What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-31 compared with 2023-08-01 · 92 added, 65 removed, 742 unchanged (17% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations as of and for the three and six months ended June 30, 2023 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 previously filed with the SEC.

The following discussion of our financial condition and results of operations as of and for the three and nine months ended September 30, 2023 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 previously filed with the SEC.

Forward-Looking Statements

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Medical Affairs department is responsible for providing appropriate scientific and medical education and information to physicians, preparing scientific presentations and publications, and overseeing the process for supporting investigator sponsored trials.

In September 2023, we were notified by the Centers for Medicare and Medicaid Services (CMS) that ruxolitinib phosphate qualified for the Small Biotech Exception for initial price applicability year 2026.

Myelofibrosis.

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Clinical Programs in Hematology and Oncology

In early 2023, as part of our efforts to continuously optimize our R&D portfolio, we prioritized several programs in dermatology and oncology that we determined to have high potential value.

As part of this process, we also de-prioritized and discontinued certain programs, including parsaclisib in myelofibrosis and warm hemolytic anemia, as well as certain early stage programs.

As part of our ongoing LIMBER (Leadership In MPNs BEyond Ruxolitinib) clinical development initiative, which is designed to improve and expand therapeutic options for patients with myeloproliferative neoplasms, we are evaluating combinations of ruxolitinib with other therapeutic modalities, as well as developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and combination therapy.

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In April 2023, we announced that the European Commission approved OPZELURA for the topical treatment of nonsegmental vitiligo with facial involvement in adults and adolescents 12 years and older following a positive opinion from the Committee for Medicinal Products for Human Use (CHMP).

In October 2023, new results of a pooled analysis of long-term extension (LTE) data from the pivotal Phase 3 TRuE-V program assessing Opzelura cream 1.5% in patients 12 years of age and older with nonsegmental vitiligo who previously experienced limited or no response to treatment at Week 24 were presented at the European Academy of Dermatology and Venereology (EADV) Congress 2023 as a late-breaking oral presentation.

These results showed patients who initially experienced limited or no facial or total body repigmentation at six months achieved improved repigmentation after continued treatment with Opzelura for up to two years.

Clinical Programs in Dermatology

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The study showed significantly more patients treated with ruxolitinib cream 0.75% and 1.5% achieved Investigator's Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control.

In October 2023, the expanded results from the pivotal Phase 3 TRuE-AD3 were presented at EADV.

Significantly more patients treated with ruxolitinib cream (0.75% and 1.5%) achieved Investigator’s Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control (non-medicated cream).

We are also developing povorcitinib (formerly INCB54707), which is an oral small molecule selective JAK1 inhibitor.

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In July 2023, we initiated two Phase II trials evaluating povorcitinib in patients with moderate to severe uncontrolled asthma and in chronic spontaneous urticaria.

In October 2023, positive 52-week data from a Phase IIb clinical trial evaluating the safety and efficacy of povorcitinib in adult patients with extensive nonsegmental vitiligo were presented at EADV as a late-breaking oral presentation.

Results showed that treatment with oral povorcitinib was associated with substantial total body and facial repigmentation across all treatment groups at Week 52 and further reinforces the efficacy profile and potential of povorcitinib as an oral treatment for patients with extensive nonsegmental vitiligo.

Additionally, we announced in October 2023 that the Phase II, randomized, double-blind, placebo-controlled, dose ranging study evaluating the efficacy and safety of povorcitinib in participants with prurigo nodularis (PN) met its primary endpoint.

A Phase III study in PN is being planned.

Earlier-Stage Development Programs in Dermatology

In November 2022, we acquired Villaris Therapeutics, Inc., an asset-centric biopharmaceutical company focused on the development of novel antibody therapeutics for vitiligo.

Its lead asset, auremolimab (VM6) is a novel, humanized anti-IL-15Rβ monoclonal antibody designed to target and deplete autoreactive tissue resident memory T cells (TRM) that has demonstrated efficacy as a treatment for vitiligo in preclinical models.

In July 2023, auremolimab received IND clearance and is expected to enter the clinic in 2023.

INCA034460 is a novel, humanized anti-IL-15Rβ monoclonal antibody designed to target and deplete autoreactive tissue resident memory T cells (TRM) that has demonstrated efficacy as a treatment for vitiligo in preclinical models.

In July 2023, INCA034460 received IND clearance and in October 2023, we announced the first patient was dosed.

Indication and status

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Prurigo nodularis:

Phase III initiated (TRuE-PN1, TRuE-PN2)

Phase III (TRuE-PN1, TRuE-PN2)

ruxolitinib cream + NB-UVB (JAK1/JAK2 + phototherapy) Vitiligo:

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Chronic spontaneous urticaria:

(anti-IL-15Rβ) Vitiligo:

Phase I in preparation

(anti-IL-15Rβ)

Phase I initiated

Novartis’ rights for ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.

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In May 2022, we and Novartis announced the EC approval of ruxolitinib as JAKAVI for the treatment of acute or chronic GVHD in patients aged 12 years and older who have inadequate response to corticosteroids or other systemic therapies.

In August 2023, Novartis announced Jakavi was approved for use in graft-versus-host disease after hematopoietic stem cell transplant, in Japan.

Indication and status

baricitinib (JAK1/JAK2) 1

baricitinib (Olumiant ® )

(JAK1/JAK2) 1

Atopic dermatitis:

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approved in the United States, Europe and Japan

capmatinib (MET) 2

capmatinib (Tabrecta ® ) (MET) 2

NSCLC (with MET exon 14 skipping mutations):

approved in the United States, Europe and Japan

ruxolitinib (JAK1/JAK2) 3

ruxolitinib (Jakavi ® )

(JAK1/JAK2) 3

Acute and chronic GVHD:

approved in Europe;

J-NDA under review

approved in Europe and Japan

baricitinib licensed to Lilly.

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In January 2018, we entered into a Target Discovery, Research Collaboration and Option Agreement with Syros Pharmaceuticals, Inc.

Under this agreement, Syros will use its proprietary gene control platform to identify novel therapeutic targets with a focus in myeloproliferative neoplasms and we have received options to obtain exclusive worldwide rights to intellectual property resulting from the collaboration for up to seven validated targets.

We will have exclusive worldwide rights to develop and commercialize any therapies under the collaboration that modulate those validated targets.

Under this agreement, Syros would use its proprietary gene control platform to identify novel therapeutic targets with a focus in myeloproliferative neoplasms and we had received options to obtain exclusive worldwide rights to intellectual property resulting from the collaboration for up to seven validated targets.

In August 2023, we terminated the Target Discovery, Research Collaboration and Option Agreement with Syros, effective as of October 10, 2023.

In January 2020, we entered into a Collaboration and License Agreement with MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG, covering the worldwide development and commercialization of MOR208 (tafasitamab), an investigational Fc engineered monoclonal antibody directed against the target molecule CD19.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Form 10-K.

There have been no significant changes to our critical accounting policies or estimates during the six months ended June 30, 2023.

There have been no significant changes to our critical accounting policies or estimates during the nine months ended September 30, 2023.

Recent Accounting Pronouncements

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Results of Operations

We recorded net income of $203.5 million and basic net income per share of $0.91 and diluted net income per share of $0.90 for the three months ended June 30, 2023, as compared to net income of $161.4 million and basic net income per share of $0.73 and diluted net income per share of $0.72 in the corresponding period in 2022.

We recorded net income of $225.3 million and basic net income per share of $1.01 and diluted net income per share of $1.00 for the six months ended June 30, 2023, as compared to net income of $199.4 million and basic net income per share of $0.90 and diluted net income per share of $0.89 in the corresponding period in 2022.

We recorded net income of $171.3 million and basic and diluted net income per share of $0.76 for the three months ended September 30, 2023, as compared to net income of $112.8 million and basic net income per share of $0.51 and diluted net income per share of $0.50 in the corresponding period in 2022.

We recorded net income of $396.5 million and basic net income per share of $1.77 and diluted net income per share of $1.76 for the nine months ended September 30, 2023, as compared to net income of $312.2 million and basic net income per share of $1.41 and diluted net income per share of $1.40 in the corresponding period in 2022.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Total revenues $ 919.0 $ 823.3 $ 2,682.3 $ 2,467.9

The increase in JAKAFI product revenues for the three months ended June 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $61.3 million and a price increase of $23.4 million.

The increase in JAKAFI net product revenues for the six months ended June 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $81.7 million and a price increase of $38.6 million.

The JAKAFI net product revenues increase was primarily driven by growth in patient demand across all indications and inventory level normalizing at the end of the second quarter of 2023.

The increase in OPZELURA net product revenues for the three and six months ended June 30, 2023 was driven by increased patient demand and expanded coverage.

The increase in MINJUVI net product revenues for the three and six months ended June 30, 2023 was driven by the recognition of approximately $6.0 million of previously deferred MINJUVI revenue related to the Early Access Program in France, which ended in June 2023.

The increase in JAKAFI product revenues for the three months ended September 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $16.1 million and a price increase of $0.6 million.

The increase in JAKAFI net product revenues for the nine months ended September 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $98.8 million and a price increase of $38.1 million.

The JAKAFI net product revenues increase was primarily driven by growth in patient demand and was partially offset by a decrease in inventory.

The increase in OPZELURA net product revenues for the three and nine months ended September 30, 2023 was driven by increased patient demand and expanded coverage.

The increase in MINJUVI net product revenues for the nine months ended September 30, 2023 was driven by the recognition during the second quarter of 2023 of approximately $6.0 million of previously deferred MINJUVI revenue related to the Early Access Program in France, which ended in June 2023.

Our product revenues may fluctuate from quarter to quarter due to our customers’ purchasing patterns over the course of the year, including as a result of increased inventory building by customers in advance of expected or announced price increases.

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Our revenue recognition policies require estimates of the aforementioned sales allowances each period.

Our milestone and contract revenues for the three and nine months ended September 30, 2023, were derived from a regulatory milestone of $5.0 million under the Novartis collaboration and license agreement.

Our milestone and contract revenues for the nine months ended September 30, 2022, were derived from total regulatory milestones of $60.0 million under the Novartis collaboration and license agreement, regulatory milestones of $70.0 million under the license, development and commercialization agreement with Lilly, and a $5.0 million regulatory milestone under the Innovent research collaboration and licensing agreement.

The following table provides a summary of activity with respect to our sales allowances and accruals (in thousands):

Six Months Ended June 30, 2023 Discounts and

Nine Months Ended September 30, 2023 Discounts and

Fees Government

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Credits/payments for prior period sales (22,083) (87,127) (17,073) (8,477) (134,760)

Balance at June 30, 2023 $ 15,348 $ 183,117 $ 14,958 $ 8,578 $ 222,001

Balance at September 30, 2023 $ 19,326 $ 197,217 $ 11,396 $ 10,446 $ 238,385

Government rebates and chargebacks are the most significant component of our sales allowances.

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We adjust our estimates for government rebates and chargebacks based on new information regarding actual rebates as it becomes available.

We brought a lawsuit against the U.S.

Centers for Medicare and Medicaid Services (“CMS”) alleging that a recent regulation issued by CMS on the definition of “line extension” for purposes of the Medicaid rebate program is too broad and has the unintended consequence of treating OPZELURA as a “line extension” of JAKAFI under this program.

We believe that such a reading would be a violation of CMS’s statutory authority and that it would be arbitrary and capricious to treat OPZELURA which, among other differentiators, is indicated to treat entirely different medical conditions and entirely different patient populations than JAKAFI.

As of September 30, 2023, we have accrued approximately $42.9 million within accrued and other current liabilities on the condensed consolidated balance sheet.

The impact on OPZELURA gross to net deductions for the quarter ending September 30, 2023 is approximately 6.6%.

If OPZELURA is not treated as a line extension of JAKAFI, this would result in a reversal of our accrual and a lower future gross to net deduction for OPZELURA.

Claims by third-party payors for rebates and chargebacks are frequently submitted after the period in which the related sales occurred, which may result in adjustments to prior period accrual balances in the period in which the new information becomes available.

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Product royalty revenues on commercial sales of OLUMIANT by Lilly are based on net sales of licensed products in licensed territories as provided by Lilly.

JAKAVI and OLUMIANT product royalty revenues for the three and six months ended June 30, 2023 as compared to the corresponding period in 2022 were impacted by unfavorable changes in foreign currency exchange rates.

JAKAVI product royalty revenues for the three months ended September 30, 2023 as compared to the corresponding period in 2022 were impacted by favorable changes in foreign currency exchange rates, and were impacted by unfavorable changes in foreign currency exchange rates for the nine months ended September 30, 2023.

OLUMIANT product royalty revenues for the three and nine months ended September 30, 2023 as compared to the corresponding period in 2022 were impacted by unfavorable changes in foreign currency exchange rates.

In the third quarter of 2022, Olumiant royalties were impacted by a one-time deduction related to securing intellectual property rights.

Product royalty revenues on commercial sales of PEMAZYRE by Innovent are based on net sales of licensed products in licensed territories as provided by Innovent.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Cost of product revenues includes all product related costs, reserves for obsolescence, employee personnel costs, including stock compensation, for those employees dedicated to the production of our commercial products, royalties under our collaborative agreements and amortization of our licensed intellectual property rights for ICLUSIG and the amortization of capitalized milestone payments.

The increase in cost of product revenues for the three and six months ended June 30, 2023 as compared to the same periods in 2022 was primarily due to growth in net product revenues.

The increase in cost of product revenues for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 was primarily due to growth in net product revenues.

Operating Expenses

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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We account for research and development costs by natural expense line and not costs by project.

The increase in salary and benefits related expense for the three and six months ended June 30, 2023 as compared to the corresponding periods in 2022 was due primarily to increased development headcount to sustain our development pipeline.

The increase in salary and benefits related expense for the three and nine months ended September 30, 2023 as compared to the corresponding periods in 2022 was due primarily to increased development headcount to sustain our development pipeline.

Stock compensation expense may fluctuate from period to period based on the number of awards granted, stock price volatility and expected award lives, as well as expected award forfeiture rates which are used to value equity-based compensation.

The increase in clinical research and outside services expense for the three and six months ended June 30, 2023 as compared to the corresponding period in 2022 was primarily due to continued investment in our late stage development assets.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $7.0 million and $9.7 million, respectively, for the three and six months ended June 30, 2023.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $2.5 million and $22.5 million, respectively, for the three and six months ended June 30, 2022.

Research and development expenses for the three and six months ended June 30, 2023 and 2022 were net of $25.1 million, $25.7 million, $24.3 million and $34.6 million, respectively, of costs reimbursed by our collaborative partners.

The decrease in clinical research and outside services expense for the three months ended September 30, 2023 as compared to the corresponding period in 2022 was primarily due to a decrease in one-time collaboration related expenses, and the increase in clinical research and outside services expense for the nine months ended September 30, 2023 as compared to the corresponding period in 2022, was due to continued investment in our late stage development assets, partially offset by a decrease in one-time collaboration related expenses.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $3.0 million and $12.7 million, respectively, for the three and nine months ended September 30, 2023.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $33.5 million and $56.0 million, respectively, for the three and nine months ended September 30, 2022.

Research and development expenses for the three and nine months ended September 30, 2023 and 2022 were net of $11.3 million, $37.0 million, $8.7 million and $43.3 million, respectively, of costs reimbursed by our collaborative partners.

In addition to one-time expenses resulting from upfront fees in connection with the entry into any new or amended collaboration agreements and payment of milestones under those agreements, research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial related activities.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Total selling, general and administrative expenses $ 267.9 $ 266.5 $ 867.4 $ 729.3

The increase in salary and benefits related expense for the three and six months ended June 30, 2023 as compared to the corresponding period in 2022 was due primarily to increased headcount.

The increase in salary and benefits related expense for the three and nine months ended September 30, 2023 as compared to the corresponding period in 2022 was due primarily to increased headcount.

This increased headcount was due primarily to the establishment of our dermatology commercial organization.

The increase in other contract services and outside costs for the three and six months ended June 30, 2023, as compared to the corresponding periods in 2022, was primarily due to expenses related to promotional activities to support the launch of OPZELURA for the treatment of vitiligo.

Loss on change in fair value of acquisition-related contingent consideration

The increase in other contract services and outside costs for the nine months ended September 30, 2023, as compared to the corresponding period in 2022, was primarily due to expenses related to promotional activities to support the launch of OPZELURA for the treatment of vitiligo.

(Gain) loss on change in fair value of acquisition-related contingent consideration

Acquisition-related contingent consideration, which consists of our future royalty obligations to ARIAD/Takeda, was recorded on the acquisition date, June 1, 2016, at the estimated fair value of the obligation, in accordance with the acquisition method of accounting.

The fair value of the acquisition-related contingent consideration is remeasured quarterly.

The loss on change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2023 was $8.4 million and $14.6 million, respectively, which is recorded in loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The loss on change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2022 was $3.3 million and $9.7 million, respectively, which is recorded in loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The loss on change in fair value of the contingent consideration during the three and six months ended June 30, 2023 was due primarily to the passage of time.

(Profit) and loss sharing under collaboration agreements

The change in fair value of the acquisition-related contingent consideration for the three and nine months ended September 30, 2023 was a gain of $0.4 million and a loss of $14.1 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The gain on change in fair value of the acquisition-related contingent consideration for the three and nine months ended September 30, 2022 was $21.9 million and $12.2 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the contingent consideration during the three and nine months ended September 30, 2023 was due primarily to the changes in foreign currency exchange rates included within the updated projections of future net revenues of ICLUSIG and the passage of time.

The change in fair value for the three and nine months ended September 30, 2022 was due primarily to the changes in foreign currency exchange rates included within the updated projections of future net revenues of ICLUSIG.

Loss and (profit) sharing under collaboration agreements

Under the collaboration and license agreement with MorphoSys, which was executed in March 2020, we and MorphoSys are both responsible for the commercialization efforts of tafasitamab in the United States and will share equally the profits and losses from the co-commercialization efforts.

For the three and six months ended June 30, 2023, our 50% share of the profits for tafasitamab was $0.5 million and $1.9 million, respectively, as recorded in (profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

For the three and six months ended June 30, 2022, our 50% share of the losses for tafasitamab was $2.5 million and $7.3 million, respectively, as recorded in (profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

For the three and nine months ended September 30, 2023, our 50% share of the losses and profits for tafasitamab was a loss of $1.1 million and profit of $0.9 million, respectively, as recorded in loss and (profit) sharing under collaboration agreements on the condensed consolidated statement of operations.

For the three and nine months ended September 30, 2022, our 50% share of the losses for tafasitamab was $1.8 million and $9.1 million, respectively, as recorded in loss and (profit) sharing under collaboration agreements on the condensed consolidated statement of operations.

Interest income and other, net .

Interest income and other, net for the three and six months ended June 30, 2023 was $42.7 million and $75.5 million, respectively.

Interest income and other, net for the three and six months ended June 30, 2022 was $0.5 million and $1.8 million, respectively.

The increase in Interest income and other, net for the three and six months ended June 30, 2023 primarily relates to an increase in interest earned on our cash equivalents and marketable securities.

Unrealized gain (loss) on long term investments.

Interest income and other, net for the three and nine months ended September 30, 2023 was $46.4 million and $121.9 million, respectively.

Interest income and other, net for the three and nine months ended September 30, 2022 was $11.5 million and $13.3 million, respectively.

The increase in Interest income and other, net for the three and nine months ended September 30, 2023 primarily relates to an increase in interest earned on our cash equivalents and marketable securities.

Unrealized (loss) gain on long term investments.

Unrealized gains and losses on long term investments will fluctuate from period to period, based on the change in fair value of the securities we hold in our publicly held collaboration partners.

The following table provides a summary of those unrealized gains (losses):

The following table provides a summary of those unrealized (losses) gains:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Syros 0.1 (0.3) — (2.5)

Total unrealized gain (loss) on long term investments $ 41.8 $ (24.9) $ 36.5 $ (71.5)

Total unrealized (loss) gain on long term investments $ (26.7) $ (0.7) $ 9.8 $ (72.1)

Provision for income taxes.

The provision for income taxes for the three and six months ended June 30, 2023 was $74.1 million and $104.2 million, respectively.

The provision for income taxes for the three and six months ended June 30, 2022 was $67.9 million and $100.5 million, respectively.

Our effective tax rate for each of the three and six months ended June 30, 2023 and 2022 was higher than the U.S.

The provision for income taxes for the three and nine months ended September 30, 2023 was $62.5 million and $166.7 million, respectively.

The provision for income taxes for the three and nine months ended September 30, 2022 was $35.8 million and $136.3 million, respectively.

Our effective tax rate for each of the three and nine months ended September 30, 2023 and 2022 was higher than the U.S.

statutory rate primarily due to foreign losses with no associated tax benefit (i.e., full valuation allowance) and an increase in our valuation allowance against certain U.S.

federal and state deferred tax assets offset to a lesser extent by tax rate benefits associated with research and development and orphan drug tax credit generations and foreign derived intangible income deductions.

The effective tax rate for the three and six months ended June 30, 2023 decreased as compared to that for the prior year periods due to a greater tax benefit recognized in 2023 associated with research and development and orphan drug tax credit generations.

The effective tax rate for the three months ended September 30, 2023 increased as compared to that for the prior year period primarily due to an increase in foreign losses with no associated tax benefit.

The effective tax rate for the nine months ended September 30, 2023 decreased as compared to that for the prior year period primarily due to greater tax benefits recognized in 2023 associated with research and development and orphan drug tax credit generations, partially offset by a decrease in the tax benefit associated with foreign derived intangible income.

Liquidity and Capital Resources

Due to historical net losses, we had an accumulated deficit of $212 million as of June 30, 2023.

Due to historical net losses, we had an accumulated deficit of $40.7 million as of September 30, 2023.

We have funded our research and development operations through cash received from customers, sales of equity securities, the issuance of convertible notes, and collaborative arrangements.

At June 30, 2023, we had available cash, cash equivalents and marketable securities of $3.4 billion.

At September 30, 2023, we had available cash, cash equivalents and marketable securities of $3.5 billion.

Our cash and marketable securities balances are held in a variety of interest-bearing instruments, including money market accounts, and U.S.

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Available cash is invested in accordance with our investment policy’s primary objectives of liquidity, safety of principal and diversity of investments.

Net cash provided by operating activities for the six months ended June 30, 2023 was $200.9 million and net cash provided by operating activities for the six months ended June 30, 2022 was $389.9 million.

Net cash provided by operating activities for the nine months ended September 30, 2023 was $348.8 million and net cash provided by operating activities for the nine months ended September 30, 2022 was $686.3 million.

The decrease in cash provided by operating activities was due primarily to changes in working capital.

Our investing activities, other than purchases, sales and maturities of marketable securities, have consisted predominantly of capital expenditures and purchases of long term investments.

Net cash used in investing activities was $36.0 million for the six months ended June 30, 2023, which represented purchases of marketable securities of $152.3 million, payments for intangible assets of $15.0 million, and capital expenditures of $19.2 million, offset in part by the sale and maturities of marketable securities of $150.5 million.

Net cash used in investing activities was $29.2 million for the six months ended June 30, 2022, which represented purchases of marketable securities of $44.0 million and capital expenditures of $28.7 million, offset in part by the sales and maturities of marketable securities of $43.5 million.

Net cash used in investing activities was $53.2 million for the nine months ended September 30, 2023, which represented purchases of marketable securities of $222.2 million, payments for intangible assets of $15.0 million, capital expenditures of $30.2 million, and purchases of long term investments of $10.0 million, offset in part by the sale and maturities of marketable securities of $224.2 million.

Net cash used in investing activities was $57.6 million for the nine months ended September 30, 2022, which represented purchases of marketable securities of $59.1 million and capital expenditures of $56.6 million, offset in part by the sales and maturities of marketable securities of $58.0 million.

In the future, net cash used by investing activities may fluctuate significantly from period to period due to the timing of strategic equity investments, acquisitions, and capital expenditures and maturities/sales and purchases of marketable securities.

Net cash provided by financing activities was $16.9 million and $16.0 million for the six months ended June 30, 2023 and 2022, respectively, primarily representing proceeds from the issuance of common stock under our stock plans, offset in part by cash paid to ARIAD/Takeda for contingent consideration.

In October 2019, we entered into an agreement with Wilmington Friends School Inc., to purchase property for $50.0 million to expand our global headquarters.

Under that agreement, closing of the purchase is subject to certain standard closing conditions, including an initial diligence period and a subsequent approval period.

Net cash used in financing activities was $20.4 million for the nine months ended September 30, 2023, and net cash provided by financing activities was $1.7 million for the nine months ended September 30, 2022, respectively, primarily representing cash paid to ARIAD/Takeda for contingent consideration, offset in part by proceeds from the issuance of common stock under our stock plans.

In October 2019, we entered into an agreement with Wilmington Friends School Inc., to purchase property for $50.0 million, subject to certain closing conditions.

As of September 30, 2023, these conditions had not been met, and we no longer expect the purchase to move forward.

Accordingly, the related assets of approximately $5.6 million have been written off, as recorded on the condensed consolidated statements of operations in selling, general and administrative expenses.

In August 2021, we entered into a $500.0 million, three-year senior unsecured revolving credit facility.

We may increase the maximum revolving commitments or add one or more incremental term loan facilities, subject to obtaining commitments from any participating lenders and certain other conditions, in an amount not to exceed $250.0 million plus a contingent additional amount that is dependent on our pro forma consolidated leverage ratio.

As of June 30, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

As of September 30, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

income tax payments will increase significantly in 2023 resulting from the full utilization in 2022 of our research and development and orphan drug tax credit carryforwards generated in prior years.

12 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 2. Management’s Discussion and Analysis