What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-28 compared with 2025-07-30 · 67 added, 41 removed, 167 unchanged (39% 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 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2025.

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

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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 $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.

INGREZZA net product sales totaled $1.9 billion and $1.7 billion, respectively, for the first nine 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 $165.8 million for the first nine 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 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.

During the first nine 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.

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• 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.

• Announced planned expansion of the INGREZZA and CRENESSITY sales teams to maximize commercial momentum.

Expansion to be completed by the end of the first quarter of 2026.

2025 Pipeline Highlights

• 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 two Phase 3 clinical studies for direclidine (NBI-1117568), a potential first-in-class, orally active, highly selective investigational M4 agonist, in schizophrenia.

• Initiated a Phase 3 clinical study for osavampator (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.

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• 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.

• Presented new data from a post-hoc analysis of the Phase 4 KINECT-PRO open-label study confirming that robust rates of symptomatic remission of tardive dyskinesia were achieved with once-daily INGREZZA capsules.

The analysis also showed sustained improvements in patient-reported outcomes among participants who achieved symptomatic remission.

• Presented new data from the Phase 2 SAVITRI™ study, which showed statistically significant and clinically meaningful improvement in depression severity at Day 28 and Day 56 with once-daily oral administration of 1 mg osavampator.

• 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

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Net Product Sales

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

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Total net product sales $ 789.9 $ 616.6 $ 2,035.6 $ 1,709.4

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.

Compared with the comparable periods last year, the increase for the third quarter and first nine 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

September 30, Nine Months Ended

September 30,

( in millions)

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

( in millions)

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Cost of revenues $ 14.0 $ 8.0 $ 34.5 $ 24.7

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.

Compared with the comparable periods last year, the increase for the third quarter and first nine 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

September 30, Nine Months Ended

September 30,

(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 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.

Compared with the comparable periods last year, the increase for the third quarter and first nine months of 2025 primarily reflected increased investment in the Phase 3 programs for osavampator in MDD and direclidine in schizophrenia, partially offset by lower spend related to crinecerfont in CAH.

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 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.

Compared with the comparable periods last year, the decrease for the third quarter and first nine months of 2025 primarily reflected the successful progression of the Phase 2 program for direclidine 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 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 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.

Compared with the comparable periods last year, the increase for the third quarter and first nine 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.

The following table presents milestones expense by collaboration partner.

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

Nxera Pharma UK Limited

$ — $ 35.0 $ 15.0 $ 50.0

Takeda Pharmaceutical Company Limited

Xenon Pharmaceuticals Inc.

Voyager Therapeutics, Inc.

1.0 0.8 1.5 2.9

Total milestones

$ 1.0 $ 38.8 $ 61.5 $ 71.4

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

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 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.

Compared with the comparable periods last year, the increase for the third quarter and first nine months of 2025 primarily reflected higher headcount and increases of $7.2 million and $19.0 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 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.

Compared with the comparable periods last year, the increase for the third quarter and first nine 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

September 30, Nine Months Ended

September 30,

( in millions)

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Selling, general, and administrative $ 291.6 $ 234.3 $ 854.4 $ 719.4

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.

Compared with the comparable periods last year, the increase for the third quarter and first nine 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) and increases of $5.0 million and $11.2 million, respectively, in non-cash stock-based compensation expense.

In addition, the increase for the first nine months of 2025 was partially offset by decreased impairment charges associated with our vacated legacy campus facilities.

Other Income (Expense)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

Unrealized loss on equity investments

Unrealized gain (loss) on equity investments

$ 30.6 $ (16.9) $ (6.7) $ (35.2)

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$ 52.8 $ 6.5 $ 57.8 $ (105.1)

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.

Compared with the comparable periods last year, the change for the third quarter and first nine 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

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

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$ 82.3 $ 60.5 $ 141.1 $ 85.2

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.

The effective tax rate for the third quarter and first nine months of 2025 and 2024 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 valuation allowances recorded in certain foreign and domestic state jurisdictions for tax benefits that management cannot conclude that it is more likely than not will be realized in the future.

In addition, the effective tax rate for the third quarter of 2025 reflects increased tax expense related to foreign operations and the enactment of the One Big Beautiful Bill Act (OBBBA).

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

Net income $ 209.5 $ 129.8 $ 324.9 $ 238.2

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.

Compared with the comparable periods last year, the change for the third quarter and first nine 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 milestones expense associated with the achievement of development milestones under collaborative arrangements, 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

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Information Regarding Our Financial Condition

(in millions) June 30,

(in millions) September 30,

2025 December 31,

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Information Regarding Our Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2025 2024

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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 and CRENESSITY.

Compared with the comparable period last year, the increase primarily reflected increased net product sales of INGREZZA and CRENESSITY, partially offset by 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.

The increase in accounts receivable was driven by higher total gross product sales.

The increase in accounts payable and accrued liabilities was driven by higher revenue-related reserves for discounts and allowances attributed to higher gross product sales combined with expanded formulary access for INGREZZA.

In addition, the increase in income tax assets and liabilities primarily related to timing of foreign tax expense recognition, partially offset by the federal tax benefit on current income taxes payable from the enactment of the OBBBA.

Cash Flows from Investing Activities

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Cash Flows from Financing Activities

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.

Compared with the comparable period last year, the change reflected $167.7 million in repurchases of our common stock during the first nine 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 1.5 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.

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 nine months of 2025.

As of September 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 June 30, 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 September 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