NEUROCRINE BIOSCIENCES INC

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

Our portfolio of products includes U.S. Food and Drug Administration (FDA) approved treatments for tardive dyskinesia (TD), chorea associated with Huntington's disease, classic congenital adrenal hyperplasia (CAH), and endometriosis and uterine fibroids in collaboration with AbbVie Inc. (AbbVie). 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, conjugates, and gene therapy.

Previous wording

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 CRENESSITYTM (crinecerfont) in the U.S. as a first-in-class FDA-approved treatment of CAH in December 2024.

Current wording

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® (crinecerfont) in the U.S. as a first-in-class FDA-approved treatment of CAH in December 2024.

Previous wording

We estimate that TD affects approximately 800,000 people in the U.S., that approximately 90% of the 40,000 people in the U.S. affected by Huntington’s disease will develop chorea, and that CAH affects at least 20,000 people in the U.S. Key elements of our commercial strategy include maximizing the opportunities in INGREZZA and CRENESSITY through consistent and effective commercial execution, continued development of valbenazine as the best-in-class treatment for new patient populations, and to lead the evolving understanding of vesicular monoamine transporter 2 (VMAT2) biology and its role in disease. INGREZZA net product sales totaled $545.2 million and $506.0 million, respectively, for the first quarter of 2025 and 2024 and accounted for substantially all of our total net product sales during each of these reporting periods. CRENESSITY net product sales totaled $14.5 million for the first quarter of 2025.

Current wording

We estimate that TD affects approximately 800,000 people in the U.S., that approximately 90% of the 40,000 people in the U.S. affected by Huntington’s disease will develop chorea, and that CAH affects at least 20,000 people in the U.S. Key elements of our commercial strategy include maximizing the opportunities in INGREZZA and CRENESSITY through consistent and effective commercial execution, continued development of valbenazine as the best-in-class treatment for new patient populations, and to lead the evolving understanding of vesicular monoamine transporter 2 (VMAT2) biology and its role in disease. INGREZZA net product sales totaled $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.

Previous wording

•In February 2025, our Board of Directors authorized a new share repurchase program (the 2025 Repurchase Program) under which we may repurchase up to $500.0 million of our common stock, subject to market conditions. The 2025 Repurchase Program is in addition to the $300.0 million accelerated repurchase program (the 2024 Repurchase Program) that was announced in October 2024 and completed in February 2025. During the first quarter of 2025, we repurchased 1.4 million shares on the open market under the 2025 Repurchase Program and received an additional 0.3 million shares upon settlement of the 2024 Repurchase Program in February 2025.

Current wording

•In February 2025, our Board of Directors authorized a new share repurchase program (the 2025 Repurchase Program) under which we may repurchase up to $500.0 million of our common stock, subject to market conditions. The 2025 Repurchase Program is in addition to the $300.0 million accelerated repurchase program (the 2024 Repurchase Program) that was announced in October 2024 and completed in February 2025. During the first 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.

Previous wording

•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.

Current wording

•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, 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.

Previous wording

•Initiated a Phase 1 clinical study for NBI-921355, an investigational, selective inhibitor of voltage-gated sodium channels Nav 1.2 and Nav 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.

Current wording

•Initiated a Phase 1 clinical study for NBI-921355, an investigational, selective inhibitor of voltage-gated sodium channels Nav 1.2 and Nav 1.6 in development for the potential treatment of certain types of epilepsy.

Previous wording

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

Current wording

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

Previous wording

Compared with the comparable period last year, the increase primarily reflected increased net product sales of INGREZZA, driven by underlying patient demand and improved gross-to-net dynamics, and CRENESSITY, which was launched in the U.S. as a first-in-class FDA-approved treatment of CAH in December 2024.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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. 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. We may seek to access the public or private equity markets whenever conditions are favorable or pursue opportunities to obtain debt financing in the future. We may also seek additional funding through strategic alliances or other financing mechanisms. However, we cannot provide assurance that adequate funding will be available on terms acceptable to us, if at all.

Current wording

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. We may seek to access the public or private equity markets whenever conditions are favorable or pursue opportunities to obtain debt financing in the future. We may also seek additional funding through strategic alliances or other financing mechanisms. However, we cannot provide assurance that adequate funding will be available on terms acceptable to us, if at all.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

In addition to our independent efforts to develop and market products, we may enter into collaboration and license agreements or acquire businesses from time-to-time to enhance our drug development and commercial capabilities. With respect to our existing collaboration and license agreements, we may be required to make potential future payments of up to $14.8 billion upon the achievement of certain milestones.

Current wording

In addition to our independent efforts to develop and market products, we may enter into collaboration and license agreements or acquire businesses from time-to-time to enhance our drug development and commercial capabilities. With respect to our existing collaboration and license agreements, we may be required to make potential future payments of up to $14.0 billion upon the achievement of certain milestones.

Previous wording

In addition to the foregoing future capital requirements, in February 2025, our Board of Directors authorized the 2025 Repurchase Program under which we may repurchase up to $500.0 million of our common stock, subject to market conditions. The 2025 Repurchase Program is in addition to the $300.0 million 2024 Repurchase Program that was announced in October 2024 and completed in February 2025. Under the 2025 Repurchase Program, we repurchased 1.4 million shares on the open market for a cost of $150.0 million during the first quarter of 2025. As of March 31, 2025, we had $350.0 million remaining under the 2025 Repurchase Program.

Current wording

In addition to the foregoing future capital requirements, in February 2025, our Board of Directors authorized the 2025 Repurchase Program under which we may repurchase up to $500.0 million of our common stock, subject to market conditions. The 2025 Repurchase Program is in addition to the $300.0 million 2024 Repurchase Program that was announced in October 2024 and completed in February 2025. Under the 2025 Repurchase Program, we repurchased 1.5 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.