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Item 1. Financial Statements

2024-05-01 compared with 2023-10-31 · 183 added, 210 removed, 289 unchanged (58% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data) September 30,

(in millions, except share data) March 31,

2024 December 31,

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Intangible assets, net 34.3 35.5

Other assets 43.1 25.0

Other noncurrent assets 50.9 49.6

Total assets $ 3,472.4 $ 3,251.4

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Accounts payable and accrued liabilities $ 417.2 $ 448.8

Convertible senior notes 169.9 169.4

Convertible senior notes, at carrying value ($ 170.4 face value as of March 31, 2024 and

December 31, 2023)

Convertible senior notes embedded derivative liability

Other current liabilities 36.7 35.9

1 unchanged sentence

Noncurrent operating lease liabilities 252.9 258.3

Other long-term liabilities 68.6 29.7

Other noncurrent liabilities 120.5 106.3

Total liabilities 1,086.3 1,019.4

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Common stock, $ 0.001 par value;

220.0 million shares authorized;

98.2 million and 96.5 million shares issued and outstanding, respectively

220.0 shares authorized;

100.6 and 98.7 shares issued and outstanding, respectively

Additional paid-in capital 2,496.4 2,382.0

Accumulated other comprehensive loss ( 1.7 ) ( 7.9 )

Accumulated other comprehensive income 3.3 7.0

Accumulated deficit ( 113.7 ) ( 157.1 )

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NEUROCRINE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2024 2023

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Total operating expenses 416.0 534.6

Operating income 141.2 87.8 100.6 145.6

Other income (expense):

Operating income (loss) 99.3 ( 114.2 )

Other (expense) income:

Interest expense ( 1.1 ) ( 1.1 )

Unrealized (loss) gain on equity security investments ( 40.1 ) 11.1 ( 0.6 ) 23.6

Loss on extinguishment of convertible senior notes — — — ( 70.0 )

Unrealized gain on equity security investments 1.6 2.2

Charges associated with convertible senior notes

Investment income and other, net 23.4 9.8

Total other (expense) income, net ( 64.8 ) 10.9

Income (loss) before benefit from income taxes

34.5 ( 103.3 )

Income before provision for income taxes 115.6 97.9 133.9 96.0

Provision for income taxes 32.5 29.4 31.9 30.5

Net income 83.1 68.5 102.0 65.5

Foreign currency translation adjustments, net of tax ( 1.4 ) — 0.7 —

Unrealized gain (loss) on debt securities available-for-sale, net of tax

Benefit from income taxes

( 8.9 ) ( 26.7 )

Comprehensive income $ 82.5 $ 66.7 $ 108.2 $ 53.2

Earnings per share:

Net income (loss) 43.4 ( 76.6 )

Foreign currency translation adjustments, net of tax ( 0.5 ) 1.2

Unrealized (loss) gain on debt securities available-for-sale, net of tax ( 3.2 ) 4.0

Comprehensive income (loss) $ 39.7 $ ( 71.4 )

Earnings (loss) per share:

Basic $ 0.43 $ ( 0.79 )

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(in millions) Shares $ Total

Balances at June 30, 2023

97.6 $ 0.1 $ 2,241.9 $ ( 1.1 ) $ ( 387.9 ) $ 1,853.0

Net income — — — — 83.1 83.1

Other comprehensive loss, net of tax — — — ( 0.6 ) — ( 0.6 )

Stock-based compensation expense — — 47.8 — — 47.8

Issuances of common stock under stock plans 0.6 — 18.8 — — 18.8

Balances at September 30, 2023

98.2 $ 0.1 $ 2,308.5 $ ( 1.7 ) $ ( 304.8 ) $ 2,002.1

Balances at June 30, 2022

Balance at December 31, 2023

98.7 $ 0.1 $ 2,382.0 $ 7.0 $ ( 157.1 ) $ 2,232.0

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Issuances of common stock under stock plans 1.9 — 69.9 — — 69.9

Balances at September 30, 2022

Balance at March 31, 2024

100.6 $ 0.1 $ 2,496.4 $ 3.3 $ ( 113.7 ) $ 2,386.1

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96.5 $ 0.1 $ 2,122.4 $ ( 7.9 ) $ ( 406.8 ) $ 1,707.8

Net income — — — — 102.0 102.0

Net loss — — — — ( 76.6 ) ( 76.6 )

Other comprehensive income, net of tax — — — 5.2 — 5.2

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Issuances of common stock under stock plans 1.0 — 8.2 — — 8.2

Balance at September 30, 2023

98.2 $ 0.1 $ 2,308.5 $ ( 1.7 ) $ ( 304.8 ) $ 2,002.1

Balance at December 31, 2021

94.9 $ 0.1 $ 2,011.4 $ ( 1.7 ) $ ( 635.8 ) $ 1,374.0

Net income — — — — 65.5 65.5

Other comprehensive loss, net of tax — — — ( 12.3 ) — ( 12.3 )

Cumulative-effect adjustment due to adoption of ASU 2020-06 — — ( 106.8 ) — 74.5 ( 32.3 )

Stock-based compensation expense — — 129.6 — — 129.6

Issuances of common stock under stock plans 1.2 — 20.1 — — 20.1

Balance at September 30, 2022

Balance at March 31, 2023

97.5 $ 0.1 $ 2,170.5 $ ( 2.7 ) $ ( 483.4 ) $ 1,684.5

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2024 2023

Cash flows from operating activities:

Net income $ 102.0 $ 65.5

Adjustments to reconcile net income to net cash from operating activities:

Net income (loss) $ 43.4 $ ( 76.6 )

Adjustments to reconcile net income (loss) to net cash from operating activities:

Stock-based compensation expense 44.5 39.9

Charges associated with convertible senior notes

Depreciation 5.3 4.1

Amortization of debt issuance costs 0.6 1.0

Accretion of discount on investments, net ( 7.1 ) ( 2.1 )

Amortization of intangible assets 0.9 0.9

Changes in fair value of equity security investments 0.6 ( 23.6 )

Changes in fair value of equity investments ( 1.6 ) ( 2.2 )

Deferred income taxes ( 15.6 ) ( 31.6 )

Loss on extinguishment of convertible senior notes — 70.0

Other 3.4 ( 0.1 )

1 unchanged sentence

Accounts receivable ( 11.3 ) ( 41.7 )

Inventories 6.3 ( 6.5 )

Inventory 1.1 1.8

Accounts payable and accrued liabilities ( 18.6 ) 6.7

4 unchanged sentences

Sales and maturities of debt securities available-for-sale 276.3 203.9

Purchases of equity security investments ( 31.3 ) ( 7.7 )

Purchases of equity investments — ( 31.3 )

Capital expenditures ( 11.2 ) ( 8.5 )

2 unchanged sentences

Issuances of common stock under benefit plans 69.9 8.2

Repurchase of convertible senior notes — ( 279.0 )

Cash flows from financing activities 69.9 8.2

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Non-cash capital expenditures $ 1.1 $ 0.6

Right-of-use assets acquired through operating leases $ 1.8 $ —

Cash paid for interest $ 1.9 $ 4.6

Cash paid for income taxes $ 0.2 $ 0.2

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Basis of Presentation .

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions of the Securities and Exchange Commission, or SEC, on Form 10-Q and Rule 10-01 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X.

Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements.

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The condensed consolidated balance sheet as of December 31, 2023, has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

There were no significant changes to our significant accounting policies as disclosed in the 2022 Form 10-K, except as set forth below.

Strategic investments.

We account for certain equity investments subject to the equity method of accounting, or through which we have the ability to exercise significant influence (but not control) over the operating and financial policies of an investee, under the fair value option.

In assessing whether we exercise significant influence, we consider the nature and magnitude of such an investment, the voting and protective rights we hold, any participation in the governance of the investee and other relevant factors, such as the presence of a collaborative or other business relationship.

Such investments in publicly traded companies are currently classified within Level 1 of the fair value hierarchy and carried at fair value, with any changes in the fair value of such investments recognized in earnings.

Recently Adopted Accounting Pronouncements.

In June 2022, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The ASU also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and introduces certain disclosure requirements for equity securities subject to such restrictions.

The amendments in ASU 2022-03 should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption.

We adopted ASU 2022-03 on January 1, 2023 with no significant impact on our condensed consolidated financial statements.

There were no significant changes to our significant accounting policies as disclosed in the 2023 Form 10-K.

Recently Issued Accounting Pronouncements Not Yet Adopted.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and for interim reporting periods beginning January 1, 2025, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-09.

Collaboration and License Agreements

Heptares Therapeutics Limited, or Heptares.

We entered into a collaboration and license agreement with Heptares, which became effective in December 2021, to develop and commercialize certain compounds containing sub-type selective muscarinic M1, M4, or dual M1/M4 receptor agonists, for which we have the exclusive rights to develop, manufacture and commercialize worldwide, excluding in Japan, where Heptares retains the rights to develop, manufacture, and commercialize all compounds comprised of M1 receptor agonists, subject to certain exceptions.

With respect to such rights retained by Heptares, we retain the rights to opt in to profit sharing arrangements, pursuant to which we and Heptares will equally share in the operating profits and losses for such compounds in Japan.

Subject to specified conditions, we may elect to exercise such opt-in rights with respect to each such compound either before initiation of the first proof of concept Phase II clinical trial for such compound or following our receipt from Heptares of the top-line data from such clinical trial for such compound.

Nxera Pharma UK Limited, or Nxera.

In 2021, we entered into a collaboration and license agreement with Nxera (formerly Heptares Therapeutics Limited) to develop and commercialize certain compounds containing sub-type selective muscarinic M1, M4, or dual M1/M4 receptor agonists, which we have the exclusive rights to develop, manufacture and commercialize worldwide, excluding in Japan, where Nxera retains the rights to develop, manufacture, and commercialize all compounds comprised of M1 receptor agonists, subject to certain exceptions.

With respect to such rights retained by Nxera, we retain the rights to opt in to profit sharing arrangements, pursuant to which we and Nxera will equally share in the operating profits and losses for such compounds in Japan.

Subject to specified conditions, we may elect to exercise such opt-in rights with respect to each such compound either before initiation of the first proof of concept Phase 2 clinical trial for such compound or following our receipt from Nxera of the top-line data from such clinical trial for such compound.

We are responsible for all development, manufacturing, and commercialization costs of any collaboration product.

In connection with the agreement, we paid Heptares $ 100.0 million upfront, which, including certain transaction-related costs, was expensed as in-process research and development, or IPR&D, in 2021.

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

In connection with the United States Food and Drug Administration's, or FDA's, acceptance of our investigational new drug application for NBI-1117568 for the treatment of schizophrenia in June 2022, we paid Heptares a milestone of $ 30.0 million, which was expensed as research and development, or R&D, in the second quarter of 2022.

Under the terms of the agreement, Heptares may be entitled to receive potential future payments of up to $ 2.6 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product.

Under the terms of the agreement, Nxera may be entitled to receive potential future payments of up to $ 2.6 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product.

Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by-country basis until the date on which the royalty term for such licensed product has expired in such country.

On a licensed product-by-licensed product and country-by-country basis, royalty payments would commence on the first commercial sale of a licensed product and terminate on the later of (i) the expiration of the last patent covering such licensed product in such country, (ii) a number of years from the first commercial sale of such licensed product in such country and (iii) the expiration of regulatory exclusivity for such licensed product in such country.

We may terminate the agreement in its entirety or with respect to one or more targets upon 180 days’ written notice to Heptares during the research collaboration term and upon 90 days’ written notice to Heptares following the expiration of the research collaboration term.

Following the expiration of the research collaboration term, Heptares may terminate the agreement on a target-by-target basis in the event that we do not conduct any material development activities outside of Japan with respect to a certain compound or licensed product within the applicable target class for a continuous period of not less than 365 days and do not commence any such activities within 120 days of receiving written notice.

We may terminate the agreement in its entirety or with respect to one or more targets upon 180 days’ written notice to Nxera during the research collaboration term and upon 90 days’ written notice to Nxera following the expiration of the research collaboration term.

Following the expiration of the research collaboration term, Nxera may terminate the agreement on a target-by-target basis in the event that we do not conduct any material development activities outside of Japan with respect to a certain compound or licensed product within the applicable target class for a continuous period of not less than 365 days and do not commence any such activities within 120 days of receiving written notice.

Either party may terminate the agreement, subject to specified conditions, (i) in the event of material breach by the other party, subject to a cure period, (ii) if the other party challenges the validity or enforceability of certain intellectual property rights, subject to a cure period, or (iii) if the other party becomes insolvent or takes certain actions related to insolvency.

Takeda Pharmaceutical Company Limited, or Takeda.

In 2020, we entered into an exclusive license agreement with Takeda, pursuant to which we acquired the exclusive rights to develop and commercialize certain early to mid-stage psychiatry compounds, including luvadaxistat, NBI-1065845, NBI-1065846 and four non-clinical stage compounds.

Luvadaxistat and the four non-clinical stage compounds have each been designated as a royalty-bearing product.

In 2020, we entered into an exclusive license agreement with Takeda, pursuant to which we acquired the exclusive rights to develop and commercialize certain early to mid-stage psychiatry compounds, including luvadaxistat, NBI-1070770, NBI-1065845, NBI-1065846 and three non-clinical stage compounds.

Luvadaxistat, NBI-1070770, and the three non-clinical stage compounds have each been designated as a royalty-bearing product.

NBI-1065845 and NBI-1065846 are currently each designated as a profit-share product.

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Takeda retains the rights to opt-out of the profit-sharing arrangements, pursuant to which Takeda would be entitled to receive potential future payments upon the achievement of certain event-based milestones with respect to such compounds and receive royalties on the future net sales of such compounds (in lieu of equally sharing in the operating profits and losses).

Takeda may elect to exercise such opt-out right for such compound immediately following the completion of a second Phase II clinical trial for such compound, or, under certain circumstances related to the development and commercialization activities to be performed by us, before the initiation of a Phase III clinical trial for such compound.

In connection with the agreement, we paid Takeda $ 120.0 million upfront, which, including certain transaction-related costs, was expensed as IPR&D in 2020.

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

In connection with the approval of our clinical trial application for NBI-1070770 for the treatment of major depressive disorder in July 2022, we paid Takeda a milestone of $ 5.0 million, which was expensed as R&D in the third quarter of 2022.

Takeda may elect to exercise such opt-out right for such compound immediately following the completion of a second Phase 2 clinical trial for such compound, or, under certain circumstances related to the development and commercialization activities to be performed by us, before the initiation of a Phase 3 clinical trial for such compound.

Under the terms of the agreement, Takeda may be entitled to receive potential future payments of up to $ 1.9 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any royalty-bearing product.

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We are responsible for all manufacturing, development and commercialization costs of any collaboration product.

In connection with the agreement, we paid Idorsia $ 45.0 million upfront, which was expensed as IPR&D in 2020.

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

Under the terms of the agreement, Idorsia may be entitled to receive potential future payments of up to $ 1.7 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product.

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We are responsible for all development and manufacturing costs of any collaboration product, subject to certain exceptions.

In connection with the agreement, we paid Xenon $ 50.0 million upfront, including a purchase of approximately 1.4 million shares of Xenon common stock (at $ 14.196 per share).

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

The purchased shares were recorded at a fair value of $ 14.1 million after considering Xenon’s stock price on the measurement date and certain transfer restrictions applicable to the shares.

The remaining $ 36.2 million of the purchase price, which includes certain transaction-related costs, was expensed as IPR&D in 2019.

In connection with the European Union’s approval of our clinical trial application for NBI-921352 for the treatment of focal onset seizures in adults in September 2021, we paid Xenon a regulatory milestone of $ 10.0 million, including a purchase of approximately 0.3 million shares of Xenon common stock (at $ 19.9755 per share).

The purchased shares were recorded at a fair value of $ 4.6 million after considering Xenon’s stock price on the measurement date and certain transfer restrictions that were applicable to the shares.

The remaining $ 5.4 million of the milestone payment was expensed as R&D in 2021.

In connection with the FDA's acceptance of our amended KAYAK TM study protocol in January 2022, we paid Xenon a regulatory milestone of $ 15.0 million, including a purchase of approximately 0.3 million shares of Xenon common stock (at $ 31.855 per share).

The purchased shares were recorded at a fair value of $ 7.7 million after considering Xenon’s stock price on the measurement date.

The remaining $ 7.3 million of the milestone payment was expensed as R&D in the first quarter of 2022.

In connection with entering the agreement in 2019, we purchased approximately 1.4 million shares (at $ 14.196 per share) of Xenon common stock (the 2019 Xenon Shares).

The 2019 Xenon Shares were recorded at a fair value of $ 14.1 million after considering Xenon’s stock price and certain transfer restrictions that were applicable to the shares on the measurement date.

In connection with the achievement of a development milestone in 2021, we purchased approximately 0.3 million shares (at $ 19.9755 per share) of Xenon common stock (the 2021 Xenon Shares).

The 2021 Xenon Shares were recorded at a fair value of $ 4.6 million after considering Xenon’s stock price and certain transfer restrictions that were applicable to the shares on the measurement date.

In connection with the achievement of a development milestone in 2022, we purchased approximately 0.3 million shares (at $ 31.855 per share) of Xenon common stock (the 2022 Xenon Shares).

The 2022 Xenon Shares were recorded at a fair value of $ 7.7 million after considering Xenon’s stock price on the measurement date.

Under the terms of the agreement, Xenon may be entitled to receive potential future payments of up to $ 1.7 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product.

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2019 Voyager Agreement.

In 2019, we entered into a collaboration and license agreement with Voyager, or the 2019 Voyager Agreement, pursuant to which we retain certain rights to develop and commercialize the Friedreich’s ataxia program and two undisclosed programs.

In 2019, we entered into a collaboration and license agreement with Voyager (the 2019 Voyager Agreement), pursuant to which we retain certain rights to develop and commercialize the Friedreich’s ataxia (FA) program and two undisclosed programs.

We are responsible for all development and commercialization costs of any collaboration product under the 2019 Voyager Agreement, subject to certain co-development and co-commercialization rights retained by Voyager.

In connection with the 2019 Voyager Agreement, we paid Voyager $ 165.0 million upfront, including a purchase of approximately 4.2 million shares of Voyager common stock (at $ 11.9625 per share), or the 2019 Purchased Shares, which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years from the effective date of the 2023 Voyager Agreement (defined below).

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

The 2019 Purchased Shares were recorded at a fair value of $ 54.7 million after considering Voyager’s stock price and certain transfer restrictions that were applicable to the shares on the measurement date.

The remaining $ 113.1 million of the purchase price, which includes certain transaction-related costs, was expensed as IPR&D in 2019.

In addition, we paid Voyager $ 5.0 million upfront, which was expensed as IPR&D in 2019, to acquire the rights outside the United States to the Friedreich’s ataxia program.

In connection with the 2019 Voyager Agreement, we purchased approximately 4.2 million shares (at $ 11.9625 per share) of Voyager common stock (the 2019 Voyager Shares), which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years from the effective date of the 2023 Voyager Agreement (defined below).

The 2019 Voyager Shares were recorded at a fair value of $ 54.7 million after considering Voyager’s stock price and certain transfer restrictions that were applicable to the shares on the measurement date.

In connection with the selection of a development candidate under the FA program pursuant to our collaboration with Voyager in February 2024, we paid Voyager a milestone of $ 5.0 million, which was expensed as research and development in the first quarter of 2024.

Under the terms of the 2019 Voyager Agreement, Voyager may be entitled to receive potential future payments of up to $ 1.3 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product, subject to certain co-development and co-commercialization rights retained by Voyager.

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2023 Voyager Agreement.

In the first quarter of 2023, we entered into a collaboration and license agreement with Voyager, or the 2023 Voyager Agreement, pursuant to which we acquired the global rights to the gene therapy products directed to the gene that encodes glucosylceramidase beta 1, or GBA1, for the treatment of Parkinson's disease and other diseases associated with GBA1, or the GBA1 Program, and three gene therapy programs directed to rare central nervous system, or CNS, targets, each enabled by Voyager's next-generation TRACER TM capsids.

With respect to collaboration products subject to the GBA1 Program, we are responsible for all development and commercialization costs of any such products, including in the United States, where Voyager retains certain co-development and co-commercialization rights.

Voyager may elect to exercise such rights, pursuant to which we and Voyager would equally share in the operating profits and losses of such products in the United States (in lieu of Voyager being entitled to receive potential future payments of certain event-based milestones upon their achievement in the United States and receive royalties on the future net sales of such products in the United States), following Voyager’s receipt of the top-line data from a first Phase I clinical trial for each such product.

Irrespective of Voyager’s election to exercise such rights, Voyager may be entitled to receive potential future payments upon the achievement of certain event-based milestones outside the United States and would be entitled to receive royalties on the future net sales of any such product outside the United States.

In 2023, we entered into a collaboration and license agreement with Voyager (the 2023 Voyager Agreement), pursuant to which we acquired the global rights to the gene therapy products directed to the gene that encodes glucosylceramidase beta 1 (GBA1) for the treatment of Parkinson's disease and other diseases associated with GBA1 (the GBA1 Program), and three gene therapy programs directed to rare central nervous system (CNS) targets, each enabled by Voyager's next-generation TRACER TM capsids.

With respect to collaboration products subject to the GBA1 Program, we are responsible for all development and commercialization costs of any such products, including in the U.S., where Voyager retains certain co-development and co-commercialization rights.

Voyager may elect to exercise such rights, pursuant to which we and Voyager would equally share in the operating profits and losses of such products in the U.S.

(in lieu of Voyager being entitled to receive potential future payments of certain event-based milestones upon their achievement in the U.S.

and receive royalties on the future net sales of such products in the U.S.), following Voyager’s receipt of the top-line data from a first clinical trial Parkinson’s disease.

However, if we and Voyager elect to focus on an indication other than Parkinson’s disease prior to Voyager’s receipt of top-line data from a first clinical trial for Parkinson’s disease, then Voyager may elect to exercise such co-development and co-commercialization rights after the later of:

(i) Voyager’s receipt of top-line data from the first clinical trial of a product that is the subject of the GBA1 Program or (ii) the date we and Voyager decide not to pursue Parkinson’s disease as an indication for development under the GBA1 Program.

Irrespective of Voyager’s election to exercise such rights, Voyager may be entitled to receive potential future payments upon the achievement of certain event-based milestones outside the U.S.

and would be entitled to receive royalties on the future net sales of any such product outside the U.S.

With respect to collaboration products subject to the three gene therapy programs directed to rare CNS targets, we are responsible for all development and commercialization costs for any such products.

In connection with the 2023 Voyager Agreement, we paid Voyager $ 175.0 million upfront, including a purchase of approximately 4.4 million shares of Voyager common stock (at $ 8.88 per share), or the 2023 Purchased Shares, which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years from the effective date of the 2023 Voyager Agreement.

In addition, as part of the collaboration, Jude Onyia, Ph.D., Chief Scientific Officer of Neurocrine, was appointed to Voyager's board of directors with an initial term expiring in 2024.

In connection with the 2023 Voyager Agreement, we paid Voyager $ 175.0 million upfront, including a purchase of approximately 4.4 million shares (at $ 8.88 per share) of Voyager common stock (the 2023 Voyager Shares), which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years from the effective date of the 2023 Voyager Agreement.

In addition, as part of the collaboration, Jude Onyia, Ph.D., Chief Scientific Officer of Neurocrine Biosciences, was appointed to Voyager's board of directors.

Onyia (or another individual designated by us) will be nominated for election to Voyager's board of directors annually for a maximum duration of 10 years from the effective date of the 2023 Voyager Agreement.

As a result, our equity investment in Voyager became subject to the equity method of accounting, and Voyager became a related party, following our purchase of the 2023 Voyager Shares, after which, together with the 2019 Voyager Shares, we owned approximately 19.9 % of the voting stock of Voyager.

We elected the fair value option to account for our equity investment in Voyager as we believe it creates greater transparency regarding the investment's fair value at future reporting dates.

The 2023 Voyager Shares were recorded at a fair value of $ 31.3 million after considering Voyager’s stock price on the measurement date.

The remaining $ 143.9 million of the purchase price, which includes certain transaction-related costs, was expensed as in-process research and development in the first quarter of 2023 as the license had no foreseeable alternative future use.

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

Our strategic investment in Voyager became subject to the equity method of accounting following our purchase of the 2023 Purchased Shares, after which, together with the 2019 Purchased Shares, we owned approximately 19.9 % of the voting stock of Voyager.

We elected the fair value option to account for our strategic investment in Voyager as we believe it creates greater transparency regarding the investment's fair value at future reporting dates.

The 2023 Purchased Shares were recorded at a fair value of $ 31.3 million after considering Voyager’s stock price on the measurement date.

The remaining $ 143.9 million of the purchase price, which includes certain transaction-related costs, was expensed as IPR&D in the first quarter of 2023 as the license had no foreseeable alternative future use.

We recognized an unrealized loss of $ 31.7 million for the third quarter of 2023 and an unrealized gain of $ 9.6 million for the first nine months of 2023 on our strategic investment in Voyager.

As of September 30, 2023, the fair value (Level 1) of our strategic investment in Voyager was $ 66.5 million.

We recognized unrealized gains of $ 7.5 million and $ 9.3 million, respectively, on our equity investment in Voyager for the first quarter of 2024 and 2023.

As of March 31, 2024, the fair value (Level 1) of our equity investment in Voyager was $ 79.8 million.

Under the terms of the 2023 Voyager Agreement, Voyager may be entitled to receive potential future payments of up to $ 6.1 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product, subject to certain co-development and co-commercialization rights retained by Voyager.

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We may terminate the 2023 Voyager Agreement upon 180 days’ written notice to Voyager prior to the first commercial sale of any collaboration product under the 2023 Voyager Agreement or upon one year after the date of notice if such notice is provided after the first commercial sale of any collaboration product under the 2023 Voyager Agreement.

BIAL – Portela & Ca, S.A., or BIAL.

In 2017, we received from BIAL a license to commercialize and market ONGENTYS ® (opicapone) in the United States and Canada.

We launched ONGENTYS in the United States in September 2020 as an FDA-approved add-on treatment to levodopa/carbidopa in patients with Parkinson's disease experiencing motor fluctuations.

In the first quarter of 2023, we provided BIAL with written notice of termination of the license agreement to commercialize and market ONGENTYS in the United States and Canada.

The termination is anticipated to be effective in December 2023.

Mitsubishi Tanabe Pharma Corporation, or MTPC.

We out-licensed the rights to valbenazine in Japan and other select Asian markets to MTPC in 2015.

In December 2020, we entered into a commercial supply agreement with MTPC, pursuant to which we supply MTPC with valbenazine drug product for commercial use in such markets.

In 2015, we out-licensed the rights to valbenazine in Japan and other select Asian markets to MTPC.

In 2020, we entered into a commercial supply agreement with MTPC, pursuant to which we supply MTPC with valbenazine drug product for commercial use in such markets.

MTPC is responsible for all development, manufacturing and commercialization costs of valbenazine in such markets.

In June 2022, MTPC launched DYSVAL ® (valbenazine) in Japan for the treatment of tardive dyskinesia.

In connection with MTPC's first commercial sale of DYSVAL in Japan, we recognized milestone revenue of $ 20.0 million in the second quarter of 2022.

In addition, we receive royalties at tiered percentage rates on MTPC net sales of DYSVAL.

MTPC launched DYSVAL ® (valbenazine) in Japan for the treatment of tardive dyskinesia in June 2022 and subsequently in other select Asian markets, where it is marketed as REMLEAS ® (valbenazine).

We receive royalties at tiered percentage rates on MTPC net sales of valbenazine.

Under the terms of our license agreement with MTPC, we may be entitled to receive potential future payments of up to $ 30.0 million upon the achievement of certain sales-based milestones and are entitled to receive royalties at tiered percentage rates on future MTPC net sales of valbenazine for the longer of 10 years or the life of the related patent rights.

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AbbVie Inc., or AbbVie.

We out-licensed the global rights to elagolix to AbbVie in 2010.

In 2010, we out-licensed the global rights to elagolix to AbbVie.

AbbVie is responsible for all development and commercialization costs of elagolix.

In August 2018, AbbVie launched ORILISSA ® (elagolix tablets) in the United States for the treatment of moderate to severe pain associated with endometriosis.

In June 2020, AbbVie launched ORIAHNN ® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsules) in the United States for the treatment of heavy menstrual bleeding related to uterine fibroids in premenopausal women.

We receive royalties at tiered percentage rates on AbbVie net sales of elagolix and recognized elagolix royalty revenue of $ 4.2 million and $ 6.1 million, respectively, for the third quarter of 2023 and 2022 and $ 12.0 million and $ 15.5 million, respectively, for the first nine months of 2023 and 2022.

AbbVie launched ORILISSA ® (elagolix tablets) in the U.S.

for the treatment of moderate to severe pain associated with endometriosis in August 2018 and ORIAHNN ® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsules) in the U.S.

for the treatment of heavy menstrual bleeding due to uterine fibroids in June 2020.

We receive royalties at tiered percentage rates on AbbVie net sales of elagolix and recognized elagolix royalty revenue of $ 3.0 million and $ 3.7 million, respectively, for the first quarter of 2024 and 2023.

Under the terms of our license agreement with AbbVie, we may be entitled to receive potential future payments of up to $ 366.0 million upon the achievement of certain event-based milestones and are entitled to receive royalties at tiered percentage rates on future AbbVie net sales of elagolix for the longer of 10 years or the life of the related patent rights.

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The following table presents the amortized cost, unrealized gain and loss recognized in accumulated other comprehensive income (loss) and fair value of debt securities available-for-sale, aggregated by major security type and contractual maturity.

September 30,

2024 December 31,

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These investments are of high credit quality, and we do not intend to sell these investments and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost basis.

No allowance for credit losses was recognized as of September 30, 2023 or December 31, 2022.

The following table presents debt securities available-for-sale that were in an unrealized loss position as of September 30, 2023, aggregated by major security type and length of time in a continuous loss position.

No allowance for credit losses was recognized as of March 31, 2024 or December 31, 2023.

The following table presents debt securities available-for-sale that were in an unrealized loss position as of March 31, 2024, aggregated by major security type and length of time in a continuous loss position.

Less Than 12 Months 12 Months or Longer Total

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Value Unrealized

Commercial paper $ 32.1 $ ( 0.2 ) $ — $ — $ 32.1 $ ( 0.2 )

Corporate debt securities $ 265.1 $ ( 0.4 ) $ 183.8 $ ( 1.0 ) $ 448.9 $ ( 1.4 )

Securities of government-sponsored entities $ 214.6 $ ( 0.2 ) $ 16.7 $ ( 0.4 ) $ 231.3 $ ( 0.6 )

Accrued interest receivables on debt securities available-for-sale totaled $ 8.1 million and $ 4.7 million, respectively, as of September 30, 2023 and December 31, 2022.

Accrued interest receivables on debt securities available-for-sale totaled $ 12.6 million and $ 11.2 million, respectively, as of March 31, 2024 and December 31, 2023.

We do not measure an allowance for credit losses for accrued interest receivables.

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Uncollectible accrued interest receivables associated with an impaired debt security are reversed against interest income upon identification of the impairment.

No accrued interest receivables were written off during the first nine months of 2023 or 2022.

No accrued interest receivables were written off during the first three months of 2024 or 2023.

Fair Value Measurements

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The following table presents a summary of financial assets, which were measured at fair value on a recurring basis.

September 30,

2024 December 31,

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$ 2,082.5 $ 567.8 $ 1,514.7 $ 1,889.0 $ 421.0 $ 1,468.0

Inventories consisted of the following:

(in millions) September 30,

Other Balance Sheet Details

Inventory consisted of the following:

(in millions) March 31,

2024 December 31,

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Finished goods 7.5 12.3

Total inventories

Less inventory reserves

( 0.4 ) ( 5.2 )

Total inventory

$ 37.2 $ 38.3

Accounts payable and accrued liabilities consisted of the following:

(in millions) March 31,

2024 December 31,

Sales rebates and reserves $ 185.9 $ 139.3

Accrued employee related costs 42.6 86.2

Current branded prescription drug fee 35.3 45.7

Accrued development costs 41.3 44.3

Current income taxes payable

Accounts payable and other accrued liabilities 87.3 108.9

Total accounts payable and accrued liabilities $ 417.2 $ 448.8

Other noncurrent liabilities consisted of the following:

(in millions) March 31,

2024 December 31,

Noncurrent income taxes payable

$ 101.1 $ 96.0

Noncurrent branded prescription drug fee

Total other noncurrent liabilities $ 120.5 $ 106.3

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.

(in millions) March 31,

2024 March 31,

Cash and cash equivalents $ 396.3 $ 103.8

Restricted cash included in other noncurrent assets

Total cash, cash equivalents and restricted cash $ 404.3 $ 111.6

Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill.

Goodwill is included in other assets in our condensed consolidated balance sheets.

Goodwill is included in other noncurrent assets in our condensed consolidated balance sheets.

(in millions) Amount

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Foreign currency translation adjustments ( 0.1 )

Balance as of September 30, 2023

The following table presents information relating to our recognized intangible assets as of September 30, 2023.

Balance as of March 31, 2024

The following table presents information relating to our recognized intangible assets as of March 31, 2024.

(dollars in millions) Useful Life Gross Carrying Amount Accumulated Amortization Net

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Total intangible assets, net $ 34.3

The following table presents approximate future annual amortization expense for our finite-lived intangible assets as of September 30, 2023.

The following table presents approximate future annual amortization expense for our finite-lived intangible assets as of March 31, 2024.

(in millions) Amount

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Thereafter $ 13.7

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.

(in millions) September 30,

2023 September 30,

Cash and cash equivalents $ 293.7 $ 212.2

Restricted cash included in other assets 8.0 7.8

Total cash, cash equivalents and restricted cash $ 301.7 $ 220.0

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following:

(in millions) September 30,

2023 December 31,

Sales rebates and reserves $ 184.0 $ 131.9

Income taxes payable 72.7 9.0

Accrued employee related costs 68.6 72.8

Current branded prescription drug fee 44.5 27.5

Accrued development costs 39.5 39.1

Accounts payable and other accrued liabilities 93.8 67.3

Total accounts payable and accrued liabilities $ 503.0 $ 347.6

Our operating leases that have commenced have terms that expire beginning 2025 through 2036 and consist of office space and research and development laboratories, including our corporate headquarters.

Certain of these lease agreements contain clauses for renewal at our option.

As we were not reasonably certain to exercise any of these renewal options at commencement of the associated leases, no such options were recognized as part of our operating lease right-of-use, or ROU, assets or operating lease liabilities.

In connection with our operating leases, in lieu of a cash security deposits, Wells Fargo Bank, N.A.

issued letters of credit on our behalf, which are secured by deposits totaling $ 7.8 million.

As we were not reasonably certain to exercise any of these renewal options at commencement of the associated leases, no such options were recognized as part of our right-of-use (ROU) assets or operating lease liabilities.

The following table presents supplemental operating lease information for operating leases that have commenced.

Nine Months Ended

September 30,

Three Months Ended

(in millions, except weighted average data) 2024 2023

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Cash paid for amounts included in the measurement of operating lease liabilities $ 6.1 $ 4.4

September 30,

2023 September 30,

2024 March 31,

Weighted average remaining lease term

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Weighted average discount rate 5.1 % 5.3 %

The following table presents approximate future non-cancelable minimum lease payments under operating leases and sublease income as of September 30, 2023.

Restricted cash related to letters of credit issued in lieu of cash security deposits $ 7.8 $ 7.8

The following table presents approximate future non-cancelable minimum lease payments under operating leases and sublease income as of March 31, 2024.

(in millions) Operating

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_________________________

(1) Amounts presented in the table above exclude $ 17.2 million for 2024, $ 33.3 million for 2025, $ 41.9 million for 2026, $ 43.2 million for 2027 and $ 436.5 million thereafter of approximate non-cancelable future minimum lease payments under operating leases that have not yet commenced.

(1) Amounts presented in the table above exclude $ 15.4 million for 2025, $ 23.6 million for 2026, $ 24.3 million for 2027, $ 25.1 million for 2028 and $ 223.5 million thereafter of approximate non-cancelable future minimum lease payments under operating leases related to our new campus facility that have not yet commenced.

New Campus Facility.

On February 8, 2022, we entered into a lease agreement for a new four-building campus facility in San Diego, California.

This campus facility, comprised of office space and research and development laboratories, will serve as our new corporate headquarters upon completion of its construction.

Under the terms of the lease, we also secured a six-year option for the construction of a fifth building and an option to purchase the entire campus in the future.

Under the terms of the lease, on a building-by-building basis, base rent will be subject to a 10-month rent abatement period following the respective lease commencement date.

After the rent abatement period, monthly base rent will be $ 6 per square foot, subject to annual escalations of 3 % during the initial 13.6-year lease term, which term we have the option to renew for two additional terms of five years each.

The construction of the campus facility is phased, with the first phase of construction relating to office space scheduled for completion by the end of 2023.

The commencement of this lease for accounting purposes will be determined for each building based upon its readiness for occupancy.

On a building-by-building basis, we will recognize a lease liability, corresponding right-of-use asset, and initiate lease expense recognition when this condition has been met.

As we prepare to occupy our new campus facility, we sublease certain of our existing leased premises when we determine there is excess leased capacity.

On February 8, 2022, we entered into a lease agreement for a four-building campus facility to be constructed in San Diego, California, including a six-year option for the construction of a fifth building.

This campus facility, comprised of office space and research and development laboratories, now serves as our corporate headquarters.

The construction of the campus facility is phased.

The first phase of construction, consisting of two buildings relating to office space, was completed in December 2023 and resulted in the recognition of ROU assets and operating lease liabilities totaling $ 199.0 million and $ 189.8 million, respectively.

As we begin to occupy our new campus facility, we will sublease certain of our existing leased premises when we determine there is excess leased capacity.

Certain of these subleases contain both lease and non-lease components.

Sublease income is recognized as an offset to operating expense on a straight-line basis over the lease term.

Income related to non-lease components is recognized in operating expenses as a reduction to costs we incur in relation to the head lease.

Income related to non-lease components is recognized in operating expenses as a reduction to costs we incur in relation to the primary lease.

Further, ROU assets are reviewed for impairment when indicators of impairment are present.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities.

An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Corporate ROU assets identified for sublease in connection with excess leased capacity are tested for impairment individually when the cash flows related to the ROU asset are determined to be independent from the cash flows of other assets and liabilities.

Corporate ROU assets are otherwise tested for impairment on a consolidated level with consideration given to all cash flows of the company as corporate functions do not generate cash flows and are funded by revenue-producing activities at lower levels of the entity.

Convertible Senior Notes

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Interest on the 2024 Notes is due semi-annually on May 15 and November 15 of each year.

In 2020, we repurchased $ 136.2 million aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $ 186.9 million in cash, which resulted in the recognition of an $ 18.4 million loss on extinguishment.

In 2022, we repurchased $ 210.8 million aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $ 279.0 million in cash, which resulted in the recognition of a $ 70.0 million loss on extinguishment in the second quarter of 2022.

The following table presents a summary of the 2024 Notes as of September 30, 2023.

Amount Unamortized Issuance Costs Net Carrying

In 2020, we repurchased $ 136.2 million aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $ 186.9 million in cash.

In 2022, we repurchased $ 210.8 million aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $ 279.0 million in cash.

In January 2024, we provided notice to the holders of the 2024 Notes electing to settle all conversions of the 2024 Notes which occur on or after January 15, 2024 in cash.

Consequently, the embedded conversion option of the 2024 Notes (the conversion feature) required bifurcation and separate accounting from the 2024 Notes as it no longer qualified for the equity scope exception under ASC 815.

Upon bifurcation of the conversion feature, we recorded a derivative liability at a fair value of $ 126.6 million (Level 3) and a corresponding debt discount that will be accreted over the remaining term of the 2024 Notes using the straight-line method.

Subsequent changes in the fair value of the derivative liability and accretion of the debt discount will be recorded in other income (expense), net in our condensed consolidated statements of operations.

The following table presents a reconciliation of the beginning and ending balances for the derivative liability measured at fair value using significant unobservable inputs (Level 3).

(in millions) Amount

Balance as of December 31, 2023

Initial fair value

Change in fair value

Balance as of March 31, 2024

The following table presents a summary of charges recognized in connection with the bifurcation of the conversion feature of the 2024 Notes in the first quarter of 2024.

(in millions) Amount

Accretion of debt discount

Change in fair value

Charges associated with convertible senior notes

The following table presents a summary of the 2024 Notes as of March 31, 2024.

Amount Unamortized Debt Net Carrying

Amount Fair Value

(in millions) Amount Leveling

2024 Notes $ 170.4 $ ( 0.5 ) $ 169.9 $ 252.5 Level 2

(in millions) Issuance Costs Discount Amount Leveling

Convertible senior notes

$ 170.4 $ ( 0.1 ) $ ( 47.5 ) $ 122.8 $ 309.5 Level 2

The following table presents a summary of the 2024 Notes as of December 31, 2023.

Amount Unamortized Issuance Costs Net Carrying

Amount Unamortized Debt Net Carrying

Amount Fair Value

(in millions) Amount Leveling

2024 Notes $ 170.4 $ ( 1.0 ) $ 169.4 $ 268.0 Level 2

The following table presents a summary of the interest expense of the 2024 Notes.

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2023 2022 2023 2022

Coupon interest $ 0.9 $ 1.0 $ 2.9 $ 5.0

Amortization of debt discount and issuance costs 0.2 0.2 0.6 1.0

Total interest expense $ 1.1 $ 1.2 $ 3.5 $ 6.0

(in millions) Issuance Costs Discount Amount Leveling

Convertible senior notes

$ 170.4 $ ( 0.3 ) $ — $ 170.1 $ 295.7 Level 2

The initial conversion rate for the 2024 Notes, which is subject to adjustment in some events (as provided for in the 2017 Indenture), is 13.1711 shares of common stock per $ 1,000 principal amount and equivalent to an initial conversion price of approximately $ 75.92 per share, reflecting a conversion premium of approximately 42.5 % above the closing price of $ 53.28 per share of our common stock on April 26, 2017.

We may redeem for cash all or part of the 2024 Notes if the last reported sale price (as defined in the 2017 Indenture) of our common stock has been at least 130 % of the conversion price then in effect (equal to $ 98.70 as of September 30, 2023) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately before the date which we provide notice of redemption.

On or after May 15, 2021, we had the ability to redeem for cash all or part of the 2024 Notes if the last reported sale price (as defined in the 2017 Indenture) of our common stock had been at least 130 % of the conversion price then in effect (equal to $ 98.70 as of March 31, 2024) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately before the date which we provide a notice of redemption.

Holders of the 2024 Notes may convert the 2024 Notes at any time prior to the close of business on the business day immediately preceding May 15, 2024, only under the following circumstances:

(i) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130 % of the conversion price (equal to $ 98.70 as of September 30, 2023) on each applicable trading day;

(ii) during the five business-day period immediately after any five consecutive trading-day period (the measurement period) in which the trading price (as defined in the 2017 Indenture) per $ 1,000 principal amount of the 2024 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

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(iv) if we call the 2024 Notes for redemption, until the close of business on the business day immediately preceding the redemption date.

As the conditional conversion feature described under (i) above was triggered as of September 30, 2023, holders of the 2024 Notes may convert the 2024 Notes at any time during the period beginning on October 1, 2023, and ending at the close of business on December 29, 2023.

On or after January 15, 2024, until the close of business on the scheduled trading day immediately preceding May 15, 2024, holders of the 2024 Notes may convert the 2024 Notes at any time.

Upon conversion, holders will receive the principal amount of their 2024 Notes in cash and any conversion premium, calculated based on the per share volume-weighted average price for each of the 30 consecutive trading days during the observation period (as more fully described in the 2017 Indenture), in either cash or shares of our common stock.

Until the close of business on the scheduled trading day immediately preceding May 15, 2024, holders of the 2024 Notes may convert the 2024 Notes at any time.

Upon conversion, holders of the 2024 Notes will receive the principal amount of their 2024 Notes and any conversion premium, calculated based on the per share volume-weighted average price (VWAP) for each of the 30 consecutive trading days during the observation period (as more fully described in the 2017 Indenture), in cash.

If we undergo a fundamental change (as defined in the 2017 Indenture), subject to certain conditions, holders of the 2024 Notes may require us to repurchase for cash all or part of their 2024 Notes at a repurchase price equal to 100 % of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

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The 2017 Indenture contains customary events of default with respect to the 2024 Notes, including that upon certain events of default, 100 % of the principal and accrued and unpaid interest on the 2024 Notes will automatically become due and payable.

Earnings per Share

Earnings per share was calculated as follows:

Earnings (Loss) per Share

Earnings (loss) per share were calculated as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2024 2023

Net income - basic and diluted $ 83.1 $ 68.5 $ 102.0 $ 65.5

Weighted-average shares outstanding:

Net income (loss) - basic and diluted $ 43.4 $ ( 76.6 )

Weighted-average common shares outstanding:

Basic 99.8 97.1

Effect of dilutive securities 3.8 —

Stock options 1.8 1.9 1.7 1.7

Restricted stock 0.7 0.8 0.7 0.5

2024 Notes 0.6 0.6 0.6 0.5

Diluted 103.6 97.1

Earnings per share, basic $ 0.85 $ 0.72 $ 1.05 $ 0.69

Earnings per share, diluted $ 0.82 $ 0.69 $ 1.01 $ 0.67

Earnings (loss) per share:

Basic $ 0.43 $ ( 0.79 )

Diluted $ 0.42 $ ( 0.79 )

Shares excluded from diluted per share amounts because their effect would have been anti-dilutive 1.7 15.5

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

What changed 10-Q

Item 1. Financial Statements