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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-05-05 · 63 added, 41 removed, 145 unchanged (42% of the section changed)

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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, 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:

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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 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 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 ® (crinecerfont) in the U.S.

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

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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.

INGREZZA net product sales totaled $1.2 billion and $1.1 billion, respectively, for the first six months 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 $67.7 million for the first six months 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).

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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.

During the first six months of 2025, we repurchased 1.5 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.

In addition, we expanded formulary access for INGREZZA, significantly improving coverage to now include approximately 70% of TD and Huntington's disease Medicare beneficiaries to support long-term growth.

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

• On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the OBBBA).

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

Given the date of enactment, the effects of the OBBBA, which we are still evaluating, will be reflected in our Quarterly Report on Form 10-Q for the quarter ending September 30, 2025.

Pipeline Highlights

• 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 3 clinical study for NBI-1117568, a potential first-in-class, orally active, highly selective investigational M4 agonist, in schizophrenia.

• Initiated a Phase 3 clinical study for osavampator (formerly NBI-1065845), a potential first-in-class alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid (AMPA) positive allosteric modulator (PAM), in major depressive disorder (MDD).

• Initiated a Phase 1 clinical study for NBIP-1435, an investigational, long-acting corticotropin-releasing factor type 1 (CRF-1) receptor antagonist administered as a subcutaneous injection for the potential treatment of CAH.

• 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 in development for the potential treatment of certain types of epilepsy.

• 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

• Announced the Phase 3 study of valbenazine for the adjunctive treatment of schizophrenia did not meet the primary endpoint.

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Net Product Sales

Three Months Ended

June 30, Six Months Ended

( in millions)

2025 2024 2025 2024

INGREZZA $ 624.4 $ 579.5 $ 1,169.6 $ 1,085.5

53.2 — 67.7 —

Other 4.4 4.3 8.4 7.3

Total net product sales $ 682.0 $ 583.8 $ 1,245.7 $ 1,092.8

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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected increased net product sales of INGREZZA, driven by total prescriptions on strong patient demand partially offset by lower net price due to new market access investments to support long-term growth, and CRENESSITY, which was launched in the U.S.

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

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Three Months Ended

June 30, Six Months Ended

( in millions)

2025 2024 2025 2024

$ 5.1 $ 4.7 $ 13.2 $ 8.9

0.4 1.7 1.2 3.8

Total collaboration revenues $ 5.5 $ 6.4 $ 14.4 $ 12.7

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Three Months Ended

June 30, Six Months Ended

( in millions)

2025 2024 2025 2024

Cost of revenues $ 11.3 $ 9.2 $ 20.5 $ 16.7

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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected increased net product sales of INGREZZA and increased royalties payable on net product sales of CRENESSITY.

Research and Development

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Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

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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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected increased investment in the Phase 3 programs for osavampator in MDD and NBI-1117568 in schizophrenia, partially offset by lower spend related to the Phase 3 program for crinecerfont in CAH, which was successfully completed in the fourth quarter of 2024.

Early Stage .

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.

Compared with the comparable periods last year, the decrease for the second quarter and first six months of 2025 primarily reflected the successful progression of the Phase 2 program for NBI-1117568 in schizophrenia to late-stage in the fourth quarter of 2024 and lower spend on certain early-stage neuropsychiatry programs, partially offset by increased investment in our early-stage muscarinic agonist portfolio.

Research and Discovery .

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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected increased investment in gene therapy and other preclinical development programs.

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

For the second quarter of 2025 compared to the second quarter of 2024, the decrease primarily reflected lower spend for development milestones achieved under our collaborations with Takeda Pharmaceutical Company Limited (Takeda) and Voyager Therapeutics, Inc.

For the first six months of 2025 compared to the first six months of 2024, the increase primarily reflected increased spend for development milestones achieved under our collaborations with Takeda and Xenon Pharmaceuticals Inc.

We also incurred milestone expense of $15.0 million in both the second quarter of 2025 and 2024 for development milestones achieved under our collaboration with Nxera Pharma UK Limited.

Payroll and Benefits.

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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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected higher headcount and increases of $5.8 million and $11.8 million, respectively, in non-cash stock-based compensation expense.

Facilities and Other.

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.

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 primarily reflected increased facility-based expenses related to our new campus facility.

Selling, General, and Administrative

Three Months Ended

June 30, Six Months Ended

( in millions)

2025 2024 2025 2024

Selling, general, and administrative $ 286.3 $ 242.0 $ 562.8 $ 485.1

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

Compared with the comparable periods last year, the increase for the second quarter and first six months of 2025 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), increases of $3.9 million and $6.2 million, respectively, in non-cash stock-based compensation expense, and prior year impairment charges of $14.0 million associated with vacated legacy campus facilities.

Other Income (Expense)

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

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

Unrealized loss on equity investments

$ (6.7) $ (19.9) $ (37.3) $ (18.3)

Charges associated with convertible senior notes — (49.7) — (138.4)

Investment income and other, net 20.6 22.8 42.3 45.1

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

Total other income (expense), net

$ 13.9 $ (46.8) $ 5.0 $ (111.6)

Compared with the comparable periods last year, the change for the second quarter and first six months of 2025 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 Income Taxes

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

Provision for (Benefit from) income taxes

Provision for income taxes

$ 52.0 $ 33.6 $ 58.8 $ 24.7

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.

The effective tax rate for the second quarter and first six months 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 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 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

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

Net income $ 107.5 $ 65.0 $ 115.4 $ 108.4

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.

Compared with the comparable periods last year, the change for the second quarter and first six months of 2025 primarily reflected increased INGREZZA and CRENESSITY net product sales, 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, periodic fluctuations in payments for development milestones achieved in connection with our collaborations, periodic fluctuations in the fair values of our equity investments, and prior year charges associated with the convertible senior notes that matured in May 2024.

Liquidity and Capital Resources

Sources of Liquidity

We believe that our existing capital resources, funds generated by anticipated INGREZZA net product sales, and investment income will be sufficient to satisfy our current and projected funding requirements for at least the next 12 months.

We believe that our existing capital resources, funds generated by anticipated INGREZZA and CRENESSITY net product sales, and investment income will be sufficient to satisfy our current and projected funding requirements for at least the next 12 months.

However, we cannot guarantee that our existing capital resources and anticipated revenues will be sufficient to conduct and complete all of our research and development programs or commercialization activities as planned.

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Information Regarding Our Financial Condition

(in millions) March 31,

(in millions) June 30,

2025 December 31,

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Information Regarding Our Cash Flows

Three Months Ended

Six Months Ended

(in millions) 2025 2024

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Cash flows from financing activities (121.2) (223.1)

Effect of exchange rate changes on cash and cash equivalents 0.2 —

Change in cash, cash equivalents, and restricted cash $ 31.0 $ (111.4)

Cash Flows from Operating Activities

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.

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 and CRENESSITY.

Cash Flows from Investing Activities

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Cash Flows from Financing Activities

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.

Compared with the comparable period last year, the change reflected $167.7 million in repurchases of our common stock during the first six months of 2025 under the $500.0 million 2025 Repurchase Program that was authorized by our Board of Directors in February 2025, decreased proceeds from issuances of our common stock, and $308.8 million in cash payments to settle the convertible senior notes in the second quarter of 2024.

Material Cash Requirements

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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.

Under the 2025 Repurchase Program, we repurchased 1.5 million shares on the open market for a cost of $167.7 million during the first six months of 2025.

As of June 30, 2025, we had $332.3 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 March 31, 2025, 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 June 30, 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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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