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Item 2. Management’s Discussion and Analysis

2025-05-05 compared with 2024-10-30 · 74 added, 133 removed, 112 unchanged (65% of the section changed)

1 unchanged sentence

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations section contains forward-looking statements, which involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A under the caption “Risk Factors.” The interim financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the six months ended June 30, 2024.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A under the caption “Risk Factors.” The interim financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company with a simple purpose:

to relieve suffering for people with great needs, but few options.

We are dedicated to discovering and developing life-changing treatments for patients with under-addressed neurological, neuroendocrine and neuropsychiatric disorders.

The company’s diverse portfolio includes U.S.

Food and Drug Administration (FDA) approved treatments for tardive dyskinesia, chorea associated with Huntington's disease, endometriosis and uterine fibroids in collaboration with AbbVie Inc.

(AbbVie), as well as a diversified portfolio of multiple compounds in mid- to late-phase clinical development across our core therapeutic areas.

We are dedicated to discovering and developing life-changing treatments for patients with under-addressed neuropsychiatric, neurological, and neuroendocrine disorders.

Our portfolio of products includes U.S.

Food and Drug Administration (FDA) approved treatments for tardive dyskinesia (TD), chorea associated with Huntington's disease, classic congenital adrenal hyperplasia (CAH), and endometriosis and uterine fibroids in collaboration with AbbVie Inc.

In addition, we have a diversified portfolio of multiple compounds in mid- to late-phase development across our core therapeutic areas and an expanding early-phase pipeline that includes a range of modalities including small molecules, peptides, proteins, antibodies, and gene therapy.

We launched INGREZZA ® (valbenazine) in the U.S.

as the first FDA-approved drug for the treatment of tardive dyskinesia in May 2017 and for the treatment of chorea associated with Huntington's disease in August 2023.

We estimate that tardive dyskinesia affects approximately 800,000 people in the U.S.

and approximately 90% of the 40,0000 people in in the U.S.

diagnosed with Huntington’s disease will develop chorea.

Key elements of our commercial strategy include maximizing the opportunity in INGREZZA through consistent and effective commercial execution, continued development of valbenazine as the best-in-class treatment for new patient populations and to lead the evolving understanding of VMAT2 biology and its role in disease.

INGREZZA net product sales accounted for approximately 99% of our total net product sales for the first nine months of 2024.

Our partner Mitsubishi Tanabe Pharma Corporation (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).

as the first FDA-approved drug for the treatment of TD in May 2017 and for the treatment of chorea associated with Huntington's disease in August 2023 and launched CRENESSITY TM (crinecerfont) in the U.S.

as a first-in-class FDA-approved treatment of CAH in December 2024.

We estimate that TD affects approximately 800,000 people in the U.S., that approximately 90% of the 40,000 people in the U.S.

affected by Huntington’s disease will develop chorea, and that CAH affects at least 20,000 people in the U.S.

Key elements of our commercial strategy include maximizing the opportunities in INGREZZA and CRENESSITY through consistent and effective commercial execution, continued development of valbenazine as the best-in-class treatment for new patient populations, and to lead the evolving understanding of vesicular monoamine transporter 2 (VMAT2) biology and its role in disease.

INGREZZA net product sales totaled $545.2 million and $506.0 million, respectively, for the first quarter of 2025 and 2024 and accounted for substantially all of our total net product sales during each of these reporting periods.

CRENESSITY net product sales totaled $14.5 million for the first quarter of 2025.

Our partner Mitsubishi Tanabe Pharma Corporation (MTPC) launched DYSVAL ® (valbenazine) in Japan for the treatment of TD 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.

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Business Highlights

• Kevin Gorman, Ph.D., retired as Chief Executive Officer (CEO) effective October 11, 2024.

Kyle Gano, Ph.D., formerly Neurocrine’s Chief Business Development and Strategy Officer, succeeded Dr.

Gorman in the CEO role and also joined the Company’s Board of Directors at that time.

Gorman will continue to serve on the Company’s Board.

• Received notification from the Centers for Medicare and Medicaid Services that INGREZZA qualified for the Specified Small Manufacturer Exception pertaining to the Part D redesign of the Inflation Reduction Act.

• Settled the convertible senior notes due May 15, 2024 (the 2024 Notes) in full in cash upon maturity.

• Deployed expanded INGREZZA psychiatry and long-term care sales teams to better serve patients by accelerating the number of people who are diagnosed and treated for tardive dyskinesia and chorea associated with Huntington's disease with INGREZZA.

• In October 2024, our Board of Directors authorized a share repurchase program to repurchase up to $300 million of our common stock, which we intend to execute by entering into an accelerated share repurchase transaction with a financial institution, subject to market conditions.

• In February 2025, our Board of Directors authorized a new share repurchase program (the 2025 Repurchase Program) under which we may repurchase up to $500.0 million of our common stock, subject to market conditions.

The 2025 Repurchase Program is in addition to the $300.0 million accelerated repurchase program (the 2024 Repurchase Program) that was announced in October 2024 and completed in February 2025.

During the first quarter of 2025, we repurchased 1.4 million shares on the open market under the 2025 Repurchase Program and received an additional 0.3 million shares upon settlement of the 2024 Repurchase Program in February 2025.

• In January 2025, we received Centers for Medicare and Medicaid Services (CMS) notification that INGREZZA qualifies for the small biotech exception under the Medicare Drug Price Negotiation Program, which provides exemption from selection until 2027 for initial price applicability in 2029.

In addition, in April 2025, we expanded formulary access for INGREZZA, significantly improving coverage to now include two-thirds of TD and Huntington's disease Medicare beneficiaries.

• Appointed Sanjay Keswani, M.D., as Chief Medical Officer (CMO) and member of the Company's executive management team effective June 2, 2025.

Pipeline Highlights

• Announced positive topline data for the Phase 2 study of NBI-1117568, a first-in-class, orally active, highly selective investigational M4 agonist, in development as a potential treatment for schizophrenia.

The successful completion of the Phase 2 study triggered a $35.0 million milestone payment to Nxera Pharma UK Limited (Nxera) 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 an additional $15.0 million milestone payment to Nxera upon initiation of the Phase 3 study.

• Announced positive topline data for the Phase 2 SAVITRI™ study.

This randomized, double-blind, placebo-controlled dose-finding study assessed the efficacy and safety of NBI-1065845 in adult subjects with major depressive disorder (MDD).

NBI-1065845 is an investigational alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid (AMPA) positive allosteric modulator (PAM) in development as a potential treatment for patients with MDD who have not benefited from treatment with at least one antidepressant in their current episode of depression.

• Announced FDA accepted New Drug Applications (NDAs) and granted Priority Review for crinecerfont for pediatric and adult patients with classic congenital adrenal hyperplasia (CAH).

The agency set Prescription Drug User Fee (PDUFA) target action dates of December 29, 2024 for the capsule formulation and December 30, 2024 for the oral solution formulation.

• At the Endocrine Society Annual Meeting (ENDO 2024), presented new Phase 3 clinical study data from the CAHtalyst™ registrational studies of crinecerfont in pediatric and adult patients with CAH due to 21-hydroxylase deficiency.

In parallel, announced that the primary study results from the CAHtalyst™ registrational studies of crinecerfont in pediatric and adult patients with CAH due to 21-hydroxylase deficiency have been published in The New England Journal of Medicine.

• Initiated Phase 2 study of NBI-1070770 in adults with MDD.

NBI-1070770 is a novel, selective, and orally active, negative allosteric modulator (NAM) of the NR2B subunit-containing N-methyl-D-aspartate (NMDA NR2B) receptor.

• Initiated Phase 1 study of NBI-1117567 in healthy adult participants.

NBI-1117567 is an investigational, oral, M1/M4 (M1 preferring) selective muscarinic agonist for the potential treatment of neurological and neuropsychiatric conditions.

• Initiated Phase 1 study of NBI-1076968 in healthy adult participants.

NBI-1076968 is an investigational, oral, M4 subtype-selective muscarinic antagonist for the potential treatment of movement disorders.

• Received approval from the FDA for INGREZZA ® SPRINKLE (valbenazine) capsules, a new oral granules formulation of INGREZZA capsules, and subsequently launched new sprinkle formulation of INGREZZA capsules for the treatment of adults with tardive dyskinesia and chorea associated with Huntington’s disease.

• Presented KINECT ® -HD2 interim data at the 2024 MDS International Congress of Parkinson’s Disease and Movement Disorders demonstrating robust and sustained improvements in chorea associated with Huntington’s disease through week 104 irrespective of antipsychotic use.

• Announced the ERUDITE™ Phase 2 study of luvadaxistat (NBI-1065844) in cognitive impairment associated with schizophrenia (CIAS) did not meet its primary endpoint.

In addition, we provided Takeda Pharmaceutical Company Limited (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.

• Provided Idorsia Pharmaceuticals Ltd.

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.

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Net Product Sales by Sales Product.

• Initiated a Phase 3 clinical study for osavampator (formerly NBI-1065845) in major depressive disorder (MDD), which resulted in the expense of a $37.5 million milestone payable to Takeda Pharmaceutical Company Limited (Takeda) as research and development (R&D) in the first quarter of 2025 and payment in the second quarter of 2025.

• Initiated a Phase 1 clinical study for NBI-921355, an investigational, selective inhibitor of voltage-gated sodium channels Na v 1.2 and Na v 1.6, as a potential treatment of certain types of epilepsy, which resulted in the expense of a $7.5 million milestone payable to Xenon Pharmaceuticals Inc.

(Xenon) as R&D in the first quarter of 2025 and payment in the second quarter of 2025.

• Initiated a Phase 1 clinical study for NBI-1140675, an investigational, oral, selective second-generation small molecule VMAT2 inhibitor in development for the potential treatment of certain neurological and neuropsychiatric conditions.

• Announced top-line data from a Phase 4 study, KINECT-PRO™, demonstrating clinically meaningful and sustained effects of INGREZZA capsules on the physical, social, and emotional impacts experienced by patients living with TD, irrespective of TD severity or underlying psychiatric condition.

• Initiated a Phase 3 clinical study for NBI-1117568 in the second quarter of 2025, which triggered a milestone of $15.0 million payable to Nxera Pharma UK Limited upon initiation of the Phase 3 study.

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Net Product Sales

Three Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

2024 2023 2024 2023

INGREZZA $ 545.2 $ 506.0

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Total net product sales $ 563.7 $ 509.0

Compared with the comparable period last year, the increase in total net product sales for the first nine months of 2024 primarily reflected increased INGREZZA net product sales driven by strong underlying patient demand and improved gross-to-net dynamics.

Collaboration Revenues by Category.

Compared with the comparable period last year, the increase primarily reflected increased net product sales of INGREZZA, driven by underlying patient demand and improved gross-to-net dynamics, and CRENESSITY, which was launched in the U.S.

as a first-in-class FDA-approved treatment of CAH in December 2024.

Collaboration Revenues

Three Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

2024 2023 2024 2023

Royalty revenue $ 4.6 $ 5.6 $ 13.5 $ 14.6

0.9 1.4 4.7 3.9

Total collaboration revenues $ 8.9 $ 6.3

Total collaboration revenues for all periods presented primarily reflected royalty revenue earned on AbbVie net sales of elagolix and MTPC net sales of DYSVAL.

Total collaboration revenues for all periods presented primarily reflected royalties earned on AbbVie net sales of elagolix and MTPC net sales of valbenazine.

Operating Expenses

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Three Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

2024 2023 2024 2023

Cost of revenues $ 9.2 $ 7.5

Compared with the comparable period last year, the decrease in cost of revenues for the first nine months of 2024 primarily reflected the impact of decreased ONGENTYS ® (opicapone) net product sales and lower ONGENTYS inventory reserves in connection with the termination of our license agreement with BIAL, which became effective in December 2023, partially offset by the impact of increased INGREZZA net product sales.

Research and Development by Category.

Compared with the comparable period last year, the increase primarily reflected increased net product sales of INGREZZA and increased royalties payable on net product sales of CRENESSITY.

Research and Development

We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs, and business development opportunities.

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

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Research and discovery 50.9 26.2

Milestone 38.8 0.3 71.4 0.3

Milestones 45.4 6.1

Payroll and benefits 75.0 57.6

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Total research and development $ 263.2 $ 159.4

Consists of expenses incurred for product candidates in Phase II registrational studies and all subsequent activities.

Compared with the comparable period last year, the decrease in late-stage expenses for the first nine months of 2024 primarily reflected the successful completion of the Phase 3 programs for crinecerfont in CAH in the third quarter of 2023 and lower spend on certain of our late-stage VMAT2 programs.

Late stage consists of costs incurred for product candidates in Phase 2 registrational studies and all subsequent activities.

Compared with the comparable period last year, the increase primarily reflected increased investment in the Phase 3 programs for osavampator in MDD and NBI-1117568 in schizophrenia, partially offset by the successful completion of the Phase 3 program for crinecerfont in CAH.

Early Stage .

Consists of expenses incurred for product candidates after the approval of an investigational new drug application by the applicable regulatory agency through Phase II non-registrational studies.

Compared with the comparable period last year, the decrease in early-stage expenses for the first nine months of 2024 primarily reflected lower spend on early stage programs in epilepsy, offset by increased investment in our muscarinic programs and advancing Phase 2 programs in psychiatry.

Early stage consists of costs incurred for product candidates after the approval of an investigational new drug application by the applicable regulatory agency through Phase 2 non-registrational studies.

Compared with the comparable period last year, the decrease primarily reflected the successful completions of the Phase 2 programs for osavampator in MDD and NBI-1117568 in schizophrenia and lower spend on early-stage epilepsy programs, partially offset by increased investment in certain early-stage muscarinic programs.

Research and Discovery .

Consists of expenses incurred prior to the approval of an investigational new drug application by the applicable regulatory agency.

Compared with the comparable period last year, the increase in research and discovery expenses for the first nine months of 2024 primarily reflected increased investment in preclinical development programs, including our gene therapy programs.

Consists of milestone expenses incurred in connection with our collaborative arrangements.

Compared with the comparable period last year, the increase in milestone expenses for the first nine months of 2024 primarily reflected expense recognized in connection with development milestones achieved under our collaborations with Nxera, Takeda, and Voyager Therapeutics, Inc.

Research and discovery consists of costs incurred prior to the approval of an investigational new drug application by the applicable regulatory agency.

Compared with the comparable period last year, the increase reflected increased investments in gene therapy and other preclinical development programs.

Milestones consists of costs incurred in connection with the achievement of development milestones under our collaborative arrangements.

Compared with the comparable period last year, the increase primarily reflected first quarter 2025 expenses of $37.5 million and $7.5 million, respectively, for development milestones achieved under our collaborations with Takeda and Xenon.

Payroll and Benefits.

Consists of costs incurred for salaries and wages, payroll taxes, benefits, and stock-based compensation associated with employees involved in research and development activities.

Stock-based compensation may fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates stock-based grants are issued and timing of expense recognition related to performance-based restricted stock units, which is generally recognized ratably over the expected performance period once the predefined performance-based criteria for vesting becomes probable.

Compared with the comparable period last year, the increase in payroll and benefits expenses for the first nine months of 2024 primarily reflected higher headcount, partially offset by decreased non-cash stock-based compensation expense driven by a charge related to a change in equity grant agreement terms in the second quarter of 2023.

Payroll and benefits consists of costs incurred for salaries and wages, payroll taxes, benefits, and stock-based compensation associated with employees involved in research and development activities.

Stock-based compensation may fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates stock-based grants are issued.

Compared with the comparable period last year, the increase primarily reflected higher headcount and a $6.0 million increase in non-cash stock-based compensation expense.

Facilities and Other.

Consists of indirect costs incurred for the benefit of multiple programs, including depreciation, information technology, and other facility-based expenses, such as rent expense.

Compared with the comparable period last year, the increase in facilities and other expenses for the first nine months of 2024 primarily reflected increased rent expense related to our new campus facility.

Acquired In-Process Research and Development, or IPR&D.

Three Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

2024 2023 2024 2023

Acquired in-process research and development $ 1.0 $ — $ 9.5 $ 143.9

Compared with the comparable period last year, the decrease in IPR&D expense for the first nine months of 2024 reflected lower payments for upfront fees in connection with our collaborations.

In the first nine months of 2023, we recognized $143.9 million of IPR&D expense in connection with payment of the upfront fee pursuant to the expansion of our collaboration with Voyager.

Selling, General, and Administrative, or SG&A.

Facilities and other consists of indirect costs incurred for the benefit of multiple programs, including facility-based expenses (such as rent expense) and other overhead allocations.

Compared with the comparable period last year, the increase primarily reflected increased facility-based expenses related to our new campus facility.

Selling, General, and Administrative

Three Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

2024 2023 2024 2023

Selling, general, and administrative $ 276.5 $ 243.1

Compared with the comparable period last year, the increase in SG&A expenses for the first nine months of 2024 primarily reflected continued investment in our commercial organization, including the recent expansion of our psychiatry and long-term care sales team in September 2024, pre-launch crinecerfont activities, increased facility expenses related to our new campus facility and impairment charges of $14.0 million associated with leased office space that has been vacated as we continue to occupy our new campus facility, partially offset by decreased non-cash stock-based compensation expense driven by a charge related to a change in equity grant agreement terms in the second quarter of 2023.

Other Income (Expense), Net.

Compared with the comparable period last year, the increase primarily reflected continued investment in our commercial organization, including the expansion of our psychiatry and long-term care sales team completed in September 2024 and CRENESSITY-related headcount and commercial launch activities, and a $2.3 million increase in non-cash stock-based compensation expense.

Other (Expense) Income

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

Unrealized loss on equity investments

(16.9) (40.1) (35.2) (0.6)

Unrealized (loss) gain on equity investments (30.6) 1.6

Charges associated with convertible senior notes — (88.7)

— — (138.4) —

Investment income and other, net 21.7 22.3

Total other income (expense), net

$ 6.5 $ (25.6) $ (105.1) $ 33.3

Compared with the comparable period last year, the increase in total other expense, net, for the first nine months of 2024 primarily reflected $138.4 million of expense recognized in connection with conversions of the 2024 Notes upon maturity in May 2024 and periodic fluctuations in the fair values of our equity investments, partially offset by increased interest income on our debt security investments.

Provision for Income Taxes.

Total other expense, net $ (8.9) $ (64.8)

Compared with the comparable period last year, the change primarily reflected prior year charges associated with the convertible senior notes that matured in May 2024 and periodic fluctuations in the fair values of our equity investments.

Provision for (Benefit from) Income Taxes

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

Provision for income taxes $ 60.5 $ 32.5 $ 85.2 $ 31.9

The effective tax rate for the third quarter and first nine months of 2024 varied from the federal and state statutory rates primarily due to credits generated for research activities, certain nondeductible expenses including debt extinguishment, excess tax benefits related to stock-based compensation, and losses incurred in foreign jurisdictions for which no tax benefit was recorded as management cannot conclude that it is more likely than not that the tax benefit of such losses will be realized in the future.

For the comparable periods last year, the effective tax rate varied from the federal and state statutory rates primarily due to credits generated for research activities, certain nondeductible expenses, the impact of changes in the state effective rate, and losses incurred in foreign jurisdictions for which no tax benefit was recorded as management cannot conclude that it is more likely than not that the tax benefit of such losses will be realized in the future.

Provision for (Benefit from) income taxes

$ 6.8 $ (8.9)

The effective tax rate for the first quarter of 2025 varied from the federal and state statutory rates primarily due to credits generated for research activities, certain nondeductible expenses, excess tax benefits related to stock-based compensation, fluctuations in state effective tax rates, and losses in foreign and domestic jurisdictions for which no tax benefit was recorded as management cannot conclude that it is more likely than not that the tax benefit of such losses will be realized in the future.

For the comparable period last year, the effective tax rate varied from the federal and state statutory rates primarily due to credits generated for research activities, certain nondeductible expenses including debt extinguishment, excess tax benefits related to stock-based compensation, and losses incurred in foreign jurisdictions for which no tax benefit was recorded as management cannot conclude that it is more likely than not that the tax benefit of such losses will be realized in the future.

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

Net income $ 7.9 $ 43.4

Compared with the comparable period last year, the increase in net income for the first nine months of 2024 primarily reflected increased INGREZZA net product sales, increased interest income on our debt security investments, and lower total payments for upfront fees and development milestones achieved in connection with our collaborations, partially offset by $138.4 million of expense recognized in connection with conversions of the 2024 Notes upon maturity in May 2024, periodic fluctuations in the fair values of our equity investments, and continued investment in our commercial organization, including pre-launch crinecerfont activities, and expanded pre-clinical and clinical portfolio.

Compared with the comparable period last year, the decrease primarily reflected increased expense for development milestones achieved under our collaborations with Takeda and Xenon, periodic fluctuations in the fair values of our equity investments, and continued investments in our commercial organization, including the expansion of our psychiatry and long-term care sales team completed in September 2024 and CRENESSITY-related headcount and commercial launch activities, and expanded pre-clinical and clinical portfolio, partially offset by increased net product sales of INGREZZA and CRENESSITY and prior year charges associated with the convertible senior notes that matured in May 2024.

Liquidity and Capital Resources

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Information Regarding Our Financial Condition

(in millions) September 30,

(in millions) March 31,

2025 December 31,

Total cash, cash equivalents, and marketable securities $ 1,758.8 $ 1,815.6

$ 1,871.9 $ 1,719.1

Working Capital:

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Information Regarding Our Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2025 2024

2 unchanged sentences

Cash flows from financing activities (117.9) 69.9

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

Change in cash, cash equivalents, and restricted cash $ (38.9) $ 145.2

$ 98.0 $ 31.0

Cash Flows from Operating Activities

Compared with the comparable period last year, the change in cash flows from operating activities primarily reflected increased INGREZZA net product sales and lower total payments for upfront fees and development milestones achieved in connection with our collaborations, partially offset by increased cash paid for income taxes and increased investment in our expanded pre-clinical and clinical portfolio.

Compared with the comparable period last year, the decrease primarily reflected continued investments in our commercial organization, including the expansion of our psychiatry and long-term care sales team completed in September 2024 and CRENESSITY-related headcount and commercial launch activities, and expanded pre-clinical and clinical portfolio, partially offset by increased net product sales of INGREZZA.

In addition, we experienced an increase in accounts receivable primarily due to the timing impacts of customer orders received and cash collections on outstanding receivables.

Cash Flows from Investing Activities

Periodic fluctuations in cash flows from investing activities primarily reflect timing differences related to our purchases, sales, and maturities of debt security investments and changes in our portfolio-mix.

Cash flows from investing activities for the comparable period last year also reflected an equity investment of $31.3 million in Voyager in connection with the expansion of our collaboration in the first quarter of 2023.

Periodic fluctuations in cash flows from investing activities primarily reflected timing differences related to our purchases, sales, and maturities of debt security investments and changes in our portfolio-mix.

Cash Flows from Financing Activities

Compared with the comparable period last year, the change in cash flows from financing activities primarily reflected the settlement of the 2024 Notes in full for $308.8 million in cash, partially offset by increased proceeds from issuances of our common stock.

Cash flows from financing activities for all periods presented reflected proceeds from issuances of our common stock.

Compared with the comparable period last year, cash flows from financing activities also reflected $150.0 million in repurchases of our common stock under the $500.0 million 2025 Repurchase Program that was authorized by our Board of Directors in February 2025.

Material Cash Requirements

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In particular, our future capital requirements will depend on many factors, including:

• the commercial success of INGREZZA, ORILISSA, ORIAHNN, DYSVAL, and/or any of our other products;

• the commercial success of INGREZZA and CRENESSITY;

• continued scientific progress in our research and clinical development programs;

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In addition to our independent efforts to develop and market products, we may enter into collaboration and license agreements or acquire businesses from time-to-time to enhance our drug development and commercial capabilities.

With respect to our existing collaboration and license agreements, we may be required to make potential future payments of up to approximately $17.7 billion upon the achievement of certain milestones.

With respect to our existing collaboration and license agreements, we may be required to make potential future payments of up to $14.8 billion upon the achievement of certain milestones.

Refer to Note 2 to the condensed consolidated financial statements for more information on our significant collaboration and license agreements.

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.

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.

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, we will sublease certain of our existing leased premises when we determine there is excess leased capacity.

Refer to Note 7 to the condensed consolidated financial statements for more information on our leases, including a presentation of our approximate future minimum lease payments under non-cancelable operating leases.

Share Repurchase Program

In addition to the foregoing future capital requirements, in October 2024, our Board of Directors authorized a share repurchase program to repurchase up to $300 million of our common stock, which we intend to execute by entering into an accelerated share repurchase transaction with a financial institution, subject to market conditions.

In addition to the foregoing future capital requirements, in February 2025, our Board of Directors authorized the 2025 Repurchase Program under which we may repurchase up to $500.0 million of our common stock, subject to market conditions.

The 2025 Repurchase Program is in addition to the $300.0 million 2024 Repurchase Program that was announced in October 2024 and completed in February 2025.

Under the 2025 Repurchase Program, we repurchased 1.4 million shares on the open market for a cost of $150.0 million during the first quarter of 2025.

As of March 31, 2025, we had $350.0 million remaining under the 2025 Repurchase Program.

Critical Accounting Policies and Estimates

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The primary objective of our investment activities is to preserve principal and maintain liquidity.

If a 1% unfavorable change in interest rates were to have occurred on September 30, 2024, it would not have had a material effect on the fair value of our investment portfolio as of that date.

If a 1% unfavorable change in interest rates were to have occurred on March 31, 2025, it would not have had a material effect on the fair value of our investment portfolio as of that date.

Forward-Looking Statements

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Quantitative and Qualitative Disclosures About Market Risk

A discussion of our exposure to, and management of, market risk appears in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading “Interest Rate Risk.”

A discussion of our exposure to, and management of, market risk appears in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading “Interest Rate Risk” and is incorporated into this Part I, Item 3 by reference.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis