nbix-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-22705

NEUROCRINE BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

6027 Edgewood Bend Court

San Diego, CA

(Address of principal executive office)

33-0525145

(IRS Employer

Identification No.)

92130

(Zip Code)

(858) 617-7600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.001 par value

NBIX

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 98,965,820 as of April 30, 2025.

NEUROCRINE BIOSCIENCES, INC.

TABLE OF CONTENTS


			PAGE

Part I. Financial Information			3

Item 1. Financial Statements			3

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Income and Comprehensive Income			4

Condensed Consolidated Statements of Stockholders' Equity			5

Condensed Consolidated Statements of Cash Flows			6

Notes to the Condensed Consolidated Financial Statements			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3. Quantitative and Qualitative Disclosures About Market Risk			24

Item 4. Controls and Procedures			24

Part II. Other Information			25

Item 1. Legal Proceedings			25

Item 1A. Risk Factors			25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			54

I tem 5. Other I nformation			54

Item 6. Exhibits			55

Signatures			57

Part I. Financial Information

Item 1. Financial Statements

NEUROCRINE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share data)	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	194.1	$	233.0
Available-for-sale debt securities	749.4		843.1
Accounts receivable	516.0		479.1
Inventory	59.1		57.4
Other current assets	119.3		112.1
Total current assets	1,637.9		1,724.7
Deferred tax assets	499.4		485.7
Available-for-sale debt securities	815.3		739.5
Right-of-use assets	502.2		509.4
Equity investments	94.2		124.8
Property and equipment, net	87.0		82.6
Intangible assets, net	36.4		36.5
Other noncurrent assets	15.3		15.5
Total assets	$	3,687.7	$	3,718.7

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	475.2	$	461.6
Other current liabilities	47.7		46.1
Total current liabilities	522.9		507.7
Noncurrent operating lease liabilities	447.5		455.1
Other noncurrent liabilities	181.6		166.2
Total liabilities	1,152.0		1,129.0

Stockholders’ equity:
Preferred stock, $0.001 par value; 5.0 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.001 par value; 220.0 shares authorized; 99.0 and 99.4 shares issued and outstanding, respectively	0.1		0.1
Additional paid-in capital	2,531.9		2,554.6
Accumulated other comprehensive income	9.0		5.8
(Accumulated deficit) Retained earnings	(5.3)		29.2
Total stockholders’ equity	2,535.7		2,589.7
Total liabilities and stockholders’ equity	$	3,687.7	$	3,718.7

See accompanying notes to the condensed consolidated financial statements.

NEUROCRINE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended March 31,
(in millions, except per share data)		2025		2024
Revenues:
Net product sales		$	563.7	$	509.0
Collaboration revenues		8.9		6.3
Total revenues		572.6		515.3
Operating expenses:
Cost of revenues		9.2		7.5
Research and development		263.2		159.4
Acquired in-process research and development		0.1		6.0
Selling, general, and administrative		276.5		243.1
Total operating expenses		549.0		416.0
Operating income		23.6		99.3
Other (expense) income:
Unrealized (loss) gain on equity investments		(30.6)		1.6
Charges associated with convertible senior notes		—		(88.7)
Investment income and other, net		21.7		22.3
Total other expense, net		(8.9)		(64.8)
Income before provision for income taxes		14.7		34.5
Provision for (Benefit from) income taxes		6.8		(8.9)
Net income		$	7.9	$	43.4
Foreign currency translation adjustments, net of tax		1.5		(0.5)
Unrealized gain (loss) on available-for-sale debt securities, net of tax		1.7		(3.2)
Comprehensive income		$	11.1	$	39.7
Earnings per share:
Basic		$	0.08	$	0.43
Diluted		$	0.08	$	0.42
Weighted-average shares outstanding:
Basic		99.7		99.8
Diluted		102.5		103.6

See accompanying notes to the condensed consolidated financial statements.

NEUROCRINE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


						Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Accumulated Deficit)
	Common Stock			Additional Paid-In Capital
(in millions)	Shares	$								Total
Balance at December 31,2024	99.4	$	0.1	$	2,554.6	$	5.8	$	29.2	$	2,589.7
Net income	—	—		—		—		7.9		7.9
Other comprehensive income, net of tax	—	—		—		3.2		—		3.2
Stock-based compensation expense	—	—		52.8		—		—		52.8
Issuances of common stock under stock plans	1.2	—		32.1		—		—		32.1
Repurchases of common stock	(1.6)	—		(107.6)		—		(42.4)		(150.0)
Balance at March 31, 2025	99.0	$	0.1	$	2,531.9	$	9.0	$	(5.3)	$	2,535.7

Balance at December 31,2023	98.7	$	0.1	$	2,382.0	$	7.0	$	(157.1)	$	2,232.0
Net income	—	—		—		—		43.4		43.4
Other comprehensive loss, net of tax	—	—		—		(3.7)		—		(3.7)
Stock-based compensation expense	—	—		44.5		—		—		44.5
Issuances of common stock under stock plans	1.9	—		69.9		—		—		69.9

Balance at March 31, 2024	100.6	$	0.1	$	2,496.4	$	3.3	$	(113.7)	$	2,386.1

See accompanying notes to the condensed consolidated financial statements.

NEUROCRINE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended March 31,
(in millions)	2025		2024
Cash flows from operating activities:
Net income	$	7.9	$	43.4
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation expense	52.8		44.5
Charges associated with convertible senior notes	—		88.7
Depreciation	6.6		5.3
Accretion of discount on available-for-sale debt securities, net	(4.6)		(7.1)
Amortization of intangible assets	1.0		0.9
Changes in fair values of equity investments	30.6		(1.6)
Deferred income taxes	(13.7)		(15.6)
Other	7.9		3.4
Change in operating assets and liabilities:
Accounts receivable	(36.9)		(11.3)
Inventory	(1.7)		1.1
Accounts payable and accrued liabilities	12.4		(18.6)
Other assets and liabilities, net	2.5		(2.8)
Cash flows from operating activities	64.8		130.3

Cash flows from investing activities:
Purchases of available-for-sale debt securities	(273.2)		(320.1)
Sales and maturities of available-for-sale debt securities	298.1		276.3

Capital expenditures	(10.7)		(11.2)
Cash flows from investing activities	14.2		(55.0)

Cash flows from financing activities:
Issuances of common stock under benefit plans	32.1		69.9
Repurchases of common stock	(150.0)		—

Cash flows from financing activities	(117.9)		69.9

Change in cash, cash equivalents and restricted cash	(38.9)		145.2
Cash, cash equivalents and restricted cash at beginning of period	241.0		259.1
Cash, cash equivalents and restricted cash at end of period	$	202.1	$	404.3

Supplemental disclosures:
Accrued capital expenditures	$	2.7	$	1.1


Cash paid for income taxes	$	0.6	$	0.2

See accompanying notes to the condensed consolidated financial statements.

NEUROCRINE BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position and of the results of operations and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements include the accounts of Neurocrine Biosciences and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024, included in our Annual Report on Form 10-K (the 2024 Form 10-K) filed with the SEC. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or the full year. The condensed consolidated balance sheet as of December 31, 2024, has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

There were no significant changes to our significant accounting policies as disclosed in the 2024 Form 10-K.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. We adopted ASU 2023-07 for annual reporting periods beginning January 1, 2024 and interim reporting periods beginning January 1, 2025. The adoption of ASU 2023-07 had no significant impact on our financial statement disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that adoption of ASU 2023-09 will have on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public entities to disclose specified information about certain costs and expenses on an interim and annual basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact that adoption of ASU 2024-03 will have on our financial statement disclosures.

2. Collaboration and License Agreements

Nxera Pharma UK Limited (Nxera)

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. Subject to specified conditions, we may elect to exercise such opt-in rights with respect to each such compound either before initiation of the first proof of concept Phase 2 clinical trial for such compound or following our receipt from Nxera of the top-line data from such clinical trial for such compound. We are responsible for all development, manufacturing, and commercialization costs of any collaboration product.

Under the terms of the agreement, Nxera may be entitled to receive potential future payments of up to $2.5 billion upon the achievement of certain event-based milestones and is entitled to receive royalties on the future net sales of any collaboration product.

Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by-country basis until the date on which the royalty term for such licensed product has expired in such country. On a licensed product-by-licensed product and country-by-country basis, royalty payments would commence on the first commercial sale of a licensed product and terminate on the later of (i) the expiration of the last patent covering such licensed product in such country, (ii) a number of years from the first commercial sale of such licensed product in such country and (iii) the expiration of regulatory exclusivity for such licensed product in such country.

We may terminate the agreement in its entirety or with respect to one or more targets upon 180 days’ written notice to Nxera during the research collaboration term and upon 90 days’ written notice to Nxera following the expiration of the research collaboration term. Following the expiration of the research collaboration term, Nxera may terminate the agreement on a target-by-target basis in the event that we do not conduct any material development activities outside of Japan with respect to a certain compound or licensed product within the applicable target class for a continuous period of not less than 365 days and do not commence any such activities within 120 days of receiving written notice. Either party may terminate the agreement, subject to specified conditions, (i) in the event of material breach by the other party, subject to a cure period, (ii) if the other party challenges the validity or enforceability of certain intellectual property rights, subject to a cure period, or (iii) if the other party becomes insolvent or takes certain actions related to insolvency.

Takeda Pharmaceutical Company Limited (Takeda)

In 2020, we entered into an exclusive license agreement with Takeda (the 2020 Takeda Agreement), pursuant to which we acquired the exclusive rights to develop and commercialize certain early to mid-stage psychiatry compounds, including luvadaxistat, NBI-1070770, osavampator (formerly NBI-1065845), NBI-1065846, and three non-clinical stage compounds. Pursuant to the 2020 Takeda Agreement, osavampator was designated as a profit-share product, meaning we and Takeda would equally share in the operating profits and losses. Takeda also retained 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 osavampator and receive royalties on the future net sales of osavampator (in lieu of equally sharing in the operating profits and losses).

In October 2024, we provided Takeda with written notice of termination of the license under the 2020 Takeda Agreement to develop and commercialize luvadaxistat and NBI-1065846, which became effective in April 2025. In January 2025, we and Takeda amended and restated the exclusive license agreement (the Restated Takeda Agreement) to, among other things, reflect the conversion from sharing operating profits and losses with respect to the development and commercialization of osavampator to a royalty-bearing license, the return of rights to osavampator in Japan to Takeda, and our previous termination of DAAO inhibitors under the 2020 Takeda Agreement, including luvadaxistat, and GPR139 agonists, including NBI-1065846.

Under the Restated Takeda Agreement, we will retain exclusive rights to develop and commercialize osavampator for all indications in all territories worldwide except Japan, where Takeda will reacquire exclusive development and commercialization rights. In addition, each party is responsible for development costs for osavampator in its respective territory, and each party is eligible to receive royalty payments based on the other party’s net sales of osavampator in the other party’s territory. Pursuant to the Restated Takeda Agreement and upon the successful development and commercialization of osavampator, we will incur tiered based royalties payable to Takeda in the mid-to-upper teens in the U.S. and low double-digits outside of the U.S. on a blended basis as a percentage of net sales. Additionally, we are entitled to receive royalties from Takeda on the future net sales of osavampator in Japan.

In connection with the initiation of a Phase 3 clinical study for osavampator in major depressive disorder, we expensed a milestone of $37.5 million payable to Takeda as research and development (R&D) in the first quarter of 2025. The milestone was paid in the second quarter of 2025.

Takeda may be entitled to receive potential future payments of up to $0.7 billion upon the achievement of certain event-based milestones and is entitled to receive royalties on the future net sales of any royalty-bearing product.

Unless earlier terminated, the Restated Takeda 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; and (ii) for any profit-share product, for so long as we continue to develop, manufacture, or commercialize such licensed product. On a licensed product-by-licensed product and country-by-country basis, royalty payments would commence on the first commercial sale of a royalty-bearing product and terminate on the later of (i) the expiration of the last patent covering such royalty-bearing product in such country, (ii) a number of years from the first commercial sale of such royalty-bearing product in such country and (iii) the expiration of regulatory exclusivity for such royalty-bearing product in such country.

We may terminate the Restated Takeda Agreement in its entirety or in one or more (but not all) of the U.S., Japan, the European Union and the United Kingdom, or, collectively, the major markets, upon six months’ written notice to Takeda (i) with respect to all licensed products prior to the first commercial sale of the first licensed product for which first commercial sale occurs, or (ii) with respect to all licensed products in one or more given target classes, as defined in the Restated Takeda Agreement, prior to the first commercial sale of the first licensed product in such target class for which first commercial sale occurs. We may terminate the Restated Takeda Agreement in its entirety or in one or more (but not all) of the major markets upon 12 months’ written notice to Takeda (i) with respect to all licensed products following the first commercial sale of the first licensed product for which first commercial sale occurs, or (ii) with respect to all licensed products in one or more given target classes following the first commercial sale of the first licensed product in such target class for which first commercial sale occurs. Takeda may terminate the Restated Takeda Agreement, subject to specified conditions, (i) if we challenge the validity or enforceability of certain Takeda intellectual property rights or (ii) on a target class-by-target class basis, in the event that we do not conduct any material development or commercialization activities with respect to any licensed product within such target class for a specified continuous period. Subject to a cure period, either party may terminate the Restated Takeda Agreement in the event of any material breach, solely with respect to the target class of a licensed product to which such material breach relates, or in its entirety in the event of any material breach that relates to all licensed products, or if either party challenges the validity or enforceability of certain intellectual property rights.

Xenon Pharmaceuticals Inc. (Xenon)

In 2019, we entered into a collaboration and license agreement with Xenon to identify, research and develop sodium channel inhibitors, including NBI-921352 and three preclinical candidates, which compounds we have the exclusive rights to develop and commercialize. In connection with the agreement, we purchased 1.4 million shares (at $14.196 per share) of Xenon common stock in 2019, 0.3 million shares (at $19.9755 per share) of Xenon common stock in 2021, and 0.3 million shares (at $31.855 per share) of Xenon common stock in 2022. We are responsible for all development and manufacturing costs of any collaboration product, subject to certain exceptions.

In connection with the initiation of a Phase 1 clinical study for NBI-921355, an investigational, selective inhibitor of voltage-gated sodium channels Nav1.2 and Nav1.6, as a potential treatment of certain types of epilepsy, we expensed a milestone of $7.5 million payable to Xenon as R&D in the first quarter of 2025. The milestone was paid in the second quarter of 2025.

Under the terms of the agreement, Xenon may be entitled to receive potential future payments of up to $1.7 billion upon the achievement of certain event-based milestones and is entitled to receive royalties on the future net sales of any collaboration product. Xenon retains the right to elect to co-develop one product in a major indication, pursuant to which Xenon would receive a mid-single digit percentage increase in royalties earned on the future net sales of such product in the United States and we and Xenon would equally share in the development costs of such product in the applicable indication, except where such development costs relate solely to the regulatory approval of such product outside the United States.

Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by-country basis until the expiration of the royalty term for such product in such country. Upon the expiration of the royalty term for a particular licensed product and country, the license obtained by us with respect to such product and country will become fully paid, royalty free, perpetual and irrevocable. We may terminate the agreement upon 90 days’ written notice to Xenon, provided that such unilateral termination will not be effective for certain products until we have used commercially reasonable efforts to complete certain specified clinical studies. Either party may terminate the agreement in the event of a material breach in whole or in part, subject to specified conditions.

Voyager Therapeutics, Inc. (Voyager)

2019 Voyager Agreement

In 2019, we entered into a collaboration and license agreement with Voyager (the 2019 Voyager Agreement), pursuant to which we retain certain rights to develop and commercialize the Friedreich’s ataxia (FA) program and two undisclosed programs. We are responsible for all development and commercialization costs of any collaboration product under the 2019 Voyager Agreement, subject to certain co-development and co-commercialization rights retained by Voyager.

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

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 is 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.

Unless terminated earlier, the 2019 Voyager Agreement will continue in effect until the expiration of the last to expire royalty term with respect to any collaboration product under the agreement or the last expiration or termination of any exercised co-development and co-commercialization rights by Voyager as provided for in the 2019 Voyager Agreement. We may terminate the 2019 Voyager Agreement upon 180 days’ written notice to Voyager prior to the first commercial sale of any collaboration product under the 2019 Voyager Agreement or upon one year after the date of notice if such notice is provided after the first commercial sale of any collaboration product under the 2019 Voyager Agreement.

2023 Voyager Agreement

In 2023, we entered into a collaboration and license agreement with Voyager, which we amended in April 2024 (as amended, the 2023 Voyager Agreement), pursuant to which we acquired the global rights to the gene therapy products directed to the gene that encodes glucosylceramidase beta 1 (GBA1) for the treatment of Parkinson's disease and other diseases associated with GBA1 (the GBA1 Program), and three gene therapy programs directed to rare central nervous system (CNS) targets, each enabled by Voyager's next-generation TRACERTM capsids. With respect to collaboration products subject to the GBA1 Program, we are responsible for all development and commercialization costs of any such products, including in the U.S., where Voyager retains certain co-development and co-commercialization rights. Voyager may elect to exercise such rights, pursuant to which we and Voyager would equally share in the operating profits and losses of such products in the U.S. (in lieu of Voyager being entitled to receive potential future payments of certain event-based milestones upon their achievement in the U.S. and receive royalties on the future net sales of such products in the U.S.), following Voyager’s receipt of the top-line data from a first clinical trial Parkinson’s disease. However, if we and Voyager elect to focus on an indication other than Parkinson’s disease prior to Voyager’s receipt of top-line data from a first clinical trial for Parkinson’s disease, then Voyager may elect to exercise such co-development and co-commercialization rights after the later of: (i) Voyager’s receipt of top-line data from the first clinical trial of a product that is the subject of the GBA1 Program or (ii) the date we and Voyager decide not to pursue Parkinson’s disease as an indication for development under the GBA1 Program. Irrespective of Voyager’s election to exercise such rights, Voyager may be entitled to receive potential future payments upon the achievement of certain event-based milestones outside the U.S. and would be entitled to receive royalties on the future net sales of any such product outside the U.S. With respect to collaboration products subject to the three gene therapy programs directed to rare CNS targets, we are responsible for all development and commercialization costs for any such products. In addition, as part of the collaboration, Jude Onyia, Ph.D., Chief Scientific Officer of Neurocrine Biosciences, was appointed to Voyager's board of directors. Dr. Onyia (or another individual designated by us) will be nominated for election to Voyager's board of directors annually for a maximum duration of 10 years from the effective date of the 2023 Voyager Agreement.

In connection with the 2023 Voyager Agreement, we purchased 4.4 million shares (at $8.88 per share) of Voyager common stock (the 2023 Voyager Shares), which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years from the effective date of the 2023 Voyager Agreement. Our equity investment in Voyager became subject to the equity method of accounting, and Voyager became a related party, following our purchase of the 2023 Voyager Shares, after which, together with the 2019 Voyager Shares, we owned approximately 19.9% of the voting stock of Voyager. We elected the fair value option to account for our equity investment in Voyager as we believe it creates greater transparency regarding the investment's fair value at future reporting dates.

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 is 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.

Unless terminated earlier, the 2023 Voyager Agreement will continue in effect until the expiration of the last to expire royalty term with respect to any collaboration product under the 2023 Voyager Agreement or the last expiration or termination of any exercised co-development and co-commercialization rights by Voyager as provided for in the 2023 Voyager Agreement. We may terminate the 2023 Voyager Agreement upon 180 days’ written notice to Voyager prior to the first commercial sale of any collaboration product under the 2023 Voyager Agreement or upon one year after the date of notice if such notice is provided after the first commercial sale of any collaboration product under the 2023 Voyager Agreement.

Sanofi S.A. (Sanofi)

In 2014, we entered into a license agreement with Sanofi, pursuant to which we acquired the global rights to develop and commercialize certain corticotropin-releasing factor type 1 receptor (CRF1) antagonists, including crinecerfont. We launched CRENESSITYTM (crinecerfont) in the U.S. as a first-in-class U.S. Food and Drug Administration (FDA)-approved treatment of classic congenital adrenal hyperplasia (CAH) in December 2024. We are responsible for all manufacturing, development, and commercialization costs of any licensed product.

Under the terms of our license agreement with Sanofi, Sanofi may be entitled to receive potential future payments of up to $10.0 million upon the achievement of certain event-based milestones and is entitled to receive royalties at tiered percentage rates ranging from 3.0% to 5.0% on our future net sales of CRENESSITY in the U.S. for the longer of 16 years or the life of the related patent rights.

Mitsubishi Tanabe Pharma Corporation (MTPC)

In 2015, we out-licensed the rights to valbenazine in Japan and other select Asian markets to MTPC. In 2020, we entered into a commercial supply agreement with MTPC, pursuant to which we supply MTPC with valbenazine drug product for commercial use in such markets. MTPC 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). MTPC is responsible for all development, manufacturing, and commercialization costs of valbenazine in such markets.

Under the terms of our license agreement with MTPC, we may be entitled to receive potential future payments of up to $30.0 million upon the achievement of certain sales-based milestones and are entitled to receive royalties at tiered percentage rates on future MTPC net sales of valbenazine for the longer of 10 years or the life of the related patent rights. MTPC may terminate the agreement upon 180 days’ written notice to us. In such event, all out-licensed product rights would revert to us.

AbbVie Inc. (AbbVie)

In 2010, we out-licensed the global rights to elagolix to AbbVie. AbbVie launched ORILISSA® (elagolix tablets) in the U.S. for the treatment of moderate to severe pain associated with endometriosis in August 2018 and ORIAHNN® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsules) in the U.S. for the treatment of heavy menstrual bleeding due to uterine fibroids in June 2020. AbbVie is responsible for all development and commercialization costs of elagolix.

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. We recognized royalty revenue of $6.7 million and $3.0 million, respectively, on AbbVie net sales of elagolix for the first quarter of 2025 and 2024. AbbVie may terminate the agreement upon 180 days’ written notice to us. In such event, all out-licensed product rights would revert to us.

3. Fair Value Measurements

The fair value hierarchy consists of the following three levels:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

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 certain financial assets, which were measured at fair value on a recurring basis.


	March 31, 2025						December 31, 2024
	Fair Value		Leveling				Fair Value		Leveling
(in millions)			Level 1		Level 2				Level 1		Level 2
Cash and cash equivalents	$	194.1	$	194.1	$	—	$	233.0	$	233.0	$	—
Available-for-sale debt securities	1,564.7		—		1,564.7		1,582.6		—		1,582.6
Equity investments	94.2		94.2		—		124.8		124.8		—
	$	1,853.0	$	288.3	$	1,564.7	$	1,940.4	$	357.8	$	1,582.6

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, investments in available-for-sale debt securities, and accounts receivable.

To minimize the risks related to cash and cash equivalents and investments in available-for-sale debt securities, we have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. Our investment portfolio is maintained in accordance with our investment policy, which defines allowable investments, specifies credit quality standards, and limits the credit exposure of any single issuer.

As of March 31, 2025 and December 31, 2024, we held available-for-sale debt securities with a total fair value of $317.3 million and $458.7 million, respectively, that were in unrealized loss positions totaling $0.6 million and $1.7 million, respectively. Available-for-sale debt securities that had been in unrealized loss positions for longer than twelve months were not significant as of March 31, 2025 or December 31, 2024. Unrealized losses on available-for-sale debt securities are primarily caused by changes in interest rates. Our investments in available-for-sale debt securities 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 their maturity. Accrued interest receivables on available-for-sale debt securities totaled $14.5 million and $14.4 million, respectively, as of March 31, 2025 and December 31, 2024 and are included in other current assets on the condensed consolidated balance sheets. We do not measure an allowance for credit losses for accrued interest receivables. For the purposes of identifying and measuring an impairment, accrued interest is excluded from both the fair value and amortized cost basis of the debt security. Uncollectible accrued interest receivables associated with an impaired debt security are reversed against interest income upon identification of the impairment.

To minimize the risks related to accounts receivable, which are typically unsecured, we monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profiles.

The following table presents the percent of total gross product sales for each of our customers who individually accounted for 10% or more of total gross product sales.


	Three Months Ended March 31,
(in millions)	2025		2024
Customer A	41	%	43	%
Customer B	30	%	28	%
Customer C	14	%	14	%

The following table presents the percent of total accounts receivable for each of our customers who individually accounted for 10% or more of total accounts receivable.


(in millions)	March 31, 2025		December 31, 2024
Customer A	45	%	41	%
Customer B	31	%	37	%
Customer C	11	%	11	%
Customer D	10	%	< 10 %

4. Earnings per Share

Earnings per share were calculated as follows:


	Three Months Ended March 31,
(in millions, except per share data)		2025		2024
Net income - basic and diluted		$	7.9	$	43.4
Weighted-average common shares outstanding:
Basic		99.7		99.8
Effect of dilutive securities		2.8		3.8
Diluted		102.5		103.6
Earnings per share:
Basic		$	0.08	$	0.43
Diluted		$	0.08	$	0.42

Shares excluded from diluted per share amounts because their effect would have been anti-dilutive		3.3		1.7

5. Leases

Our operating leases that have commenced have terms that expire beginning 2025 through 2036 and consist of office space and research and development laboratories, including our corporate headquarters. Certain of these lease agreements contain clauses for renewal at our option. As we were not reasonably certain to exercise any of these renewal options at commencement of the associated leases, no such options were recognized as part of our right-of-use (ROU) assets or operating lease liabilities.

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


	Three Months Ended March 31,
(in millions, except weighted average data)	2025			2024
Operating lease cost	$	16.5		$	9.4
Sublease income	(0.9)			(0.4)
Net operating lease cost	$	15.6		$	9.0
Cash paid for amounts included in the measurement of operating lease liabilities	$	9.3		$	6.1

	March 31,
	2025			2024
Weighted average remaining lease term	10.6 years			10.6 years
Weighted average discount rate	4.9		%	5.1		%
Restricted cash related to letters of credit issued in lieu of cash security deposits	$	7.8		$	7.8

The following table presents approximate future non-cancelable minimum lease payments under operating leases and sublease income as of March 31, 2025.


(in millions)	Operating Leases (1)		Sublease Income
2025 (9 months remaining)	$	32.5	$	(2.6)
2026	58.3		(3.5)
2027	59.2		(3.5)
2028	60.7		(3.5)
2029	60.8		(3.5)
Thereafter	374.4		(5.4)
Total operating lease payments (sublease income)	645.9		$	(22.0)
Less imputed interest	152.8
Total operating lease liabilities	493.1
Less current operating lease liabilities included in other current liabilities	45.6
Noncurrent operating lease liabilities	$	447.5

_________________________

(1) Amounts presented in the table above exclude $0.9 million for 2025, $1.7 million for 2026, and $0.9 million for 2027 of approximate non-cancelable future minimum lease payments under operating leases that have not yet commenced.

6. Stockholders’ Equity

Share Repurchases

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. 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, share repurchases may be made from time to time at management's discretion through a variety of methods, such as open-market transactions including pre-set trading plans, privately negotiated transactions, accelerated share repurchases, and other transactions in accordance with applicable securities laws. Shares repurchased under the 2025 Repurchase Program are retired immediately, resulting in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares for both basic and diluted earnings per share, and included in the category of authorized but unissued shares. The excess of the purchase price over the par value of the common shares was recorded as a reduction to additional paid-in capital.

In November 2024, we entered into an accelerated share repurchase transaction (the 2024 Repurchase Program) with a third-party financial institution to repurchase an aggregate of $300.0 million of our common stock. Shares repurchased under the 2024 Repurchase Program were retired immediately upon receipt, resulting in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares for both basic and diluted earnings per share in the period received, and included in the category of authorized but unissued shares. At inception, we paid the financial institution $300.0 million using cash on hand and took initial delivery of 2.0 million shares in November 2024. The fair market value of the 2.0 million initial shares received was $240.5 million, with the excess of the fair market value over the par value of the initial shares received recorded as reductions to retained earnings and additional paid-in capital. The remaining $59.5 million of the repurchase price was recorded as a reduction to additional paid-in capital. The 2024 Repurchase Program was completed in February 2025, at which time we received an additional 0.3 million shares upon settlement, with the excess of the fair market value over the par value of the settlement shares received recorded as an increase to additional paid-in capital and a reduction to retained earnings. In total, we repurchased 2.3 million shares under the 2024 Repurchase Program at an average price of $131.83 per share, which represents the daily volume-weighted average price of our common stock over the term of the transaction, less a negotiated discount.

The following table presents information relating to purchases of our common stock.


	Three Months Ended March 31,
(in millions, except per share data)	2025		2024
Total number of shares repurchased	1.6		—
Amount repurchased	$	209.5	$	—
Average price per share	$	128.03	$	—

7. Intangible Assets

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


	March 31, 2025						December 31, 2024
(dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed product rights (1)	$	41.6	$	9.0	$	32.6	$	40.5	$	7.7	$	32.8
Acquired IPR&D (2)	$	3.8	$	—	3.8		$	3.7	$	—	3.7
Total intangible assets, net					$	36.4					$	36.5

_________________________

(1) Developed product rights have a useful life of 10 to 16 years.

(2) Acquired IPR&D is considered indefinite lived until the completion or abandonment of the associated research and development efforts.

The following table presents approximate future annual amortization expense for our finite-lived intangible assets as of March 31, 2025.


(in millions)	Amount
Year ending December 31, 2025 (9 months remaining)	$	3.0
Year ending December 31, 2026	$	4.0
Year ending December 31, 2027	$	4.0
Year ending December 31, 2028	$	4.0
Year ending December 31, 2029	$	4.0
Thereafter	$	13.6

8. Convertible Senior Notes

On May 2, 2017, we completed a private placement of $517.5 million in aggregate principal amount of 2.25% fixed-rate convertible senior notes due May 15, 2024 (the 2024 Notes) and entered into the 2017 Indenture with respect to the 2024 Notes. Interest on the 2024 Notes was due semi-annually on May 15 and November 15 of each year.

In 2020, we repurchased $136.2 million in aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $186.9 million in cash. In 2022, we repurchased $210.8 million in aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $279.0 million in cash.

In January 2024, we provided notice to the holders of the 2024 Notes electing to settle all conversions of the 2024 Notes which occur on or after January 15, 2024 in cash. Consequently, the embedded conversion option of the 2024 Notes (the conversion feature) required bifurcation and separate accounting from the 2024 Notes as it no longer qualified for the equity scope exception under ASC 815, Derivatives and Hedging. Upon bifurcation of the conversion feature in the first quarter of 2024, we recorded a derivative liability at a fair value of $126.6 million (Level 3) and a corresponding debt discount that was accreted over the remaining term of the 2024 Notes using the straight-line method. Subsequent changes in the fair value of the derivative liability and accretion of the associated debt discount were recorded in other expense, net on the condensed consolidated statements of income and comprehensive income.

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


(in millions)
Accretion of debt discount associated with derivative liability	$	79.1
Change in fair value of derivative liability	9.6

Charges associated with convertible senior notes	$	88.7

During the second quarter of 2024, holders of the 2024 Notes converted $169.8 million in aggregate principal amount of the 2024 Notes for $308.2 million in cash, reflecting a conversion premium of $138.4 million calculated based on the per share volume-weighted average price (VWAP) for each of the 30 consecutive trading days during the observation period (as more fully described in the 2017 Indenture). The 2024 Notes were settled in full upon maturity on May 15, 2024.

9. Other Balance Sheet Details

Inventory consisted of the following:


(in millions)	March 31, 2025		December 31, 2024
Raw materials	$	31.9	$	33.7
Work in process	13.8		10.9
Finished goods	13.6		12.8
	59.3		57.4
Less inventory reserves	(0.2)		—
Total inventory	$	59.1	$	57.4

Prior to FDA approval of CRENESSITY in December 2024, all costs related to its manufacturing were expensed as R&D in the period incurred. As a result, our physical inventories as of March 31, 2025 and December 31, 2024 included active pharmaceutical product with no cost basis. Costs related to the manufacturing of bulk drug product, finished bottling, and other labeling activities that occurred post-FDA approval are included in the inventory values as of March 31, 2025 and December 31, 2024.

Accounts payable and accrued liabilities consisted of the following:


(in millions)

SEC Form 10-Q filed by Neurocrine Biosciences Inc.