What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-30 compared with 2024-08-01 · 87 added, 78 removed, 398 unchanged (29% of the section changed)

3 unchanged sentences

(in millions, except per share data)

September 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 349.1 $ 251.1

Debt securities available-for-sale 899.2 780.5

Available-for-sale debt securities 878.9 780.5

Accounts receivable 481.1 439.3

2 unchanged sentences

Deferred tax assets 454.4 362.6

Debt securities available-for-sale 637.8 687.5

Available-for-sale debt securities 643.9 687.5

Right-of-use assets 257.3 276.5

Equity security investments 143.6 161.9

Equity investments 126.7 161.9

Property and equipment, net 80.0 70.8

20 unchanged sentences

Accumulated other comprehensive income 14.5 7.0

Accumulated deficit

( 48.7 ) ( 157.1 )

Retained earnings (accumulated deficit) 81.1 ( 157.1 )

Total stockholders’ equity 2,718.9 2,232.0

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2024 2023 2024 2023

8 unchanged sentences

Total operating expenses 438.3 357.6 1,299.1 1,271.3

Operating income (loss) 145.4 73.6 244.7 ( 40.6 )

Other (expense) income:

Unrealized (loss) gain on equity securities ( 19.9 ) 37.3 ( 18.3 ) 39.5

Operating income 183.8 141.2 428.5 100.6

Other income (expense):

Unrealized loss on equity investments ( 16.9 ) ( 40.1 ) ( 35.2 ) ( 0.6 )

Charges associated with convertible senior notes

1 unchanged sentence

Investment income and other, net 23.4 14.5 68.5 33.9

Total other (expense) income, net ( 46.8 ) 48.0 ( 111.6 ) 58.9

Income before provision for income taxes

Total other income (expense), net

6.5 ( 25.6 ) ( 105.1 ) 33.3

Provision for (benefit from) income taxes

Income before provision for income taxes

190.3 115.6 323.4 133.9

Provision for income taxes 60.5 32.5 85.2 31.9

Net income $ 129.8 $ 83.1 $ 238.2 $ 102.0

Foreign currency translation adjustments, net of tax 2.9 ( 1.4 ) 2.5 0.7

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

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

9.1 0.8 5.0 5.5

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss)

Common Stock Additional Paid-In Capital Accumulated Deficit

Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit)

Common Stock Additional Paid-In Capital

(in millions) Shares $ Total

Balance at March 31, 2024

Balance at June 30, 2024

100.9 $ 0.1 $ 2,555.3 $ 2.5 $ ( 48.7 ) $ 2,509.2

Net income — — — — 129.8 129.8

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

— — — 12.0 — 12.0

1 unchanged sentence

Issuances of common stock under stock plans 0.3 — 26.4 — — 26.4

Balance at June 30, 2024

Balance at September 30, 2024

101.2 $ 0.1 $ 2,623.2 $ 14.5 $ 81.1 $ 2,718.9

Balance at March 31, 2023

Balance 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 income, net of tax — — — 1.6 — 1.6

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

Balance at June 30, 2023

Balance at September 30, 2023

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

2 unchanged sentences

Net income — — — — 238.2 238.2

Other comprehensive loss, net of tax — — — ( 4.5 ) — ( 4.5 )

Other comprehensive income, net of tax

— — — 7.5 — 7.5

Stock-based compensation expense — — 129.1 — — 129.1

Issuances of common stock under stock plans 2.5 — 112.1 — — 112.1

Balance at June 30, 2024

Balance at September 30, 2024

101.2 $ 0.1 $ 2,623.2 $ 14.5 $ 81.1 $ 2,718.9

5 unchanged sentences

Issuances of common stock under stock plans 1.7 — 29.9 — — 29.9

Balance at June 30, 2023

Balance at September 30, 2023

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

6 unchanged sentences

Depreciation 17.3 12.9

Accretion of discount on investments, net ( 14.1 ) ( 6.0 )

Accretion of discount on available-for-sale debt securities, net ( 20.6 ) ( 12.0 )

Amortization of intangible assets 2.7 2.7

Changes in fair value of equity investments 18.3 ( 39.5 )

Changes in fair values of equity investments 35.2 0.6

Deferred income taxes ( 91.8 ) ( 77.3 )

7 unchanged sentences

Cash flows from investing activities:

Purchases of debt securities available-for-sale ( 511.8 ) ( 530.0 )

Sales and maturities of debt securities available-for-sale 451.4 408.6

Purchases of equity securities — ( 31.3 )

Purchases of available-for-sale debt securities ( 744.3 ) ( 892.7 )

Sales and maturities of available-for-sale debt securities 716.7 681.6

Purchases of equity investments — ( 31.3 )

Capital expenditures ( 30.9 ) ( 22.9 )

4 unchanged sentences

Cash flows from financing activities ( 196.7 ) 29.9

Effect of exchange rate changes on cash and cash equivalents 0.3 —

Change in cash, cash equivalents and restricted cash 98.0 31.0

2 unchanged sentences

Supplemental disclosures:

Non-cash capital expenditures $ 3.3 $ 0.8

Accrued capital expenditures

Right-of-use assets acquired through operating leases $ 9.0 $ 1.8

27 unchanged sentences

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.

In 2021, we entered into a collaboration and license agreement with Nxera (formerly Sosei Heptares) 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.

1 unchanged sentence

We are responsible for all development, manufacturing, and commercialization costs 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.

In connection with the successful completion of a long-term toxicity program for NBI-1117568 in April 2024, we paid Nxera a milestone of $ 15.0 million, which was expensed as research and development (R&D) in the second quarter of 2024.

NBI-1117568 is a first-in-class, orally active, highly selective investigational M4 agonist in Phase 2 development as a potential treatment for schizophrenia.

In connection with the successful completion of the Phase 2 clinical study for NBI-1117568 in August 2024, we paid Nxera a milestone of $ 35.0 million, which was expensed as R&D in the third quarter of 2024.

We expect to advance NBI-1117568 into Phase 3 development in the first half of 2025, which would trigger a milestone of $ 15.0 million payable to Nxera upon initiation of the Phase 3 clinical study.

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.

5 unchanged sentences

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.

In the third quarter of 2024, we provided Takeda with written notice of termination of the license agreement to develop and commercialize luvadaxistat and NBI-1065846.

The termination is anticipated to be effective in April 2025.

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

We are responsible for all manufacturing, development and commercialization costs of any royalty-bearing product.

With respect to NBI-1065845 and NBI-1065846, we and Takeda will equally share in the operating profits and losses.

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 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.

NBI-1065845 is currently designated as a profit-share product, meaning we and Takeda will equally share in the operating profits and losses.

Takeda retains the right to opt-out of the profit-sharing arrangement, pursuant to which Takeda would be entitled to receive potential future payments upon the achievement of certain event-based milestones with respect to NBI-1065845 and receive royalties on the future net sales of NBI-1065845 (in lieu of equally sharing in the operating profits and losses).

Takeda may elect to exercise the opt-out right for NBI-1065845 immediately following the completion of a second Phase 2 clinical study for NBI-1065845, or, under certain circumstances related to the development and commercialization activities to be performed by us, before the initiation of a Phase 3 clinical study for NBI-1065845.

In connection with the initiation of a Phase 2 clinical study for NBI-1070770 as a potential treatment for major depressive disorder in April 2024, we paid Takeda a milestone of $ 7.5 million, which was expensed as R&D in the second quarter of 2024.

Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by-country basis until the date on which, (i) for any royalty-bearing product, the royalty term has expired in such country;

6 unchanged sentences

Idorsia Pharmaceuticals Ltd., or Idorsia.

In 2020, we entered into a collaboration and license agreement with Idorsia, pursuant to which we acquired the global rights to NBI-827104, a potent, selective, orally active and brain penetrating T-type calcium channel blocker in clinical development for the treatment of a rare pediatric epilepsy and other potential indications, including essential tremor.

In 2020, we entered into a collaboration and license agreement with Idorsia, pursuant to which we acquired the exclusive rights to develop and commercialize NBI-827104, a potent, selective, orally active and brain penetrating T-type calcium channel blocker in clinical development for the treatment of a rare pediatric epilepsy and other potential indications, including essential tremor.

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

In the fourth quarter of 2024, we provided Idorsia with written notice of termination of the license agreement to develop and commercialize NBI-827104.

The termination is anticipated to be effective in January 2025.

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.

22 unchanged sentences

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 R&D in the first quarter of 2024.

In connection with the selection of a development candidate under the FA program pursuant to our collaboration with Voyager, we expensed a milestone of $ 5.0 million as R&D 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.

20 unchanged sentences

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 recognized unrealized losses of $ 12.0 million and $ 4.5 million, respectively, for the second quarter and first six months of 2024 and unrealized gains of $ 32.1 million and $ 41.3 million, respectively, for the second quarter and first six months of 2023 on our equity investment in Voyager.

As of June 30, 2024, the fair value (Level 1) of our equity investment in Voyager was $ 67.8 million.

In connection with the selection of a development candidate under the GBA1 program pursuant to our collaboration with Voyager in April 2024, we paid Voyager a milestone of $ 3.0 million, which was expensed as R&D in the second quarter of 2024.

In connection with the selection of development candidates under the GBA1 program pursuant to our collaboration with Voyager, we expensed milestones of $ 3.0 million as R&D in both the second and third quarters of 2024.

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.

16 unchanged sentences

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 $ 3.5 million and $ 4.2 million, respectively, for the second quarter of 2024 and 2023 and $ 6.5 million and $ 7.9 million, respectively, for the first six months of 2024 and 2023.

We receive royalties at tiered percentage rates on AbbVie net sales of elagolix and recognized elagolix royalty revenue of $ 3.3 million and $ 4.2 million, respectively, for the third quarter of 2024 and 2023 and $ 9.8 million and $ 12.0 million, respectively, for the first nine months 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.

1 unchanged sentence

In such event, all out-licensed product rights would revert to us.

Debt Securities

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.

Available-for-Sale Debt Securities

The following table presents a summary of available-for-sale debt securities, aggregated by major security type and contractual maturity.

September 30,

2024 December 31,

13 unchanged sentences

$ 637.1 $ 7.0 $ ( 0.2 ) $ 643.9 $ 684.6 $ 3.4 $ ( 0.5 ) $ 687.5

Unrealized losses on our available-for-sale debt security investments were primarily due to changes in interest rates.

Unrealized losses on available-for-sale debt securities were primarily due to changes in interest rates.

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 June 30, 2024 or December 31, 2023.

The following table presents debt securities available-for-sale that were in an unrealized loss position as of June 30, 2024, aggregated by major security type and length of time in a continuous loss position.

No allowance for credit losses was recognized as of September 30, 2024 or December 31, 2023.

The following table presents available-for-sale debt securities that were in an unrealized loss position as of September 30, 2024, aggregated by major security type and length of time in a continuous loss position.

Less Than 12 Months 12 Months or Longer Total

5 unchanged sentences

Securities of government-sponsored entities $ 84.8 $ ( 0.1 ) $ — $ — $ 84.8 $ ( 0.1 )

The following table presents debt securities available-for-sale that were in an unrealized loss position as of December 31, 2023, aggregated by major security type and length of time in a continuous loss position.

The following table presents available-for-sale debt securities that were in an unrealized loss position as of December 31, 2023, aggregated by major security type and length of time in a continuous loss position.

Less Than 12 Months 12 Months or Longer Total

5 unchanged sentences

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 $ 12.6 million and $ 11.2 million, respectively, as of June 30, 2024 and December 31, 2023.

Accrued interest receivables on available-for-sale debt securities totaled $ 13.5 million and $ 11.2 million, respectively, as of September 30, 2024 and December 31, 2023.

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

1 unchanged sentence

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 six months of 2024 or 2023.

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

Fair Value Measurements

3 unchanged sentences

Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions that market participants would use in pricing the asset or liability when there is little, if any, market activity for the asset or liability at the measurement date.

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

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

September 30,

2024 December 31,

2 unchanged sentences

(in millions) Level 1 Level 2 Level 1 Level 2

Cash and money market funds $ 139.7 $ 139.7 $ — $ 251.1 $ 251.1 $ —

Restricted cash 8.0 8.0 — 8.0 8.0 —

Commercial paper 57.2 — 57.2 53.5 — 53.5

Corporate debt securities 1,004.9 — 1,004.9 867.2 — 867.2

Securities of government-sponsored entities 474.9 — 474.9 547.3 — 547.3

Equity security investments 143.6 143.6 — 161.9 161.9 —

Cash and cash equivalents $ 349.1 $ 349.1 $ — $ 251.1 $ 251.1 $ —

Available-for-sale debt securities 1,522.8 — 1,522.8 1,468.0 — 1,468.0

Equity investments 126.7 126.7 — 161.9 161.9 —

$ 1,998.6 $ 475.8 $ 1,522.8 $ 1,881.0 $ 413.0 $ 1,468.0

1 unchanged sentence

Inventory consisted of the following:

(in millions) June 30,

(in millions) September 30,

2024 December 31,

3 unchanged sentences

Less inventory reserves

( 1.2 ) ( 5.2 )

Total inventory

1 unchanged sentence

Accounts payable and accrued liabilities consisted of the following:

(in millions) June 30,

(in millions) September 30,

2024 December 31,

6 unchanged sentences

Other noncurrent liabilities consisted of the following:

(in millions) June 30,

(in millions) September 30,

2024 December 31,

1 unchanged sentence

$ 134.9 $ 96.0

Noncurrent branded prescription drug fee

Other noncurrent liabilities

Total other noncurrent liabilities $ 135.0 $ 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) June 30,

2024 June 30,

(in millions) September 30,

2024 September 30,

Cash and cash equivalents $ 349.1 $ 293.7

4 unchanged sentences

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

(in millions) Amount

(in millions)

Balance as of December 31, 2023

Foreign currency translation adjustments 0.3

Balance as of June 30, 2024

Balance as of September 30, 2024

The following table presents information relating to our recognized intangible assets.

September 30,

2024 December 31,

5 unchanged sentences

Total intangible assets, net $ 34.5 $ 35.5

The following table presents approximate future annual amortization expense for our finite-lived intangible assets as of June 30, 2024.

(in millions) Amount

The following table presents approximate future annual amortization expense for our finite-lived intangible assets as of September 30, 2024.

(in millions)

2024 (3 months remaining)

4 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

(in millions, except weighted average data) 2024 2023

3 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities $ 24.0 $ 13.4

2024 June 30,

September 30,

2024 September 30,

Weighted average remaining lease term

2 unchanged sentences

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 June 30, 2024.

The following table presents approximate future non-cancelable minimum lease payments under operating leases and sublease income as of September 30, 2024.

(in millions) Operating

14 unchanged sentences

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.

The second phase of construction, consisting of two buildings relating to laboratory space, is scheduled for completion by the end of 2024.

As we continue to occupy our new campus facility, certain of our existing leased properties will be marketed for sublease when we determine there is excess leased capacity.

23 unchanged sentences

The 2024 Notes were settled in full upon maturity on May 15, 2024.

The following table presents a summary of charges recognized in connection with the bifurcation of the conversion feature of the 2024 Notes and conversions of the 2024 Notes by holders during the first six months of 2024.

(in millions) Amount

(in millions)

Accretion of debt discount associated with derivative liability $ 126.6

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2024 2023 2024 2023

9 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements