key events are as follows:

• In October 2024, argenx initiated two studies evaluating VYVGART Hytrulo with ENHANZE, a Phase 3 study for adult patients with ocular myasthenia gravis (“oMG”) and a Phase 2 study for kidney transplant recipients with antibody mediated rejection (“AMR”).

• In October 2024, Janssen announced the European Commission (“EC”) approved DARZALEX SC for the treatment of patients newly diagnosed with multiple myeloma (“NDMM”) who are eligible for autologous stem cell transplant (“ASCT”) in combination with bortezomib, lenalidomide, and dexamethasone (“D-VRd”).

• In September 2024, argenx expanded its global collaboration and license agreement nominating four additional targets that provides them exclusive access to our ENHANZE drug delivery technology for a total of six targets.

Under the terms of the expanded exclusive agreement, we received upfront payments of $7.5 million per target nomination for a total of $30.0 million.

argenx is obligated to make future milestone payments of up to $85.0 million per new nominated target, subject to achievements of specified development, regulatory and sales-based milestones.

We are also entitled to receive royalties on net sales of commercialized products with our ENHANZE technology.

• In September 2024, ViiV expanded its global collaboration and license agreement providing ViiV the ability to exclusively access our ENHANZE drug delivery technology for one additional undisclosed target.

• In September 2024, Roche announced the U.S.

Food and Drug Administration (“FDA”) approved OCREVUS ZUNOVO with ENHANZE as a twice a year ten-minute SC injection for the treatment of relapsing multiple sclerosis (“RMS”) and primary progressive multiple sclerosis (“PPMS”).

• In September 2024, Roche announced the FDA approved TECENTRIQ HYBREZA with ENHANZE for all approved adult indications of IV TECENTRIQ and was made available to patients, resulting in a $12.0 million milestone payment.

• In September 2024, Janssen announced the submission of a supplemental Biologic License Application (“sBLA”) to the FDA for approval of a new indication of DARZALEX FASPRO in combination with D-VRd for the treatment of adult patients with NDMM for whom ASCT is deferred or who are ineligible for ASCT.

• In August 2024, the FDA designated Janssen’s Biologics License Application (“BLA”) priority review status for amivantamab SC in combination with LAZCLUZE for currently approved or submitted indication of IV in certain patients with NSCLC.

• In August 2024, Takeda submitted a New Drug Application (“NDA”) in Japan seeking approval for TAK-771 with ENHANZE for treatment of chronic inflammatory demyelinating polyneuropathy (“CIDP”)/Multifocal Motor Neuropathy (“MMN”).

• In July 2024, Janssen announced the FDA approved DARZALEX FASPRO for an additional indication in NDMM patients who are eligible for ASCT in combination with D-VRd.

• In July 2024, argenx announced the National Medical Products Administration (“NMPA”) approved the BLA of efgartigimod SC for generalized myasthenia gravis (“gMG”) in China.

• In July 2024, Acumen initiated a Phase 1 study of sabirnetug (“ACU193”) co-formulated with ENHANZE for the treatment of early Alzheimer’s disease.

Product and Product Candidates

30 unchanged sentences

In June 2014, Roche launched MabThera ® SC in Europe for the treatment of patients with common forms of non-Hodgkin lymphoma (“NHL”), followed by launches in additional countries.

This formulation utilizes our ENHANZE technology and is administered in approximately five minutes compared to the approximate 1.5 to 4 hour IV infusion.

This formulation utilizes our ENHANZE technology and is administered in approximately five minutes compared to the approximate one and a half to four hour IV infusion.

In May 2016, Roche announced that the EMA approved MabThera SC to treat patients with chronic lymphocytic leukemia (“CLL”).

In June 2017, the FDA-approved Genentech’s RITUXAN HYCELA ® , a combination of rituximab using ENHANZE technology (approved and marketed under the MabThera SC brand in countries outside the U.S.

and Canada), for CLL and two types of NHL, follicular lymphoma and diffuse large B-cell lymphoma.

In March 2018, Health Canada approved a combination of rituximab

and ENHANZE (approved and marketed under the brand name RITUXAN ® SC) for patients with CLL.

and Canada), for CLL and two types of NHL, follicular lymphoma and diffuse large B-cell lymphoma (“DLBCL”).

In March 2018, Health Canada approved a combination of rituximab and ENHANZE (approved and marketed under the brand name RITUXAN ® SC) for patients with CLL.

In April 2024, Roche’s MabThera SC was approved by the China NMPA to treat DLBCL.

2 unchanged sentences

In addition, Roche will pay royalties to us if products under the collaboration are commercialized.

In August 2023, Roche announced the approval of Tecentriq SC with ENHANZE by the MHRA in Great Britain.

In January 2024, Roche received EC marketing authorization for Tecentriq SC for all approved indications of Tecentriq IV.

Based on the PDUFA date, Tecentriq SC approval in the U.S.

is expected on September 15, 2024.

Tecentriq SC enables SC delivery in approximately seven minutes, compared with 30-60 minutes for IV infusion.

In August 2019, Roche initiated a Phase 1 study evaluating ocrelizumab SC with ENHANZE technology in subjects with MS, followed by initiation of a Phase 3 study in April 2022.

In July 2023, Roche announced that the Phase 3 OCARINA 2 trial evaluating ocrelizumab SC with ENHANZE as a twice a year 10-minute SC injection met its primary and secondary endpoints in patients with relapsing forms of MS or primary progressive MS (“RMS” or “PPMS”).

In April 2024, Roche announced the FDA accepted the BLA submission of ocrelizumab SC with ENHANZE with a PDUFA goal date of September 13, 2024.

In June 2024, Roche announced the EC granted marketing authorization in the EU for ocrelizumab SC.

In July 2024, Roche announced the MHRA approved ocrelizumab SC in Great Britain.

In August 2023, Roche announced the approval of TECENTRIQ SC with ENHANZE by the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the United Kingdom.

In January 2024, Roche received EC marketing authorization for TECENTRIQ SC.

In September 2024, Roche announced the FDA approved TECENTRIQ HYBREZA with ENHANZE.

TECENTRIQ SC enables SC delivery in approximately seven minutes, compared with 30-60 minutes for IV infusion, and is approved for all adult indications of TECENTRIQ IV.

In June 2024, Roche announced the EC granted marketing authorization in the European Union (“EU”) for OCREVUS SC as a twice a year ten-minute SC injection for patients with relapsing forms of multiple sclerosis (“MS”) or RMS or PMS.

In July 2024, Roche announced the MHRA approved OCREVUS SC in the United Kingdom.

In September 2024, Roche announced the FDA approved OCREVUS ZUNOVO with ENHANZE.

In October 2019, Roche nominated a new undisclosed exclusive target to be studied using ENHANZE technology.

15 unchanged sentences

In January 2024, Takeda received FDA and EC approval for HYQVIA for the treatment of CIDP.

In April 2023, Takeda announced the FDA approved the Supplemental Biologics License Application (“sBLA”) to expand the use of HYQVIA to treat primary immunodeficiency in children.

In February 2024, Takeda submitted a New Drug Application (“NDA”) in Japan seeking approval for TAK-771, subcutaneous 10% human immunoglobulin with ENHANZE, for treatment of primary immunodeficiency.

In April 2023, Takeda announced the FDA approved the sBLA to expand the use of HYQVIA to treat primary immunodeficiency in children.

In February 2024, Takeda submitted a NDA in Japan seeking approval for TAK-771, subcutaneous 10% human immunoglobulin with ENHANZE, for treatment of primary immunodeficiency.

In June 2024, Takeda announced Health Canada approved HYQVIA as replacement therapy for primary humoral immunodeficiency and secondary humoral immunodeficiency in pediatric patients two years of age and older.

In August 2024, Takeda submitted a NDA in Japan seeking approval for TAK-771 with ENHANZE for treatment of CIDP/MMN.

Pfizer Collaboration

9 unchanged sentences

Subsequent to these approvals, Janssen received several additional regulatory approvals for additional indications and patient populations in the U.S., EU, Japan and China.

Beginning with the U.S., Janssen has marketing authorization for DARZALEX FASPRO in combination with bortezomib, thalidomide, and dexamethasone in newly diagnosed multiple myeloma patients who are eligible for autologous stem cell transplant, in combination with bortezomib, cyclophosphamide and dexamethasone (“D-VCd”) for the treatment of adult patients with newly diagnosed AL amyloidosis, in combination with pomalidomide and dexamethasone (“D-Pd”) for patients with multiple myeloma after first or subsequent relapse, and in combination with Kyprolis ® (carfilzomib) and dexamethasone for patients with relapsed or refractory multiple myeloma who have received one to three prior lines of therapy.

Beginning with the U.S., Janssen has marketing authorization for DARZALEX FASPRO in combination with bortezomib, thalidomide, and dexamethasone in NDMM patients who are eligible for autologous stem cell transplant, in combination with bortezomib, cyclophosphamide and dexamethasone (“D-VCd”) for the treatment of adult patients with newly diagnosed AL amyloidosis, in combination with pomalidomide and dexamethasone (“D-Pd”) for patients with multiple myeloma after first or subsequent relapse, and in combination with Kyprolis ® (carfilzomib) and dexamethasone for patients with relapsed or refractory multiple myeloma who have received one to three prior lines of therapy.

In the EU, Janssen has marketing authorization for DARZALEX SC in combination with D-VCd in newly diagnosed adult patients with AL amyloidosis and in combination with D-Pd in adult patients with relapsed or refractory multiple myeloma.

1 unchanged sentence

In China, Janssen has marketing authorization for DARZALEX SC for the treatment of primary light chain amyloidosis, in combination with D-VCd in newly diagnosed patients.

In July 2024, Janssen announced the FDA approved DARZALEX FASPRO in combination with bortezomib, lenalidomide and dexamethasone (“D-VRd”) for induction and consolidation treatment and with lenalidomide (“D-R”) for maintenance treatment of adult patients who are newly diagnosed with multiple myeloma (“NDMM”) and are eligible for autologous stem cell transplant (“ASCT”).

In December 2019, Janssen elected EGFR and mesenchymal-epithelial transition factor (“cMET”) as a bispecific antibody (amivantamab) target on an exclusive basis, which is being studied in solid tumors.

In July 2024, Janssen announced the FDA approved DARZALEX FASPRO in combination with D-VRd for induction and consolidation treatment and with lenalidomide (“D-R”) for maintenance treatment of adult patients who are NDMM and are eligible for autologous stem cell transplant (“ASCT”) with approval also received by the EC in October 2024.

In September 2024, Janssen announced the submission of a sBLA to the FDA for approval of a new indication of DARZALEX FASPRO in combination with D-VRd for the treatment of adult patients with NDMM for whom ASCT is deferred or who are ineligible for ASCT.

In December 2019, Janssen elected epidermal growth factor receptor (“EGFR”) and mesenchymal-epithelial transition factor (“cMET”) as a bispecific antibody (amivantamab) target on an exclusive basis, which is being studied in solid tumors.

In September 2022, following a Phase 1 study, Janssen initiated a Phase 3 study of lazertinib and amivantamab with ENHANZE in patients with EGFR-mutated advanced or metastatic non-small cell lung cancer (PALOMA-3).

In November 2022, Janssen initiated a Phase 2 study of amivantamab with ENHANZE in multiple regimens in patients with advanced or metastatic solid tumors including EGFR-mutated non-small cell lung cancer (PALOMA-2).

In May 2024, Janssen announced positive data from the Phase 3 PALOMA-3 study which supported the submission of a marketing authorization application to the EMA for SC formulation of RYBREVANT (amivantamab) with ENHANZE for the treatment of patients with EGFR-mutated NSCLC.

In June 2024, Janssen announced the submission of a BLA to the FDA for amivantamab SC co-formulated with ENHANZE also for patients with EGFR-mutated NSCLC.

1 unchanged sentence

SC amivantamab also demonstrated longer overall survival, progression-free survival and duration of response.

In August 2024, the FDA designated Janssen’s BLA priority review status for amivantamab SC in combination with LAZCLUZE for currently approved or submitted indication of IV in certain patients with NSCLC.

AbbVie Collaboration

5 unchanged sentences

Targets may be selected on an exclusive basis.

Lilly has elected two targets on an exclusive basis and one target on a semi-exclusive basis.

BMS Collaboration

1 unchanged sentence

Targets may be selected on an exclusive basis or non-exclusive basis.

BMS has designated multiple immuno-oncology targets including programmed death 1 (“PD-1”) and has an option to select three additional targets by November 2024.

BMS has designated multiple immuno-oncology targets including programmed death 1 (“PD-1”) and has an option to select three additional targets by September 2026.

In October 2019, BMS initiated a Phase 1 study of relatlimab, an anti-LAG-3 antibody, in combination with nivolumab using ENHANZE technology.

8 unchanged sentences

In February 2019, we and argenx entered into an agreement for the right to develop and commercialize one exclusive target, the human neonatal Fc receptor FcRn, which includes argenx’s lead asset efgartigimod (ARGX-113), and an option to select two additional targets using ENHANZE technology.

In May 2019, argenx nominated a second target to be studied using ENHANZE technology, a human complement factor C2 associated with the product candidate ARGX-117, which is being developed to treat severe autoimmune diseases in Multifocal Motor Neuropathy (“MMN”).

In October 2020, we and argenx entered into an agreement to expand the collaboration relationship, adding three targets for a total of up to six targets under the collaboration.

In September 2024, argenx nominated four additional targets under its global collaboration and license agreement that provides them with exclusive access to our ENHANZE drug delivery technology for these targets, for a total of six targets.

In June 2023, argenx received FDA approval under the brand name VYVGART ® Hytrulo for the injection with ENHANZE for SC use of treatment of gMG in adult patients who are anti-acetylcholine receptor (“AChR”) antibody positive.

6 unchanged sentences

Submission to Canadian Health Authorities for regulatory approval is expected in 2024.

In September 2023, Zai Lab limited (argenx commercial partner for China) announced the CDE of the NMPA granted Breakthrough Therapy Designation for efgartigimod SC for the treatment of patients with CIDP.

In September 2023, Zai Lab limited (argenx commercial partner for China) announced the Center for Drug Evaluation (“CDE”) of the NMPA granted Breakthrough Therapy Designation for efgartigimod SC for the treatment of patients with CIDP.

argenx is currently conducting the following studies with the goal of expanding approved indications for efgartigimod with ENHANZE:

Phase 2/3 (ALKIVIA) study in active idiopathic inflammatory myopathy (Myositis) and two registrational studies in thyroid eye disease (“TED”).

Phase 2/3 (ALKIVIA) study in active idiopathic inflammatory myopathy (Myositis), two registrational studies in thyroid eye disease (“TED”), Phase 2 (Shamrock) study for kidney transplant recipients with AMR and Phase 3 (ADAPT oculus) study for adult patients with oMG.

Evaluation is ongoing to determine the path forward in BALLAD study evaluating efgartigimod in bullous pemphigoid (“BP”) with an update expected in 2024.

2 unchanged sentences

These targets are integrase inhibitors, reverse transcriptase inhibitors limited to nucleoside reverse transcriptase inhibitors (“NRTI”) and nucleoside reverse transcriptase translocation inhibitors (“NRTTIs”), capsid inhibitors and broadly neutralising monoclonal antibodies (“bNAbs”), that bind to the gp120 CD4 binding site.

In December 2021, ViiV initiated enrollment of a Phase 1 study to evaluate cabotegravir administered subcutaneously with ENHANZE.

In March 2024, ViiV presented the results of the Phase 1 study of cabotegravir and communicated their decision to no longer pursue cabotegravir 200mg/ml SC plus rHuPH20 for long term dosing.

In February 2022, ViiV initiated enrollment of a Phase 1 study to evaluate the safety and PKs of N6LS, a broadly neutralizing antibody, administered subcutaneously with ENHANZE technology.

3 unchanged sentences

In March 2024, ViiV initiated a Phase 1 study of VH4524184 with ENHANZE to evaluate the safety, tolerability, and pharmacokinetics in healthy adults.

In September 2024, we and ViiV expanded the existing global collaboration and license agreement, providing ViiV exclusive access to our ENHANZE drug delivery technology for one additional undisclosed target.

Chugai Collaboration

31 unchanged sentences

Results of Operations

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Royalties – Royalties were as follows (in thousands):

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Royalties $ 155,061 $ 114,433 $ 40,628 36 %

The increase in royalties was primarily driven by continued sales uptake of Phesgo by Roche in all geographies and the recent launches of VYVGART Hytrulo by argenx and Teriparatide by Teva in the U.S.

We expect royalty revenue to grow as a result of anticipated increasing partner product sales of DARZALEX SC and Phesgo and sales of recently launched ENHANZE partner products, VYVGART Hytrulo, Tecentriq SC and Ocrevus SC.

An EU patent covering the rHuPH20 product issued in June 2024, resulted in a return of DARZALEX SC royalties to the original royalty rate through March 6, 2029, following a step down in the royalty rate from March 2024 through June 2024.

The increase in royalties was primarily driven by continued sales uptake of DARZALEX SC by Janssen and Phesgo by Roche in all geographies, and the prior year launch of VYVGART Hytrulo by argenx.

We expect royalty revenue to further grow as a result of anticipated increasing partner product sales of DARZALEX SC and Phesgo, and sales of recently launched ENHANZE partner products, VYVGART Hytrulo, TECENTRIQ SC and OCREVUS SC.

We expect modest price erosion to continue on earlier launched ENHANZE partner products, Herceptin and MabThera.

1 unchanged sentence

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

6 unchanged sentences

Total product sales, net $ 86,659 $ 86,569 $ 90 — %

The increase in product sales, net was primarily due to contributions from our proprietary products, partially offset by lower sales of device partner products and bulk rHuPH20 driven by the timing of partner demand.

Product sales, net were flat primarily due to contributions from our proprietary products, offset by lower sales of device partner products and bulk rHuPH20 driven by the timing of partner demand.

We expect sales of our proprietary products will continue to grow in future years as we continue to gain market share in the TRT market.

2 unchanged sentences

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Upfront license fees, license fees for the election of additional targets, event-based payments, license maintenance fees and amortization of deferred upfront and other license fees:

Upfront license and target nomination fees $ 27,000 $ — $ 27,000 100 %

Event-based development milestones and regulatory milestones and other fees 18,000 13,000 5,000 38 %

1 unchanged sentence

Total revenues under collaborative agreements $ 48,364 $ 15,031 $ 33,333 222 %

The decrease in revenues under collaborative agreements was primarily due to the timing of milestones achieved.

The increase in revenues under collaborative agreements was primarily due to the timing of milestones achieved.

Revenue from upfront licenses fees, license fees for the election of additional targets, license maintenance fees and other license fees and event-based payments vary from period to period based on our ENHANZE collaboration activity.

2 unchanged sentences

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

4 unchanged sentences

Cost of Sales – Cost of sales consists primarily of raw materials, third-party manufacturing costs, fill and finish costs, freight costs, internal costs and manufacturing overhead associated with the production of our proprietary products, device partnered products and bulk rHuPH20.

The decrease in cost of sales was primarily due to lower device and bulk rHuPH20 sales, partially offset by higher proprietary product sales.

The decrease in cost of sales was primarily due to lower device and bulk rHuPH20 sales.

Amortization of intangibles – Amortization of intangibles consists primarily of expense associated with the amortization of acquired device technologies and product rights.

Amortization of intangibles expense remained flat year over year.

The decrease in amortization of intangibles expense was primarily due to an impairment charge of $2.5 million recognized in the prior year to fully impair the TLANDO product rights intangible asset.

Research and Development – Research and development expenses consist of external costs, salaries and benefits and allocation of facilities and other overhead expenses related to research manufacturing, preclinical and regulatory activities related to our collaborations, and our development platforms.

The increase in research and development expense was primarily due to planned investments in ENHANZE related to the development of our new high yield rHuPH20 manufacturing processes.

The modest increase in research and development expense was primarily due to increased compensation expense.

Selling, General and Administrative – Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and related costs for personnel in executive, selling and administrative functions as well as professional fees for legal and accounting, business development, commercial operations support for proprietary products and alliance management and marketing support for our collaborations.

The decrease in SG&A expense was primarily due to planned reductions in commercial marketing expense.

The increase in SG&A expense was primarily due to increased compensation expense and consulting and professional service fees.

Investment and other income , net – investment and other income, net was as follows (in thousands):

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

1 unchanged sentence

Investment and other income, net consists primarily of interest income on our cash, cash-equivalent and marketable securities.

The increase in investment and other income, net was primarily due to higher market interest rates as well as an increase in the average invested balance.

The increase in investment and other income, net was primarily due to an increase in the average invested balance.

Interest Expense – Interest expense was as follows (in thousands):

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

1 unchanged sentence

Interest expense consists primarily of costs related to our convertible notes and revolving credit facility.

Interest expense remained flat year over year.

Income Taxes – Income taxes were as follows (in thousands):

Interest expense was flat year over year.

Income Tax Expense – Income tax expense was as follows (in thousands):

Three Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Income tax expense $ 28,136 $ 19,923 $ 8,213 41 %

The increase in income tax expense was primarily due to higher income before taxes recognized during the current quarter.

The increase in income tax expense was primarily due to higher income before income tax expense, partially offset by an increase in tax benefits mainly related to a share-based compensation windfall and a Foreign Derived Intangible Income (“FDII”) deduction recognized in the current period.

Our annual effective tax rate is estimated to be approximately 19% for 2024, which differs from the U.S.

federal statutory rate due to state income taxes, nondeductible executive compensation, research and development credit generation and the reduced rate on foreign export sales.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

federal statutory rate primarily due to a decrease from a share-based compensation windfall tax benefit, FDII deduction, and research and development credit generation, partially offset by state income tax and Section 162(m) disallowance.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Royalties – Royalties were as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Royalties $ 400,572 $ 325,813 $ 74,759 23 %

The increase in royalties was primarily driven by continued sales uptake of DARZALEX SC by Janssen and Phesgo by Roche in all geographies, and the recent launches of Vyvgart Hytrulo by argenx and Teriparatide by Teva in the U.S.

The increase in royalties was primarily driven by continued sales uptake of DARZALEX SC by Janssen and Phesgo by Roche in all geographies, and the prior year launch of Vyvgart Hytrulo by argenx.

Product Sales, Net – Product sales, net were as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

5 unchanged sentences

Revenues Under Collaborative Agreements – Revenues under collaborative agreements were as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Upfront license fees, license fees for the election of additional targets, event-based payments, license maintenance fees and amortization of deferred upfront and other license fees:

Upfront license and target nomination fees $ 27,000 $ — $ 27,000 100 %

Event-based development milestones and regulatory milestones and other fees 57,500 46,000 11,500 25 %

3 unchanged sentences

Operating expenses - Operating expenses were as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

3 unchanged sentences

Selling, general and administrative 112,086 111,574 512 — %

The decrease in cost of sales was primarily due to lower bulk rHuPH20 and device sales, partially offset by higher proprietary product sales.

Amortization of intangibles – Amortization of intangibles consists primarily of expense associated with the amortization of acquired device technologies and product rights.

Amortization of intangibles expense remained relatively flat year over year.

The increase in research and development expense was primarily due to planned investments in ENHANZE related to the development of our new high-yield rHuPH20 manufacturing processes.

The decrease in SG&A expense was primarily due to planned reductions in commercial marketing expense, partially offset by increased compensation expense.

Cost of Sales – The decrease in cost of sales was primarily due to lower bulk rHuPH20 and device sales, partially offset by higher proprietary product sales.

Amortization of intangibles – The decrease in amortization of intangibles expense was primarily due to an impairment charge of $2.5 million recognized in the prior year to fully impair the TLANDO product rights intangible asset.

Research and Development – The increase in research and development expense was primarily due to planned investments in ENHANZE related to the development of our new high-yield rHuPH20 manufacturing processes.

Selling, General and Administrative – The increase in SG&A expense was primarily due to increased compensation expense and consulting and professional service fees, partially offset by planned reductions in commercial marketing expense.

Investment and other income , net - Investment and other income, net was as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Investment and other income, net $ 16,499 $ 10,957 $ 5,542 51 %

Investment and other income, net consists primarily of interest income on our cash, cash-equivalent and marketable securities.

The increase in investment and other income, net was primarily due to an increase in market interest rates as well as an increase in the average invested balance.

The increase in investment and other income, net was primarily due to an increase in the average invested balance.

Interest Expense – Interest expense was as follows (in thousands):

Six Months Ended Increase / (Decrease)

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Interest expense $ 13,555 $ 13,542 $ 13 — %

Interest expense consists primarily of costs related to our convertible notes and revolving credit facility.

Interest expense remained flat year over year.

Income Taxes – Income taxes were as follows (in thousands):

Six Months Ended Increase / (Decrease)

Interest expense was flat year over year.

Income Tax Expense – Income tax expense was as follows (in thousands):

Nine Months Ended Increase / (Decrease)

September 30,

2024 2023 Dollar

Income tax expense $ 71,839 $ 50,948 $ 20,891 41 %

The increase in income tax expense was primarily due to higher income before taxes recognized during the current quarter.

The increase in income tax expense was primarily due to higher income before income tax expense, partially offset by an increase in tax benefits mainly related to with a share-based compensation windfall and a FDII deduction recognized during the current period.

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash, cash equivalents and available-for-sale marketable securities.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $529.0 million.

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $666.3 million.

We believe that our current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months.

8 unchanged sentences

We may, in the future, draw on our existing line of credit or offer and sell additional equity, debt securities and warrants to purchase any of such securities, either individually or in units to raise capital for additional working capital, capital expenditures, share repurchases, acquisitions or for other general corporate purposes.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

2024 2023 Change

2 unchanged sentences

Net cash provided by (used in) financing activities 27,554 (158,067) 185,621

Net increase (decrease) in cash, cash equivalents and restricted cash $ 69,494 $ (13,530) $ 83,024

Net increase in cash, cash equivalents and restricted cash $ 35,948 $ 39,532 $ (3,584)

Operating Activities

1 unchanged sentence

Investing Activities

The increase in net cash used in investing activities was primarily due an increase in net purchases of marketable securities, partially offset by a decrease in capital spend for property and equipment.

The increase in net cash used in investing activities was primarily due to an increase in net purchases of marketable securities, partially offset by a decrease in capital spend for property and equipment.

Financing Activities

The decrease in net cash used in financing activities was primarily due to the repurchase of $150.1 million in common stock in the prior year and $13.5 million in cash paid on the conversion of our 2024 Convertible Notes in the prior year, partially offset by the increase in net proceeds during the current year from the issuance of common stock under our equity incentive plan.

The decrease in net cash used in financing activities was primarily due to the repurchase of $150.1 million in common stock in the prior year and $13.5 million in cash paid on the conversion of our 2024 Convertible Notes in the prior year, partially offset by an increase in net proceeds from the issuance of common stock under our equity incentive plan.

Share Repurchases

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

As of September 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.

5 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 June 30, 2024, no capped calls had been exercised.

As of September 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.

8 unchanged sentences

The 2027 Convertible Notes pay interest semi-annually in arrears on March 1st and September 1st of each year at an annual rate of 0.25%.

The 2027 Convertible Notes are general unsecured obligations and rank senior in right of payment to all

indebtedness that is expressly subordinated in right of payment to the 2027 Convertible Notes, will rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries.

The 2027 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of payment to the 2027 Convertible Notes, will rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries.

The 2027 Convertible Notes have a maturity date of March 1, 2027.

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

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

24 unchanged sentences

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

As of June 30, 2024, the revolving credit facility was undrawn.

As of September 30, 2024, the revolving credit facility was undrawn.

Additional Capital Requirements

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of June 30, 2024, there have been no material changes to our expected working capital and other capital requirements described in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of September 30, 2024, there have been no material changes to our expected working capital and other capital requirements described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Policies and Estimates

3 unchanged sentences

The accounting policies and estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023.

There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2024.

There were no material changes to our critical accounting policies or estimates during the nine months ended September 30, 2024.

Recent Accounting Pronouncements

1 unchanged sentence

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 2. Management’s Discussion and Analysis