What changed in this filing

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Item 1A. Risk Factors

2020-08-03 compared with 2020-05-06 · 126 added, 95 removed, 560 unchanged (28% of the section changed)

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Our ability to produce INGREZZA revenues consistent with expectations ultimately depends on our ability to sell our products and secure adequate third-party reimbursement if and when they are approved by the FDA.

Our experience in marketing and selling pharmaceutical products began with INGREZZA’s approval in 2017, when we hired our sales force and established our distribution and reimbursement capabilities, all of which are necessary to successfully commercialize INGREZZA.

We have continued to invest in our commercial infrastructure and distribution capabilities in the past three years, including our sales force expansion in late 2018.

While our team members and consultants have experience marketing and selling pharmaceutical products, we may face difficulties related to managing the rapid growth of our personnel and infrastructure, and there can be no guarantee that we will be able to maintain the personnel, systems, arrangements and capabilities necessary to successfully commercialize INGREZZA, ONGENTYS or any product candidate approved by the FDA in the future.

In addition, our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 outbreak.

In addition, our business could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic.

Most hospitals, community mental health facilities, and other healthcare facilities have implemented policies that limit access of our sales representatives and medical affairs personnel to such facilities.

Due to these closures and our work from home decisions, our field force is currently functioning utilizing digital and telephonic

engagement tools and tactics, which may be less effective than our ordinary course sales and marketing programs.

Due to these closures and our work from home decisions, our field force is currently functioning utilizing digital and telephonic engagement tools and tactics, which may be less effective than our ordinary course sales and marketing programs.

If we fail to maintain successful marketing, sales and reimbursement capabilities, our product revenues may suffer.

*If physicians and patients do not continue to accept INGREZZA or do not accept any of our other products, or our sales and marketing efforts are not effective, we may not generate sufficient revenue.

*If physicians and patients do not continue to accept INGREZZA or do not accept ONGENTYS or any of our other products, or our sales and marketing efforts are not effective, we may not generate sufficient revenue.

The commercial success of INGREZZA, ONGENTYS or any of our other products, if approved for marketing, will depend upon the acceptance of those products as safe and effective by the medical community and patients.

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Our ability to commercialize any products successfully, including INGREZZA and ONGENTYS, will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available.

The continuing efforts of government and third-party payors to contain or reduce the costs of health care through various means may reduce our potential revenues.

The continuing efforts of government and third-party payors to contain or reduce the costs of health care through various means

may reduce our potential revenues.

These payors’ efforts could decrease the price that we receive for any products we may develop and sell in the future.

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Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

In addition, gene therapy treatments, which we are developing pursuant to our collaboration and license agreement with Voyager, face additional uncertainty related to pricing and reimbursement.

As an example, there are a limited number of gene therapy products currently approved for coverage and reimbursement by the Centers for Medicare & Medicaid Services, or CMS.

If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize INGREZZA, ONGENTYS or any other product candidate for which we obtain marketing approval.

Our inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

*Our business could be adversely affected by the effects of health pandemics or epidemics, including the COVID-19 pandemic, in regions where we or third parties on which we rely have significant sales and marketing efforts or manufacturing facilities, concentrations of clinical trial sites or other business operations, or materially affect our operations, including at our headquarters in California, which is currently subject to a statewide stay at home order, and at our clinical trial sites, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct business.

*Our business could be adversely affected by the effects of health pandemics or epidemics, including the COVID-19 pandemic, in regions where we or third parties on which we rely have significant sales and marketing efforts or manufacturing facilities, concentrations of clinical trial sites or other business operations, or materially affect our operations, and at our clinical trial sites, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct business.

Our business could be adversely affected by the effects of health pandemics or epidemics in regions where we have concentrations of clinical trial sites or other business operations, and could cause significant disruption in the operations of third-party manufacturers and CROs upon whom we rely.

As a result of the recent outbreak of novel COVID-19, we may experience disruptions that could severely impact our supply chain, ongoing and future clinical trials and commercialization of INGREZZA and ONGENTYS.

example, COVID-19 has resulted in increased travel restrictions and the shutdown or delay of business activities in various regions, including San Diego, California, where our headquarters are located.

In response to stay at home orders in California and other states, we implemented work-from-home policies for all employees except certain key essential members involved in business-critical activities.

As a result of the ongoing COVID-19 pandemic, we may experience disruptions that could severely impact our supply chain, ongoing and future clinical trials and commercialization of INGREZZA and ONGENTYS.

For example, COVID-19 has resulted in increased travel restrictions and the shutdown or delay of business activities in various regions, including San Diego, California, where our headquarters are located.

In response to state and local restrictions, we implemented work-from-home policies for all employees except certain key essential members involved in business-critical activities.

The effects of the stay at home order and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

These and similar, and perhaps more severe, disruptions in our operations due to COVID-19 could negatively impact our business, operating results and financial condition.

Quarantines, stay at home and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases, could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

Quarantines, stay at home orders and other state and local restrictions, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases, could

impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

In addition, clinical site initiation and patient enrollment may be delayed due to concerns for patient safety and prioritization of healthcare resources toward the COVID-19 pandemic.

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In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The global pandemic of COVID-19 continues to rapidly evolve.

The global COVID-19 pandemic continues to rapidly evolve.

The ultimate impact of the COVID-19 pandemic or a similar health pandemic or epidemic is highly uncertain and subject to change.

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*Because the development of our product candidates is subject to a substantial degree of technological uncertainty, we may not succeed in developing any of our product candidates.

All of our product candidates are currently in research or clinical development with the exceptions of INGREZZA, which has been approved by the FDA for TD, ONGENTYS, which has been approved by the FDA for Parkinson’s disease, ORILISSA (partnered with AbbVie), which has been approved by the FDA for the management of moderate to severe endometriosis pain in women, and ORIAHNN (partnered with AbbVie), which has been approved by the FDA for the management of heavy menstrual bleeding associated with uterine fibroids in pre-menopausal women.

Only a small number of research and development programs ultimately result in commercially successful drugs.

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• patients may drop out of the trials;

unforeseen disruptions may occur, caused by man-made or natural disasters or public health pandemics or epidemics or other business interruptions, including, for example, the COVID-19 pandemic;

• unforeseen disruptions or delays may occur, caused by man-made or natural disasters or public health pandemics or epidemics or other business interruptions, including, for example, the COVID-19 pandemic;

• regulatory requirements may change.

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*We depend on our current collaborators for the development and commercialization of several of our products and product candidates and may need to enter into future collaborations to develop and commercialize certain of our product candidates.

Our strategy for fully developing and commercializing ORILISSA is dependent upon maintaining our current collaboration agreement with AbbVie.

Our strategy for fully developing and commercializing ORILISSA and ORIAHNN is dependent upon maintaining our current collaboration agreement with AbbVie.

This collaboration agreement provides for significant future payments should certain development, regulatory and commercial milestones be achieved, and royalties on future sales of elagolix.

Under this agreement, AbbVie is responsible for, among other things, conducting clinical trials and obtaining required regulatory approvals for elagolix;

as well as manufacturing and commercialization of ORILISSA.

Because of our reliance on AbbVie, the commercialization and continued development of ORILISSA could be substantially delayed, and our ability to receive future funding could be substantially impaired, if AbbVie:

does not successfully commercialize ORILISSA for endometriosis;

fails to gain regulatory approval of elagolix for uterine fibroids, and if applicable, successfully launch and commercialize elagolix for that indication;

as well as manufacturing and commercialization of ORILISSA and ORIAHNN.

Because of our reliance on AbbVie, the commercialization and continued development of ORILISSA and ORIAHNN could be substantially delayed, and our ability to receive future funding could be substantially impaired, if AbbVie:

• does not successfully commercialize ORILISSA for endometriosis or ORIAHNN for uterine fibroids;

• does not conduct its collaborative activities in a timely manner;

does not devote sufficient time and resources to our partnered program;

• does not devote sufficient time and resources to our partnered programs;

• terminates its agreement with us;

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• merges with a third party that wants to terminate our agreement.

In March 2015, we entered into a collaboration and license agreement with MTPC to develop and commercialize INGREZZA in Japan and other select Asian markets.

We will rely on MTPC to achieve certain development, regulatory and commercial milestones which, if achieved, could generate significant future revenue for us.

Our collaboration with MTPC is subject to risks and uncertainties similar to those described above.

In addition, we may need to enter into other out-licensing collaborations to assist in the development and commercialization of other product candidates we are developing now or may develop in the future, and any such future collaborations would be subject to similar risks and uncertainties.

Effective in March 2019, we entered into a collaboration and license agreement with Voyager for the research, development and commercialization of four programs, including NBIb-1817 (VY-AADC) for Parkinson’s disease, the Friedreich’s ataxia program and two undisclosed programs.

In December 2019, we entered into a license and collaboration agreement with Xenon, pursuant to which we acquired an exclusive license to NBI-921352 (XEN901), a clinical-stage selective Nav1.6 sodium channel inhibitor with potential in SCN8A development and epileptic encephalopathy, or SCN8A-DEE, and other forms of epilepsy.

We also acquired an exclusive license to pre-clinical compounds for development, including selective Nav1.6 and Nav1.2/1.6 inhibitors.

Voyager and Xenon could take actions that may be adverse to us, or they could halt, slow, or deprioritize their development and commercialization efforts under

the collaborations.

We could also experience disagreements or delays involving the determination of additional programs.

In any such instances, our ability to commercialize any product candidate related to the Voyager and Xenon collaborations could be delayed or prohibited.

In 2019, we acquired an option from Idorsia to license ACT-709478, a potent, selective, orally active and brain penetrating T-type calcium channel blocker.

The option is exercisable by us following the acceptance by the FDA of the IND for ACT-709478 for the treatment of a rare pediatric epilepsy.

Idorsia is solely responsible for the development and filing of the IND for ACT-709478, and we cannot predict if the FDA will accept the NDA, or if the FDA does accept the NDA, if we will exercise our option to license ACT-709478.

In addition, we are a party to several other collaboration and license agreements, including our agreements with BIAL, MTPC, Voyager, Xenon, Idorsia and Takeda.

These collaborations are subject to risks and uncertainties similar to those described above.

In some situations, we may not be able to influence our collaboration partners’ decisions regarding the development and collaboration of our partnered product products and product candidates, and as a result, our collaboration partners may not pursue or prioritize the development and commercialization of those partnered products and product candidates in a manner that is in our best interest.

We may also need to enter into other licensing collaborations to assist in the development and commercialization of other product candidates we are developing now or may develop in the future, and any such future collaborations would be subject to similar risks and uncertainties.

These issues and possible disagreements with our current or any future corporate collaborators could lead to delays in the collaborative research, development or commercialization of our product candidates.

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If any of these issues arise, it may delay the development and commercialization of drug candidates and, ultimately, our generation of product revenues.

*We are substantially dependent on BIAL for the commercialization of ONGENTYS as an adjunctive therapy to levodopa/DOPA decarboxylase inhibitors in adult Parkinson's disease patients .

In February 2017, we entered into a license agreement with BIAL for the development and commercialization of ONGENTYS for the treatment of human diseases and conditions, including Parkinson’s disease, in the US and Canada.

In June 2019, we submitted an NDA with the FDA for ONGENTYS as an adjunctive therapy to levodopa/DOPA decarboxylase inhibitors in adult Parkinson's disease patients.

On April 24, 2020, the FDA completed its review and approved ONGENTYS for Parkinson’s disease.

Our strategy for commercializing ONGENTYS is dependent upon maintaining our current collaboration with BIAL.

Under the terms of our agreement with BIAL, although we are responsible for the management of all ONGENTYS commercialization activities, we depend on BIAL and its suppliers to supply all drug product for the commercialization of ONGENTYS.

BIAL relies on third-party contract manufacturers to produce ONGENTYS.

These contract manufacturers may encounter difficulties in achieving volume production, quality control, or quality assurance.

As a result, these contract manufacturers may not be able to adequately produce ONGENTYS in commercial quantities when required, which may impact our ability to deliver ONGENTYS on a timely basis.

For example, we continue to seek clarity concerning the ability of BIAL to adequately re-supply commercial inventory of ONGENTYS, and as a result, we have delayed the commercial launch of ONGENTYS until later in 2020.

In addition, we and BIAL have established a joint steering committee with overall coordination and strategic oversight over activities under the agreement and to provide a forum for regular exchange of information, and BIAL has the right to co-promote licensed products during certain periods of time and to engage in certain marketing-related activities in cooperation with us.

Because of our substantial reliance on BIAL, any failure by BIAL to timely or fully comply with its obligations under our agreement, any disagreement with BIAL, or any decision by BIAL to not devote sufficient time and resources to our collaboration, could substantially delay and/or prohibit our ability to commercialize ONGENTYS.

*Use of our approved products or those of our collaborators, including INGREZZA, ONGENTYS and ORILISSA, could be associated with side effects or adverse events.

As with most pharmaceutical products, use of our approved products or those of our collaborators, including INGREZZA, ONGENTYS and ORILISSA, could be associated with side effects or adverse events which can vary in severity (from minor adverse reactions to death) and frequency (infrequent or prevalent).

We may not be able to successfully commercialize ONGENTYS

In April 2020, we received FDA approval for ONGENTYS as an adjunctive therapy to levodopa/DOPA decarboxylase inhibitors in adult Parkinson’s disease patients, and in August 2020, we announced that we planned to make ONGENTYS commercially available in the third quarter of 2020.

The successful commercial launch of ONGENTYS is subject to many risks, and there are numerous examples of unsuccessful product launches and failures l, including by pharmaceutical companies with more experience and resources than us.

If we are unable to effectively train our employees and equip them with effective materials, including medical and sales literature to help them inform and educate health care practitioners about the benefits of ONGENTYS and its proper administration, our launch of ONGENTYS may not be successful.

Even if we are successful in effectively training and equipping our sales force, there are many factors that could cause the launch and commercialization of ONGENTYS to be unsuccessful, including a number of factors that are outside our control.

Health care practitioners may not prescribe ONGENTYS and patients may be unwilling to use ONGENTYS if insurance coverage is not provided or reimbursement is inadequate.

In addition, our ability to train our employees and effectively communicate with potential prescribers could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic.

*Use of our approved products or those of our collaborators, including INGREZZA, ONGENTYS, ORILISSA, and ORIAHNN could be associated with side effects or adverse events.

As with most pharmaceutical products, use of our approved products or those of our collaborators, including INGREZZA, ONGENTYS, ORILISSA, and ORIAHNN could be associated with side effects or adverse events which can vary in severity (from minor adverse reactions to death) and frequency (infrequent or prevalent).

Side effects or adverse events associated with the use of our products or those of our collaborators may be observed at any time, including after a product is commercialized, and reports of any such side effects or adverse events may negatively impact demand for our or our collaborators’ products or affect our or our collaborators’ ability to maintain regulatory approval for such products.

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There is no guarantee that this program or other collaboration gene therapy product candidates will not be placed on clinical hold by the FDA, as has been the case for many gene therapy clinical programs.

Even if we are able to successfully complete clinical development of a gene therapy product and obtain commercial approval, the success of our collaboration with Voyager will depend upon physicians who specialize in the treatment of genetic diseases targeted by gene therapy product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.

Even if we are able to successfully complete clinical development of a gene therapy product and obtain commercial approval, the success of our

collaboration with Voyager will depend upon physicians who specialize in the treatment of genetic diseases targeted by gene therapy product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.

More restrictive government regulations or negative public opinion related to gene therapy products may delay or impair the development and commercialization of our gene therapy product candidates or demand for any gene therapy products we develop.

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Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects would be harmed.

If our gene therapy products are approved but fail to achieve market acceptance among physicians, patients, hospitals, third-party payors or others in the medical community, we will not be able to generate significant revenue.

*We face intense competition, and if we are unable to compete effectively, the demand for our products may be reduced.

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Additionally, there are a number of commercially available medicines used to treat TD off-label, such as Xenazine (tetrabenazine) and generic equivalents, and various antipsychotic medications (e.g., clozapine), anticholinergics, benzodiazepines (off-label), and botulinum toxin.

In endometriosis, ORILISSA competes with several FDA-approved products for the treatment of endometriosis, uterine fibroids, infertility, and central precocious puberty.

Additionally, there is also competition from surgical interventions.

Approximately 130,000 hysterectomies are performed in the US annually as a direct result of endometriosis, as well as a significant number of laparoscopic procedures to ablate endometrial explants.

• In endometriosis, ORILISSA and ORIAHNN each compete with several FDA-approved products for the treatment of endometriosis, uterine fibroids, infertility, and central precocious puberty.

Additionally, there is also competition from surgical intervention, including hysterectomies and ablations.

Separate from these options, there are many programs in clinical development which serve as potential future competition.

Lastly, there are numerous medicines used to treat the symptoms of disease (vs.

endometriosis directly) which may also serve as competition:

endometriosis or uterine fibroids directly) which may also serve as competition:

oral contraceptives, NSAIDs and other pain medications including opioids.

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ONGENTYS will compete directly with these two drugs and their generic equivalents.

Additionally, there are a number of alternative adjunctive treatment options (FDA-approved and in clinical development) for Parkinson’s patients which will compete with ONGENTYS, including various L-dopa preparations, dopamine agonists, MAO-B inhibitors and others.

Additionally, there are a number of alternative adjunctive treatment options (FDA-approved and in clinical development) for

Parkinson’s patients which will compete with ONGENTYS, including various L-dopa preparations, dopamine agonists, MAO-B inhibitors and others.

In terms of potential future competition, there are several programs in late-stage clinical development.

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We have limited experience in manufacturing products for commercial purposes and do not currently have any manufacturing facilities.

Establishing internal commercial manufacturing capabilities would require significant time and resources, and we may not be able to timely or successfully establish such capabilities.

Consequently, we depend on, and will continue to depend on, several contract manufacturers for all production of products for development and commercial purposes, including INGREZZA and ONGENTYS.

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If our third-party suppliers for INGREZZA encounter these or any other manufacturing, quality or compliance difficulties, we may be unable to meet commercial demand for INGREZZA, which could materially and adversely affect our ability to successfully commercialize INGREZZA.

We also depend on BIAL, and its suppliers, for the production of ONGENTYS drug substance and drug product.

It is unclear whether BIAL will be able to adequately re-supply commercial inventory of ONGENTYS, and as a result we have delayed the commercial launch of ONGENTYS until later this year.

In addition, under the terms of our agreement with BIAL, although we are responsible for the management of all ONGENTYS commercialization activities, we depend on BIAL and its suppliers to supply all drug product for the commercialization of ONGENTYS.

BIAL relies on third-party contract manufacturers to produce ONGENTYS.

These contract manufacturers may encounter difficulties in achieving volume production, quality control, or quality assurance.

As a result, these contract manufacturers may not be able to adequately produce ONGENTYS in commercial quantities when required, which may impact our ability to deliver ONGENTYS on a timely basis.

In addition, if our suppliers fail or refuse to supply us with INGREZZA or its API for any reason, it would take a significant amount of time and expense to qualify a new supplier.

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Thus, our ability to keep our shareholders informed about the status of elagolix will be limited by the degree to which AbbVie keeps us informed and allows us to disclose such information to the public.

If AbbVie fails to keep us informed about commercialization efforts related to elagolix, or the status of the clinical development or regulatory approval pathway of other product candidates licensed to it, we may make operational and/or investment decisions that we would not have made had we been fully informed, which may materially and adversely affect our business and operations.

operational and/or investment decisions that we would not have made had we been fully informed, which may materially and adversely affect our business and operations.

*We are subject to ongoing obligations and continued regulatory review for INGREZZA.

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If we were to default on our obligations under any of our licenses, we could lose some or all of our rights to develop, market and sell products covered by these licenses.

For example, BIAL may terminate our license agreement, pursuant to which we have rights to commercialize ONGENTYS, if we fail to use commercially reasonable efforts, fail to submit an NDA for a licensed product by a specified date, or otherwise breach the license agreement.

Pursuant to our collaboration and license agreement with Voyager, Voyager can terminate the agreement if we challenge the validity or enforceability of certain Voyager intellectual property rights or if we commit a material breach in whole or in part of the agreement and do not cure such breach within the agreed upon cure period.

Pursuant to our collaboration and license agreement with Xenon, Xenon can terminate the agreement if we commit a material breach in whole or in part or the agreement and do not cure such breach within the agreed upon cure period.

For example, BIAL may terminate our license agreement, pursuant to which we have rights to commercialize ONGENTYS, if we fail to use commercially reasonable efforts, or otherwise breach the license agreement.

In addition, several of our collaboration and license agreements allow our licensors to terminate such agreements if we challenge the validity or enforceability of certain intellectual property rights or if we commit a material breach in whole or in part of the agreement and do not cure such breach within the agreed upon cure period.

In addition, if we were to violate any of the terms of our licenses, we could become subject to damages.

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If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

* The conditional conversion feature of the 2024 Notes, if triggered, may adversely affect our financial condition, operating results, or liquidity.

In the event the conditional conversion feature of the 2024 Notes is triggered, holders of 2024 Notes will be entitled to convert their 2024 Notes at any time during specified periods at their option.

*The conditional conversion feature of the 2024 Notes may adversely affect our financial condition, operating results, or liquidity.

The conditional conversion feature of the 2024 Notes was triggered as of June 30, 2020, meaning holders of 2024 Notes are entitled to convert their 2024 Notes at any time during the period beginning on July 1, 2020, and ending at the close of business on September 30, 2020.

The conditional conversion feature may also be triggered again in the future.

If one or more of the holders of the 2024 Notes elects to convert their notes, unless we satisfy our conversion obligation by delivering only shares of our common stock, we would be required to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

The conditional convertibility of the 2024 Notes will be monitored at each quarterly reporting date and analyzed dependent upon market prices of our common stock during the prescribed measurement periods.

*We have a history of losses and expect to increase our expenses for the foreseeable future, and we may never achieve sustained profitability.

*We have a history of losses and expect to increase our expenses for the foreseeable future, and we may not be able to sustain profitability.

Since our inception, we have incurred significant net losses and negative cash flow from operations.

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In April 2017, we received FDA approval of INGREZZA for TD.

I n July 2018, our partner AbbVie received FDA approval for ORILISSA for the management of moderate to severe endometriosis pain in women.

In July 2018, our partner AbbVie received FDA approval for ORILISSA for the management of moderate to severe endometriosis pain in women.

In April 2020, we received FDA approval of ONGENTYS for Parkinson’s disease.

In May 2020, our partner AbbVie received FDA approval for ORIAHNN for the management of heavy menstrual bleeding associated with uterine fibroids in pre-menopausal women.

However, we have not yet obtained regulatory approvals for any other product candidates.

Even if we continue to succeed in commercializing INGREZZA or ONGENTYS , or developing and commercializing any of our other product candidates, we may not be profitable.

Even if we continue to succeed in commercializing INGREZZA, or if we successfully launch ONGENTYS or are successful in developing and commercializing any of our other product candidates, we may not be able to sustain profitability.

We also expect to continue to incur significant operating and capital expenditures as we:

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We expect to increase our expenses and other investments in the coming years as we fund our operations, in-licensing or acquisition opportunities, and capital expenditures.

While we were profitable for the three months ended March 31, 2020, our future operating results and profitability may fluctuate from period to period due to the factors described above, and we will need to generate significant revenues to achieve and maintain profitability and positive cash flow on a sustained basis.

While we were profitable for the six months ended June 30, 2020, our future operating results and profitability may fluctuate from period to period due to the factors described above, and we will need to generate significant revenues to achieve and maintain profitability and positive cash flow on a sustained basis.

We may not be able to generate these revenues, and we may never achieve profitability on a sustained basis in the future.

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We may encounter difficulties with managing our growth, which could adversely affect our results of operations.

At March 31, 2020, we had approximately 750 full-time employees.

At June 30, 2020, we had approximately 780 full-time employees.

Although we have substantially increased the size of our organization, we may need to add additional qualified personnel and resources, especially now that we have a commercial sales force.

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Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.

Litigation may be necessary to defend against these claims.

Litigation may be necessary to defend

against these claims.

Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

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Thus, small declines in revenue could disproportionately affect financial results in a quarter.

While we were profitable for the three months ended March 31, 2020, our future operating results and profitability may fluctuate from period to period, and even if we become profitable on a quarterly or annual basis, we may not be able to sustain or increase our profitability.

Moreover, as our company and our market capitalization have grown, our financial performance has become increasingly subject to

quarterly and annual comparisons with the expectations of securities analysts or investors.

While we were profitable for the three months ended June 30, 2020, our future operating results and profitability may fluctuate from period to period, and even if we become profitable on a quarterly or annual basis, we may not be able to sustain or increase our profitability.

Moreover, as our company and our market capitalization have grown, our financial performance has become increasingly subject to quarterly and annual comparisons with the expectations of securities analysts or investors.

The failure of our financial results to meet these expectations, either in a single quarterly or annual period over a sustained period time, could cause our stock price to decline.

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• sales of INGREZZA and ORILISSA;

timing of the commercial launch of ONGENTYS;

• timing of the commercial launch of ONGENTYS and ORIAHNN;

• the status and cost of our post-marketing commitments for INGREZZA and ONGENTYS;

• the results of our clinical trials;

reports of safety issues related to INGREZZA, ONGENTYS or ORILISSA;

whether the FDA approves elagolix for the treatment of uterine fibroids, which has a target action date in the second quarter of 2020, or if the FDA fails to meet such targeted action date;

• reports of safety issues related to INGREZZA, ONGENTYS, ORILISSA, or ORIAHNN;

• developments concerning new and existing collaboration agreements;

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Two of these customers represented approximately 86% of our product revenue for the year ended December 31, 2019 and a significant majority of our accounts receivable balance at December 31, 2019.

If any of these significant customers becomes subject to bankruptcy, is unable to pay us for our products or is acquired by a company that wants to terminate the relationship with us, or if we otherwise lose any of these significant customers, our revenue, results of operations and cash flows would be adversely affected.

If any of these significant customers becomes subject to bankruptcy, is unable to pay us for our products

or is acquired by a company that wants to terminate the relationship with us, or if we otherwise lose any of these significant customers, our revenue, results of operations and cash flows would be adversely affected.

Even if we replace the loss of a significant customer, we cannot predict with certainty that such transition would not result in a decline in our revenue, results of operations and cash flows.

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Our future capital requirements will depend on many factors, including:

the commercial success of INGREZZA, ONGENTYS and/or ORILISSA;

• the commercial success of INGREZZA, ONGENTYS, ORILISSA, and/or ORIAHNN;

• debt service obligations on the 2024 Notes;

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• the time and costs involved in obtaining regulatory approvals;

whether the FDA approves elagolix for the treatment of uterine fibroids, which has a target action date in the second quarter of 2020, or if the FDA fails to meet such targeted action date;

• the costs involved in filing and pursuing patent applications, enforcing patent claims, or engaging in interference proceedings or other patent litigation;

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As a result, our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased sales, general and administrative expenses and management time related to compliance activities.

If we fail to comply with these laws, regulations and standards, our reputation may be harmed, and we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

If we fail to comply with these laws, regulations and standards, our reputation may be

harmed, and we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

Any such action could adversely affect our financial results and the market price of our common stock.

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There remain legal and political challenges to certain aspects of the ACA.

Since January 2017, two executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA have been put into place.

Since January 2017, several executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA have been put into place.

Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA.

Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a

year that is commonly referred to as the “individual mandate”.

The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”.

In December 2018, the Centers for Medicare & Medicaid Services, or CMS, published a new final rule permitting further collections and payments to and from certain ACA-qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.

In December 2018, CMS published a new final rule

permitting further collections and payments to and from certain ACA-qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.

In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

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In November 2019, CMS issued a final rule finalizing the changes to the Quality Payment Program.

At this time, it is unclear how the introduction of the Quality Payment Program will impact overall physician reimbursement.

At this time, it remains unclear how the introduction of the Quality Payment Program will impact overall physician reimbursement.

Also, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

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The US Department of Health and Human Services, or HHS, has solicited feedback on certain of these measures and, additionally, has implemented others under its existing authority.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

On July 24, 2020, the Trump administration announced four executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals, including a policy that would tie Medicare Part B drug prices to international drug prices;

one that directs HHS to finalize the Canadian drug importation proposed rule previously issued by HHS and makes other changes allowing for personal importation of drugs from Canada;

one that directs HHS to finalize the rulemaking process on modifying the anti-kickback law safe harbors for plans, pharmacies, and pharmaceutical benefit managers;

and one that reduces costs of insulin and epipens to patients of federally qualified health centers.

While some of these and other measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product

pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product.

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• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which also imposes obligations, including mandatory contractual terms, on certain types of individuals and entities, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians, as defined by such law, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members;

• the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of

value made to physicians, as defined by such law, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members;

• analogous state, local, and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers;

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state and local laws that require the registration of pharmaceutical sales representatives;

state and local “drug takeback” laws and regulations;

state and local “drug take back” laws and regulations;

and state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

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Physicians, on the other hand, may prescribe products for off-label uses.

Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which

marketing clearance has not been issued.

However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling.

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We cannot assure you that third parties will not assert patent or other intellectual property infringement claims against us or our collaborators with respect to technologies used in potential products.

If a patent infringement suit were brought against us or our

collaborators, we or our collaborators could be forced to stop or delay developing, manufacturing or selling potential products that are claimed to infringe a third party’s intellectual property unless that party grants us or our collaborators rights to use its intellectual property.

If a patent infringement suit were brought against us or our collaborators, we or our collaborators could be forced to stop or delay developing, manufacturing or selling potential products that are claimed to infringe a third party’s intellectual property unless that party grants us or our collaborators rights to use its intellectual property.

In such cases, we could be required to obtain licenses to patents or proprietary rights of others in order to continue to commercialize our products.

However, we may not be able to obtain any licenses required under any patents or proprietary rights of third parties on acceptable terms, or at all.

Even if our collaborators or we were able to obtain rights to the third party’s intellectual property, these rights may be non-exclusive, thereby giving our competitors access to the same intellectual property.

Even if our collaborators or we were able to obtain rights to the third party’s intellectual property, these rights may be non-exclusive, thereby giving our competitors access to

the same intellectual property.

Ultimately, we may be unable to commercialize some of our potential products or may have to cease some of our business operations as a result of patent infringement claims, which could severely harm our business.

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Information security risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign private parties and state actors.

A security breach or privacy violation that leads to disclosure or modification of or prevents access to personally identifiable information or other protected information could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, resulting in increased costs or loss of revenue.

federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, resulting in increased costs or loss of revenue.

Similarly, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Additionally, theft of our intellectual property or proprietary business information could require substantial expenditures to remedy.

If we are unable to prevent such security breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties because of lost or

misappropriated information.

In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above.

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The following exhibits are filed as part of, or incorporated by reference into, this report:

3.1 Description:

Certificate of Incorporation, as amended

Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed on November 5, 2018

3.2 Description:

Bylaws, as amended

Incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed on November 5, 2018

4.1 Description:

Form of Common Stock Certificate

Incorporated by reference to the Company’s Registration Statement on Form S-1 (Registration No.

4.2 Description:

Indenture, dated as of May 2, 2017, by and between the Company and U.S.

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Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on May 2, 2017

4.3 Description:

Form of Note representing the Company’s 2.25% Convertible Notes due 2024

Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on May 2, 2017

4.4 Description:

Description of Common Stock of the Company

Incorporated by reference to Exhibit 4.4 of the Company’s Annual Report on Form 10-K filed on February 7, 2020

10.1* Description:

Neurocrine Biosciences, Inc.

2020 Equity Incentive Plan

10.2* Description:

Form of Stock Option Grant Notice and Option Agreement for use under the Neurocrine Biosciences, Inc.

2020 Equity Incentive Plan, and Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement for use under the Neurocrine Biosciences, Inc.

2020 Equity Incentive Plan

10.3** Description:

Exclusive License Agreement dated June 12, 2020 between Takeda Pharmaceutical Company Limited and the Company

31.1 Description:

Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

31.2 Description:

Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

32*** Description:

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS Description:

Inline XBRL Instance Document.

– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Description:

Inline XBRL Taxonomy Extension Schema Document.

101.CAL Description:

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF Description:

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB Description:

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE Description:

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104 Description:

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibit 101)

______________

* Management contract or compensatory plan or arrangement.

** Certain portions of this exhibit (indicated by "**") have been omitted pursuant to confidential treatment.

*** These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C.

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NEUROCRINE BIOSCIENCES, INC.

August 3, 2020

/s/ Matthew C.

Chief Financial Officer

(Duly authorized officer and Principle Financial Officer)

(Duly authorized officer and Principal Financial Officer)

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 1A. Risk Factors