Sarepta Therapeutics Inc

(unaudited)

1. ORGANIZATION AND NATURE OF BUSINESS

Sarepta Therapeutics, Inc. (together with its wholly-owned subsidiaries, “Sarepta” or the “Company”) is a commercial-stage biopharmaceutical company focused on helping patients through the discovery and development of unique RNA-targeted therapeutics, gene therapy and other genetic therapeutic modalities for the treatment of rare diseases. Applying its proprietary, highly-differentiated and innovative technologies, and through collaborations with its strategic partners, the Company has developed multiple approved products for the treatment of Duchenne muscular dystrophy (“Duchenne”) and is developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, Limb-girdle muscular dystrophies (“LGMDs”) and other neuromuscular and central nervous system disorders.

The Company's products in the U.S., EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”) and AMONDYS 45 (casimersen) Injection (“AMONDYS 45”) were granted accelerated approval by the U.S. Food and Drug Administration (the “FDA”) on September 19, 2016, December 12, 2019 and February 25, 2021, respectively. Indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively, EXONDYS 51, VYONDYS 53 and AMONDYS 45 (collectively, the “PMO Products”) use the Company’s phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51, exon 53 and exon 45 of the dystrophin gene. Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein.

ELEVIDYS (delandistrogene moxeparvovec-rokl), approved by the FDA on June 20, 2024, is an adeno-associated virus-based gene therapy for the treatment of ambulatory pediatric patients at least 4 years old with Duchenne with a confirmed mutation in the Duchenne gene. ELEVIDYS is also approved for non-ambulatory patients under the accelerated approval pathway. ELEVIDYS was previously granted accelerated approval by the FDA on June 22, 2023 for the treatment of ambulatory pediatric patients aged 4 through 5 years with Duchenne with a confirmed mutation in the Duchenne gene. ELEVIDYS is contraindicated in patients with any deletion in exon 8 and/or exon 9 in the Duchenne gene.

As of June 30, 2024, the Company had approximately $1,476.1 million of cash, cash equivalents, restricted cash and investments, consisting of $383.6 million of cash and cash equivalents, $1,076.9 million of short-term investments and $15.6 million of non-current restricted cash. The Company believes that its balance of cash, cash equivalents and investments as of the date of the issuance of this report is sufficient to fund its current operational plan for at least the next twelve months, though it may pursue additional cash resources through public or private debt and equity financings, seek funded research and development arrangements and additional government contracts and establish collaborations with or license its technology to other companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), reflect the accounts of Sarepta and its wholly-owned subsidiaries. All intercompany transactions between and among its consolidated subsidiaries have been eliminated. Management has determined that the Company operates inone segment: discovering, developing, manufacturing and delivering therapies to patients with rare diseases.

In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. GAAP, but that is not required for interim reporting purposes, has been omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2023 which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission on February 28, 2024. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Estimates and Uncertainties

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash held at financial institutions, cash equivalents, investments and accounts receivable, net, from customers. As of June 30, 2024, the Company’s cash was concentrated at three financial institutions, which potentially exposes the Company to credit risks. However, the Company does not believe that there is significant risk of non-performance by the financial institutions. The Company also purchases commercial paper, government and government agency bonds, corporate bonds and certificates of deposit issued by highly rated corporations, financial institutions and governments and limits the amount of credit exposure to any one issuer. These amounts may at times exceed federally insured limits. The Company has not experienced any credit losses related to these financial instruments and does not believe to be exposed to any significant credit risk related to these instruments. As of June 30, 2024, three entities accounted for 33%,28% and 15% of accounts receivable, net, respectively. As of December 31, 2023, four entities accounted for 40%,19%,19% and 12% of accounts receivable, net, respectively. As of June 30, 2024, the Company believes its largest customers are of high credit quality and has not experienced any material credit losses related to such customers.

Significant Accounting Policies

For details about the Company's accounting policies, please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncementsof the Annual Report on Form 10-K for the year ended December 31, 2023.

There have not been any material changes to the Company's accounting policies or recent accounting pronouncements that could have a material impact through June 30, 2024.

3. LICENSE AND COLLABORATION AGREEMENTS

F. Hoffman-La Roche Ltd.

For the three and six months ended June 30, 2023, the Company recognized$22.3 million and $44.3 million, respectively, of collaboration revenue associated with the license, collaboration and option agreement (the “Roche Agreement”) with F. Hoffman-La Roche Ltd. (“Roche”) related to the amortization of the single, combined performance obligation, with no such activity for the corresponding periods ended June 30, 2024. Under the Roche Agreement, the Company has granted Roche options to acquire ex-U.S. rights to certain future Duchenne development programs (the “Options”) in exchange for separate option exercise payments, milestone and royalty considerations, and cost-sharing provisions. These Options were accounted for as material rights related to individual programs and recorded in deferred revenue at the inception of the Roche Agreement. The value assigned to the material rights is included in deferred revenue until such rights expire or are exercised. On February 12, 2024, Roche declined to exercise its optional rights related to one external, early stage development program, which resulted in the immediate recognition of $48.0 million of collaboration revenue for the six months ended June 30, 2024. As of June 30, 2024 and December 31, 2023, the Company had total deferred revenue of $447.0 million and $487.4 million, primarily related to the separate material rights for the Options associated with the Roche Agreement, of which $122.0 million and $50.4 million were classified as current, respectively.

The costs associated with co-development activities performed under the Roche Agreement are included in operating expenses, with any reimbursement of costs by Roche reflected as a reduction of such expenses when the related expense is incurred. For the three and six months ended June 30, 2024, costs reimbursable by Roche and reflected as a reduction to operating expenses were $17.9 million and $39.6 million, respectively. For the three and six months ended June 30, 2023, costs reimbursable by Roche and reflected as a reduction to operating expenses were $28.2 million and $48.5 million, respectively. As of June 30, 2024 and December 31, 2023, there were $19.9 million and $29.8 million, respectively, of collaboration and other receivables included in other current assets on the unaudited condensed consolidated balance sheets.

In accordance with the Roche Agreement, the Company agreed to enter into a supply agreement with Roche in order to supply them with clinical and commercial batches of ELEVIDYS (the “Supply Agreement”). While the Supply Agreement is in the process of being negotiated, the Company has delivered batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis. For the six months ended June 30, 2024, the Company recognized $5.8 million of contract manufacturing revenue related to these shipments, withno similar activity for the six months ended June 30, 2023. There was no similar activity in contract manufacturing revenue for either the three months ended June 30, 2024 or 2023. This revenue is included in collaboration and other revenues in the unaudited condensed consolidated statements of comprehensive income (loss). For the six months ended June 30, 2024, the Company recognized $1.7 million of inventory costs related to these shipments, which is included in cost of sales (excluding amortization of in-licensed rights) in the unaudited condensed consolidated statements of comprehensive income (loss). For the three andsix months ended June 30, 2024, the Company recognized $2.4 million and $2.6 million, respectively, of royalty revenue from sales of ELEVIDYS by Roche, withno similar activity for the same periods of 2023.

Research and Option Agreements

The Company has research and option agreements with third parties in order to develop various technologies and biologics that may be used in the administration of the Company’s genetic therapeutics. The agreements generally provide for research services related to pre-clinical development programs and options to license the technology for clinical development. Prior to the options under these agreements being executed, the Company may be required to make up to $34.8 million in research milestone payments. Under these agreements, there are $121.8 million in potential option payments to be made by the Company upon the determination to exercise the options. Additionally, if the options for each agreement are executed, the Company would incur additional contingent obligations and may be required to make development, regulatory, and sales milestone payments and royalty payments based on the net sales of the developed products upon commercialization. For the three and six months ended June 30, 2023, the Company recognized $7.5 million of up-front payments related to an exercised option as research and development expense. During thethree and six months ended June 30, 2024, the Company didnot exercise any options, nor did any additional research milestone payments become probable of occurring.

Milestone Obligations

The Company has license and collaboration agreements in place for which it could be obligated to pay, in addition to the payment of up-front fees upon execution of the agreements, certain milestone payments as a product candidate proceeds from the submission of an investigational new drug application through approval for commercial sale and beyond. As of June 30, 2024, the Company may be obligated to make up to $2.8 billion of future development, regulatory, commercial and up-front royalty payments associated with its collaboration and license agreements. These obligations exclude potential future option and milestone payments for options that have yet to be exercised within research and option agreements entered into by the Company as of June 30, 2024, which are discussed above. For the three and six months ended June 30, 2023, the Company recognized up-front, development milestone and other expenses of $7.6 million and $8.1 million, respectively, as research and development expense in the accompanying unaudited condensed consolidated statements of comprehensive income (loss), withno similar activity for thethree and six months ended June 30, 2024.

4. FAIR VALUE MEASUREMENTS

The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

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Level 1 — quoted prices for identical instruments in active markets;

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Level 2 — quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

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Level 3 — valuations derived from valuation techniques in which one or more significant value drivers are unobservable.

During the six months ended June 30, 2024, there were no transfers into or out of Level 3. The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques it utilizes to determine such fair value:

The Company’s assets with a fair value categorized as Level 1 within the fair value hierarchy include money market funds and the Company's strategic investment in a biotechnology company listed on the Nasdaq Global Market.

The Company's assets with a fair value categorized as Level 2 within the fair value hierarchy consist of commercial paper, government and government agency bonds, corporate bonds and certificates of deposit. These assets have been initially valued at the transaction price and subsequently valued at the end of each reporting period utilizing third-party pricing services. The Company uses observable market inputs to determine value, which primarily consist of reportable trades. Certain of the short-term investments with maturities of less than three months at the date of acquisition are presented as cash equivalents on the unaudited condensed consolidated balance sheets as of June 30, 2024.

The Company’s assets with a fair value categorized as Level 3 within the fair value hierarchy consist of a strategic investment in a private biotechnology company whose fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. At the end of each reporting period, the fair value of the Company's strategic investments that are not listed securities are adjusted if the issuers were to issue similar or identical securities or when there is a triggering event for impairment. There were no valuation measurement events related to the fair value of the Company's Level 3 strategic investments during the six months ended June 30, 2024 or 2023, as no impairment indicators were identified nor were similar securities issued.

The Company’s contingent consideration liability with a fair value categorized as Level 3 within the fair value hierarchy relates to the regulatory-related contingent payments to Myonexus Therapeutics, Inc. (“Myonexus”) selling shareholders as well as to two academic institutions under separate license agreements that meet the definition of a derivative. For more information related to Myonexus, please read Note 3, License and Collaboration Agreements to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The contingent consideration liability was estimated using an income approach based on the probability-weighted expected cash flows that incorporated industry-based probability adjusted assumptions relating to the achievement of the milestone and thus the likelihood of making the payments. This fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 measurement. Significant changes which increase or decrease the probabilities of achieving the milestone or shorten or lengthen the time required to achieve the milestone, would result in a corresponding increase or decrease in the fair value of the liability. At the end of each reporting period, the fair value is adjusted to reflect the most current assumptions through earnings.

The following table represents a roll-forward of the fair value of Level 3 financial liabilities for the periods indicated:

For the six months ended June 30, 2024, the Company recorded an increase of $10.1 million to account for the change in fair value of the Company's existing contingent consideration liabilities. These changes, which are recorded through earnings, were a result of updates made to certain inputs and assumptions impacting the probability-weighted expected cash flows, principally the probability of success of the underlying programs and the discount rate utilized to determine the present value of future payments to be made. As of June 30, 2024, the contingent consideration was recorded as a long-term liability on the Company's unaudited condensed consolidated balance sheets. For the six months ended June 30, 2023, a decrease of $0.8 million was recorded to account forthe termination of a license agreement with an academic institution that had met the definition of a derivative.

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximated fair value because of the immediate or short-term maturity of these financial instruments. For fair value information related to the Company's debt facilities, please read Note 10, Indebtedness.

5. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

The following table summarizes the Company’s financial assets with maturities of less than 90 days from the date of purchase included in cash equivalents in the unaudited condensed consolidated balance sheets for each of the periods indicated:

It is the Company’s policy to mitigate credit risk in its financial assets by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type. The weighted average maturity of the Company's available-for-sale securities as of both June 30, 2024 and December 31, 2023 was approximately five months.

The following tables summarize the Company’s cash, cash equivalents and short-term investments for each of the periods indicated:

6. PRODUCT REVENUES, NET, ACCOUNTS RECEIVABLE, NET, AND RESERVES FOR PRODUCT REVENUES

Net product revenues, which includes revenues associated with the PMO Products and ELEVIDYS, consisted of the following:

For the three and six months ended June 30, 2024 and 2023, no individual country outside the U.S. exceeded 10% of total net product revenues.

The following table summarizes the Company's net product revenues, by customer, for those customers that exceeded 10% for the periods indicated:

As of June 30, 2024 and December 31, 2023, the Company's accounts receivable, net were $360.0 million and $400.3 million, respectively, both of which were related to product sales, net of discounts and allowances. As of June 30, 2024, the majority of the Company’s accounts receivable arose from product sales in the U.S. and all customers have standard payment terms that generally require payment within 65 to 90 days. Outside of the U.S., the majority of the Company’s customers have payment terms ranging between 90 and 150 days. Please refer to Note 2, Summary of Significant Accounting Policiesfor discussion of the credit risk associated with accounts receivable, net.

The following tables summarize an analysis of the change in reserves for discounts and allowances for each of the periods indicated:

The following table summarizes the total reserves above included in the Company’s unaudited condensed consolidated balance sheets for each of the periods indicated:

7. INVENTORY

The following table summarizes the components of the Company’s inventory for each of the periods indicated:

No material inventory reserves existed as of June 30, 2024 or December 31, 2023. The Company classifies inventory associated with its PMO Products as non-current inventory when consumption of the inventory is expected beyond the Company's normal PMO Product inventory operating cycle of two years. Non-current inventory consists of raw materials and work in progress associated with the PMO Products.

The following table summarizes the balance sheet classification of the Company's inventory for each of the periods indicated:

8. OTHER ASSETS

The following table summarizes the Company’s other current assets for each of the periods indicated:

The following table summarizes the Company’s other non-current assets for each of the periods indicated:

• The Company had approximately $15.6 million in restricted cash included in other non-current assets on the Company’s unaudited condensed consolidated balance sheets as of both June 30, 2024 and December 31, 2023. Restricted cash for both periods relates to (i) letters of credit established under the Company’s various property leases that serve as security for potential future default of lease payments, (ii) a letter of credit established under a certain commercial supply agreement and (iii) collateralized cash for the Company’s credit cards. The restricted cash is unavailable for withdrawal or use for general obligations.

9. ACCRUED EXPENSES

The following table summarizes the Company’s accrued expenses for each of the periods indicated:

10. INDEBTEDNESS

2024 Convertible Notes and 2017 Capped Call Transactions

On November 14, 2017, the Company issued $570.0 million aggregate principal amount of senior convertible notes due on November 15, 2024 (the “2024 Notes”) and, simultaneously, entered into capped call transactions with counterparties intended to minimize the impact of potential dilution upon conversion of the 2024 Notes (the “2017 Capped Calls”).

On September 14, 2022, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding 2024 Notes. The holders exchanged $150.6 million in aggregate principal value of 2024 Notes held by them for an aggregate payment of $248.6 million for full settlement of the principal value and accrued interest on such date. As a result of the repurchases, the Company entered into agreements with the 2017 Capped Calls counterparties to terminate a corresponding portion of the 2017 Capped Calls and received $26.3 million in cash.

On March 2, 2023, the Company entered into separate, privately negotiated exchange agreements with certain holders of the outstanding 2024 Notes. The holders exchanged $313.5 million in aggregate principal value of the 2024 Notes held by them for 4.5 million shares of the Company’s common stock. As a result of the exchange, the Company entered into agreements with the counterparties to the 2017 Capped Calls to terminate a portion of the 2017 Capped Calls and received approximately $80.6 million in cash.

In June 2024, certain existing holders elected to convert $14.2 million in aggregate principal amount of the 2024 Notes into approximately 0.2 million shares of the Company’s common stock. As the conversions were completed under the original terms of the

2024 Notes, there is no gain or loss impact on the accompanying unaudited condensed consolidated statements of comprehensive income (loss). The capped call options related to the shares underlying the conversion are required to be settled at the scheduled maturity date of the 2024 Notes.

For additional details about the 2024 Notes, please read Note 13, Indebtednessto the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Total Debt Obligations

As of June 30, 2024 and December 31, 2023, the Company recorded approximately $1,226.3 million and $1,238.0 million as debt on the unaudited condensed consolidated balance sheets, respectively, with the 2024 Notes balance recorded as a current liability for both periods.

The following table summarizes the Company’s debt facilities for each of the periods indicated:

For each of the three months ended June 30, 2024 and 2023, contractual interest expense from debt facilities was $5.2 million, inclusive of $1.3 million and $1.2 million of amortization of debt discounts, respectively. For the six months ended June 30, 2024 and 2023, contractual interest expense from debt facilities was $10.5 million and $11.5 million, inclusive of $2.5 million and $2.7 million of amortization of debt discounts, respectively. The fair value of the 1.25% convertible senior notes due on September 15, 2027 (“2027 Notes”) and the 2024 Notes is based on open market trades and is classified as Level 1 in the fair value hierarchy.

The following table summarizes the total principal and contractual interest payments due under the Company’s debt arrangements:

11. STOCK-BASED COMPENSATION

The following table summarizes the Company’s stock awards granted for each of the periods indicated:

(1) Included in restricted stock units (“RSUs”) for thethree and six months ended June 30, 2024 are 8,860 and 97,460 shares with performance conditions (“March 2024 PSUs”), respectively, which are related to the achievement of certain financial performance goals and regulatory approval of certain of the Company's product candidates. The expanded regulatory approval of ELEVIDYS in June 2024 resulted in the cliff-vesting of 44,300 of the 97,460 shares of the March 2024 PSUs during thethree and six months ended June 30, 2024. As of June 30, 2024, none of the performance conditions for the remaining 53,160 shares were probable of being achieved. Stock options and the remaining RSUs granted during the three and six months ended June 30, 2024 have only service-based criteria and vest over four years.

(2) Included in the RSUs for thesix months ended June 30, 2023 are 502,225 shares with performance conditions (the “March 2023 PSUs”), which are related to regulatory approval of ELEVIDYS and achievement of a certain financial performance target, both of which were achieved in 2023. Vesting of the March 2023 PSUs is contingent on the fulfillment of remaining service conditions.

During the year ended December 31, 2022, the Company granted 38,500 RSUs with performance conditions (the “March 2022 PSUs”), which are related to regulatory approval of certain of the Company's product candidates. As a result of the expanded regulatory approval of ELEVIDYS in June 2024, a portion of the March 2022 PSUs became eligible for vesting. Vesting of these PSUs iscontingent on the fulfillment of remaining service conditions. As of June 30, 2024, none of the remaining performance conditions were probable of being achieved.

Stock-based Compensation Expense

For the three months ended June 30, 2024 and 2023, total stock-based compensation expense was $50.5 million and $47.4 million, respectively. For thesix months ended June 30, 2024 and 2023, total stock-based compensation expense was $91.2 million and$88.6 million, respectively.

The following table summarizes stock-based compensation expense by grant type and by function included within the unaudited condensed consolidated statements of comprehensive income (loss):

*Prior to thesix months ended June 30, 2024, capitalized stock-based compensation costs were not material.

12. OTHER INCOME (LOSS), NET

The following table summarizes other income (loss), net for each of the periods indicated:

13. INCOME TAXES

During the three and six months ended June 30, 2024, the Company recorded an income tax provision of $7.1 million and $12.4 million, respectively. The effective tax rate for the six months ended June 30, 2024 was 22.6%. The income tax provision primarily relates to the current tax provision on taxable profits, including in certain states which restrict the amount of net operating loss carryforwards which may be utilized to offset taxable income. The Company continues to maintain a valuation allowance on its worldwide deferred tax assets with the exception of deferred tax assets in certain foreign jurisdictions, as it has concluded that it is more likely than not that these deferred tax assets will not be realized.

During the three and six months ended June 30, 2023, the Company recorded an income tax provision of $9.4 million and $13.4 million, respectively. The effective tax rate for the six months ended June 30, 2023 was(2.5%). For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize the costs over five years for research activities performed in the U.S. and 15 years for research activities performed outside the U.S. The requirement to capitalize research and development costs for tax purposes resulted in the Company having taxable profits and recording federal and state tax expense of $2.9 million and $10.5 million, respectively. The state tax expense of $10.5 million is primarily related to state taxable income, partially offset by net operating loss carryforwards.

14. EARNINGS (LOSS) PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding.

The following table sets forth the computation of basic and diluted earnings (loss) per common share:

The following table summarizes potential shares of common stock that were excluded from the computation of diluted earnings per share as they were anti-dilutive:

(1) As of June 30, 2024, the anti-dilutive common stock issuable under the Company's equity incentive plans excludes 1.2 million shares that are dilutive but have performance or market conditions that were not met as of the end of the period.

(2) As of June 30, 2023, the anti-dilutive common stock issuable under the Company's equity incentive plans includes 1.2 million shares that have performance or market conditions that were not met as of the end of the period because these were anti-dilutive as the Company was in a net loss position at the end of the period.

15. COMMITMENTS AND CONTINGENCIES

Manufacturing Obligations

The following table summarizes the aggregate non-cancelable contractual obligations arising from the Company’s manufacturing obligations:

*Total manufacturing commitments include the Catalent, Inc. (“Catalent”) manufacturing and supply agreement, for which the Company has ROU assets and lease liabilities recorded on the unaudited condensed consolidated balance sheets as of June 30, 2024.

For more information related to the Company’s manufacturing and supply agreements, please read Note 16, Subsequent Events included herein and Note 21, Commitments and Contingencies to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Litigation

In the normal course of business, the Company from time to time is named as a party to various legal claims, actions and complaints, which have included and may include matters involving securities, employment, intellectual property, arising from the use of therapeutics utilizing its technology, or others. The Company records a loss contingency reserve for a legal proceeding when it considers the potential loss probable, and it can reasonably estimate the amount of the loss or determine a probable range of loss. The Company provides disclosure when it considers a loss reasonably possible or when it determines that a loss in excess of a reserve is reasonably possible. The Company provides an estimate of such reasonably possible losses or an aggregate range of such reasonably possible losses, unless the Company believes that such an estimate cannot be made. The Company has not recorded any material accruals for loss contingencies, and in management's opinion, no material range of loss is estimable for the matters described below as of June 30, 2024.

On September 15, 2020, REGENXBIO INC. (“Regenx”) and the Trustees of the University of Pennsylvania (“U-Penn”) filed a lawsuit against the Company and Sarepta Therapeutics Three, LLC, in the U.S. District Court for the District of Delaware. The plaintiffs assert patent infringement of U.S. Patent No. 10,526,617 (“the ‘617 Patent”) under 35 U.S.C.§§ 271(a)-(c) based on Sarepta’s alleged direct or indirect manufacture and use of the patented cultured host cell technology allegedly used to make adeno-associated virus (“AAV”) gene therapy products, including SRP-9001 (approved June 22, 2023 in the U.S. as ELEVIDYS®). Specifically, the Complaint essentially includes the allegation that Sarepta’s use, and the use by its contract manufacturers on its behalf, of a host cell containing a recombinant acid molecule that encodes a capsid protein having at least 95% amino acid identity to AAVrh10 infringes the ‘617 Patent asserted by Regenx. Plaintiffs seek injunctive relief, a judgment of infringement and willful infringement, damages that are no less than a reasonable royalty (treble damages), attorneys’ fees and costs, and such other relief as the court deems just and proper. On January 5, 2024, the Court granted Sarepta’s motion for summary judgment on the grounds that the asserted claims of Regenx’s ‘617 Patent are invalid because they cover patent ineligible subject matter under 35 U.S.C. § 101. On January 12, 2024, the Court entered judgment and closed the case. Plaintiffs have appealed to the U.S. Court of Appeals for the Federal Circuit.

On June 20, 2023, Regenx and U-Penn commenced a second patent infringement lawsuit against Sarepta and its contract manufacturer, Catalent asserting patent alleged infringement of U. S. Patent No. 11,680,274 (“the ’274 Patent”). In the second lawsuit, Regenx and U-Penn allege that Sarepta and Catalent’s manufacture, use and commercial launch of ELEVIDYS® (SRP-9001) infringe the ’274 Patent. Sarepta answered the complaint on August 10, 2023, and a case schedule has been set with a trial commencing on November 17, 2025. On February 21, 2024, Sarepta submitted a petition for Inter Partes Review ("IPR") for filing with the Patent Trial and Appeal Board ("PTAB") at the USPTO. The petition seeks to invalidate the ‘274 Patent. On March 20, 2024, the district court stayed the litigation pending the PTAB’s determination on the IPR.

On July 13, 2021, Nippon Shinyaku Co., Ltd. (“Nippon Shinyaku” or “NS”) filed a lawsuit against the Company in the U.S. District Court for the District of Delaware. NS asserted a claim for breach of contract arising from Sarepta filing seven petitions for Inter Partes Review (“IPR Petitions”) with the PTAB at the USPTO in which Sarepta sought to invalidate certain NS patents concerning exon 53 skipping technology (U.S. Patent Nos. 9,708,361, 10,385,092, 10,407,461, 10,487,106, 10,647,741, 10,662,217, and 10,683,322, respectively, and collectively the “NS Patents”). In addition, NS asserted claims for patent infringement and willful infringement of each of the NS Patents allegedly arising from Sarepta’s activities, including the sale of, its exon 53 skipping product, VYONDYS 53 (golodirsen). NS further sought a determination of non-infringement by NS alleged to arise from NS’s activities, including the sale of, its exon 53 skipping product, Viltepso (viltolarsen) and invalidity of certain patents licensed to the Company from the University of Western Australia ("UWA") (U.S. Patent Nos. 9,994,851, 10,227,590, and 10,266,827, collectively the “UWA Patents”). In its complaint, NS sought legal fees and costs, an unspecified amount of monetary relief (treble damages) attributed to Sarepta’s alleged infringement, and such other relief as the court deems just and proper. In January 2022, the PTAB granted institution of all claims of all NS Patents in response to Sarepta’s IPR Petitions and determined that Sarepta demonstrated a reasonable likelihood of success in proving that the NS Patents are unpatentable. NS filed a motion for preliminary injunction solely seeking Sarepta’s withdrawal of the IPR Petitions, which was ultimately granted after the U.S. Court of Appeals for the Federal Circuit reversed and remanded to the district court on February 8, 2022. Sarepta subsequently withdrew the IPRs, which were terminated on June 14, 2022. On December 27, 2021, the district court partially granted and denied the motion to dismiss by Sarepta and ordered NS to file a Second Amended Complaint (“SAC”), which it did on January 14, 2022. In the SAC, NS maintained all claims of the original complaint of July 13, 2021, except a determination of non-infringement of the UWA Patents. On January 28, 2022, Sarepta filed its answer to the SAC, with defenses and counterclaims against NS and NS Pharma Inc. that include infringement of the UWA Patents allegedly arising from their activities concerning, including the sale of, its exon 53 skipping product, Viltepso (viltolarsen) and breach of contract. Sarepta also sought a determination of invalidity of the NS Patents. In its counterclaim complaint, Sarepta sought an award of relief in its defenses to NS’ allegations, a judgment of breach of contract, a determination of invalidity of the NS Patents, a judgment of infringement and willful infringement of the UWA Patents, legal fees and costs, an unspecified amount of monetary relief

(treble damages) attributable to NS’ alleged infringement, and such other relief as the court deems just and proper. UWA has since been joined as a Plaintiff in Sarepta’s counterclaims against NS. On August 14, 2023, the Court granted cross motions to amend the pleadings, allowing Sarepta to add a counterclaim against NS for inequitable conduct, and NS to add counterclaims against Sarepta for inequitable conduct and Walker Process fraud. The parties have since stipulated to the dismissal of NS's claim of infringement of its ’361 Patent and certain claims of the ’322 Patent, and NS’s breach of contract claim. The Court bifurcated the Walker Process fraud claim on April 18, 2024, and granted Sarepta's motion for summary judgement of infringement of the '851 Patent and NS’s motion for partial summary judgment of infringement of certain NS patents on May 1, 2024. A trial is scheduled to commence on December 16, 2024.

On or about June 5, 2023, Sarepta initiated a patent infringement lawsuit against Nippon Shinyaku in Japan, alleging that NS’s production, sales and offers to sell Viltepso infringe Sarepta’s Japanese Patent No. 6406782. NS filed its preliminary answer on July 13, 2023. A technical presentation session occurred on July 26, 2024.

On July 26, 2024, Genzyme Corporation filed a lawsuit against Sarepta Therapeutics, Inc. and Sarepta Therapeutics Three, LLC, in the U.S. District Court for the District of Delaware. The complaint asserts infringement of United States Patent Nos. 9,051,542 (the “’542 Patent”) and 7,704,721 (the “’721 Patent”) arising from Sarepta’s alleged manufacture and sale of ELEVIDYS® (delandistrogene moxeparvovec-rokl). In its complaint, Genzyme seeks, inter alia, damages for the alleged infringement, including increased damages up to three times the amount found or assessed, together with prejudgment and post-judgment interest and costs.

16. SUBSEQUENT EVENTS

The Company issued a termination notice to Brammer Bio MA, LLC, an affiliate of Thermo Fisher Scientific, Inc. (“Thermo”) on July 18, 2024 to terminate the development, commercial manufacturing, and supply agreement, as related to the Company's adherent manufacturing process for its gene therapy programs. The termination will be effective as of August 21, 2024 and the Company is currently performing its analysis of the financial impact of the termination. As of the date of this report, the Company expects to record between approximately $55.0 million to $65.0 million in additional expense as a result of this termination for the three and nine months ended September 30, 2024. This range is the net impact of any expected termination expenses and write-offs and the reduction to operating expense for applicable reimbursable costs under the Roche Agreement. As the Company had yet to obtain regulatory approval to produce commercial supply of ELEVIDYS at Thermo manufacturing facilities prior to the issuance of this termination notice, the Company will record these amounts as research and development expenses in the three and nine months ended September 30, 2024.

The Company is analyzing any further impact from the termination that will be recorded for the three and nine months ended September 30, 2024.

For more information related to Thermo, please read Note 21, Commitments and Contingencies to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.