Sarepta Therapeutics Inc

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 (“CNS”) 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”) in 2016, 2019 and 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-(“AAV”) based gene therapy for the treatment of ambulatory patients at least four 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 in June 2023 for the treatment of ambulatory patients aged four through five 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 December 31, 2024, the Company had approximately $1,503.5 million of cash, cash equivalents, restricted cash and investments, consisting of $1,103.0 million of cash and cash equivalents, $384.9 million of investments and $15.6 million of 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 POLICIESAND RECENT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

The accompanying 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. All adjustments of a normal recurring nature necessary for a fair presentation have been reflected.

Segments

Management has determined that the Company operates inone segment: discovering, developing, manufacturing and delivering therapies to patients with rare diseases. The Company’s Chief Executive Officer (“CEO”), as the chief operating decision-maker (“CODM”), manages and allocates resources to the operations of the Company on a total company basis. For more information related to the Company's segment results, please read Note 21, Segment Information.

Estimates and Uncertainties

The preparation of the 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, revenue, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

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.

The fair value of the majority of the Company’s financial assets is categorized as Level 2 within the fair value hierarchy. These assets include commercial paper, government and government agency bonds, corporate bonds and certificates of deposit. For additional information related to fair value measurements, please read Note 5, Fair Value Measurements to the consolidated financial statements.

Cash Equivalents

Only investments that are highly liquid and readily convertible to cash and have original maturities of three months or less at the time of acquisition are considered cash equivalents.

Investments

Available-For-Sale Debt Securities

Available-for-sale debt securities are recorded at fair value and unrealized gains and losses are included in accumulated other comprehensive income (loss) in the consolidated statements of stockholders’ equity. Interest income and realized gains and losses are reported in other income (expense), net, on a specific identification basis. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, the net amount of which, along with interest and realized gains and losses, is included in other income (expense), net in the consolidated statements of comprehensive income (loss).

Equity Investments

The Company’s equity investments include its strategic investments in both publicly traded and private biotechnology companies and are included in other non-current assets in the Company’s consolidated balance sheets. The strategic investment in the publicly traded biotechnology company has a readily determinable fair value and is carried at fair value. The strategic investment in the privately held biotechnology company does not have a readily determinable fair value and is measured at cost less any impairment, plus or minus changes resulting from observable price changes for the identical or a similar investment of the same issuer. Any change in the valuation of equity investments is recorded as a gain or loss on the Company’s consolidated statements of comprehensive income (loss).

Accounts Receivable, Net

The Company’s accounts receivable, net arise from product sales. They are generally stated at the invoiced amount and do not bear interest.

The accounts receivable, net from product sales represents receivables due from the Company’s specialty distributor and specialty pharmacies and sites of care in the U.S., as well as certain distributors in South America, Europe, and the Middle East. Historically, the Company has had no material write-offs of its accounts receivable, net. Payment terms range from 60 to 90 days for sales within the U.S. and 60 and 150 days for the majority of product sales outside the U.S. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in the customers’ credit profiles or any specific issues. The Company provides reserves against trade receivables for expected credit losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are written-off against the established reserve. As of December 31, 2024 and 2023, the credit profiles for the Company’s customers are deemed to be in good standing and an allowance for expected credit losses is not considered necessary.

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 December 31, 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 December 31, 2024, three entities accounted for 54%,21%, and 13% of accounts receivable, net, respectively. As of December 31, 2023, four entities accounted for 40%,19%,19%, and 12% of accounts receivable, net, respectively.

Inventories

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS inventory used in clinical development programs is charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes.

The Company periodically analyzes its inventories for excess amounts or obsolescence and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value. Additionally, though the Company’s products are subject to strict quality control and monitoring the Company performs throughout the manufacturing processes, certain batches or units of product may not meet quality specifications. Expense incurred related to excess inventory, obsolete inventory, or inventories that do not meet the Company's quality specifications is recorded as a component of cost of sales in the Company's consolidated statements of comprehensive income (loss).

For products which are under development and have not yet been approved by regulatory authorities, purchased drug product is charged to research and development expense upon delivery. Delivery occurs when the inventory passes quality inspection and ownership transfers to the Company. Nonrefundable advance payments for research and development activities, including production of purchased drug product, are deferred and capitalized until the goods are delivered. If the Company does not expect the goods to be delivered or services to be rendered, the capitalized advanced payment will be charged to expense.

Property and Equipment

Property and equipment are initially recorded at cost, including the acquisition cost and all costs necessarily incurred to bring the asset to the location and working condition necessary for their intended use. The cost of normal, recurring or periodic repairs and maintenance activities related to property and equipment are expensed as incurred. The cost for planned major maintenance activities, including the related acquisition or construction of assets, is capitalized if the repair will result in future economic benefits. Interest costs incurred during the construction period of major capital projects are periodically reviewed, and if determined to be material, capitalized until the asset is ready for its intended use, at which point the interest costs are amortized as depreciation expense over the life of the underlying asset.

The Company generally depreciates the cost of its property and equipment using the straight-line method over the estimated useful lives of the respective assets, which are summarized as follows:

Intangible assets

The Company’s intangible assets, consisting of in-licensed rights, patent costs and software licenses, are included within other non-current assets in the Company’s consolidated balance sheets.

The in-licensed rights primarily relate to agreements with BioMarin Pharmaceutical, Inc. (“BioMarin”), the University of Western Australia (“UWA”), the Research Institute at Nationwide Children’s Hospital (“Nationwide”) and Parent Project Muscular Dystrophy (“PPMD”). The in-licensed rights are being amortized on a straight-line basis over the remaining life of the related patents because the life of the related patents reflects the expected time period that the Company will benefit from the in-licensed rights.

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company, intangible assets with definite lives and right of use (“ROU”) assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. The Company evaluates recoverability of assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Such reviews assess the fair value of the assets based upon estimates of future cash flows that the assets are expected to generate.

Convertible Debt

The Company accounts for the liability and equity components of convertible debt instruments that can be settled in cash as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives under ASC Topic 815, Derivatives and Hedging(“ASC 815”). Simultaneously with the issuance of the Company's convertible senior notes due on November 15, 2024 (the “2024 Notes”) and convertible senior notes due on September 15, 2027 (the “2027 Notes”) in November 2017 and September 2022, respectively, the Company bought capped call options from certain counterparties to minimize the impact of potential dilution upon conversion. The premium for the capped call options was recorded as additional paid-in capital. For additional information related to the convertible debt transactions, please read Note 13, Indebtedness to the consolidated financial statements.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC Topic 606, Revenue from Contracts with Customers(“ASC 606”), the Company performs the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers or provides to the customer. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. The only performance obligation in the Company’s contracts with customers is to timely deliver drug products to the customer’s designated location.

Product revenues

The Company distributes its products principally through its customers or sells directly to sites of care. When the product is distributed through customers, the customers subsequently resell the products to patients and health care providers. The Company provides right of return to the customers only in cases of shipping error or product defect and other limited rights. Product revenues are recognized when the customers take control of the products, which typically occurs upon delivery or shipment. For information related to revenues by product type and region, please read Note 7, Product Revenues, Net, Accounts Receivable, Net and Reserves for Product Revenues to the consolidated financial statements.

Variable Consideration

Product revenues are recorded at the net sales price (transaction price) which includes reserves for variable consideration such as: rebates and chargebacks, distribution fees, prompt pay discounts, patient assistance and return reserves. These reserves, representing the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contracts, are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable if no payments are required of the Company or a current liability if a payment is required of the Company. Where appropriate, the estimates reflect the Company’s historical experience, contractual and statutory requirements, industry data and forecasted customer buying and payment patterns. Actual amounts may differ from the Company’s estimates. If actual results vary, these estimates are adjusted, which could have an effect on revenue in the period of adjustment.

Additional details relating to variable consideration are as follows:

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Rebates and chargebacks: relating to governmental and commercial rebates and chargebacks.

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Governmental rebates, including Medicaid-rebates relate to the Company’s estimated obligations to federal or states under established reimbursement arrangements. The commercial rebates relate to arrangements the Company enters into with payors that provide for privately-negotiated rebates. Rebate reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses.

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Chargebacks, including Public Health Services (“PHS”) chargebacks, relate to the Company’s estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices that the Company charges to wholesalers. The wholesaler charges the Company for the difference between what the wholesaler pays for the products and the ultimate selling price to the qualified healthcare providers. Chargeback reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider from the wholesaler, and the Company generally issues credits for such amounts within a few weeks of receiving notification of resale from the wholesaler.

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Distribution fees: relating to fees paid to customers in the distribution channel that provide the Company with inventory management, data and distribution services and are generally accounted for as a reduction of revenue. To the extent that the services received are distinct from the Company’s sale of products to the customers, these payments are accounted for as selling, general and administrative expenses. Reserves for distribution fees result in an increase in a liability if payments are required of the Company or a reduction of accounts receivable if no payments are required of the Company.

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Prompt payment discounts: relating to the Company’s estimated obligations for credits to be granted to specialty pharmacies for remitting payment on their purchases within established incentive periods. Reserves for prompt payment discounts are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable.

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Patient assistance: relating to financial assistance programs provided to qualified patients. Reserves for costs related to patient assistance programs are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses.

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Return reserves: relating to the limited return rights the Company provides to customers. The Company records product return reserve, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether return reserves are required, including the patient population and the customers’ limited return rights. Because of the pricing, the limited number of patients, and the customers’ limited return rights, most customers only carry a limited inventory. Based on these factors and the fact that the Company has not experienced significant product returns to date, return reserves have been immaterial to date.

Collaboration revenue

The Company’s collaboration revenue is primarily generated from its collaboration arrangement with F. Hoffman-La Roche Ltd. (“Roche”). For more information, please read Note 3, License and Collaboration Agreements. At the inception of a collaboration arrangement, the Company first assesses whether the contractual arrangement is within the scope of ASC Topic 808, Collaborative Arrangements to determine whether the arrangement involves a joint operating activity and involves two (or more) parties that are both active participants in the activity and exposed to significant risks and rewards dependent on the commercial success of such activity. Then the Company determines whether the collaboration arrangement in its entirety represents a contract with a customer as defined by ASC 606. If only a portion of the collaboration arrangement is potentially with a customer, the Company applies the distinct good or service unit-of-account guidance in ASC 606 to determine whether there is a unit of account that should be accounted for under ASC 606. For the units of account in the collaboration arrangement that do not represent a vendor-customer relationship, the Company will (i) consider applying other GAAP, including by analogy, or (ii) if there is no appropriate analogy, consistently apply a reasonable and rational accounting policy election.

In general, by analogy to ASC 606, the Company identifies the performance obligations within the collaboration arrangement and identifies and allocates the transaction price the Company expects to receive on a relative standalone selling price basis to each performance obligation. Variable consideration, consisting of development and regulatory milestones, will be included in the transaction price only if the Company expects to receive such consideration and if it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement. Sales-based royalty and milestone payments are excluded from the transaction price the Company expects to receive until the underlying sales occur because the license to the Company’s intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in its collaboration arrangement.

For the recognition of revenue associated with each performance obligation, if the Company determines ASC 606 is not appropriate to apply by analogy, the Company will apply a reasonable, rational and consistently applied accounting policy election to faithfully depict the transfer of services to the collaboration partner over the estimated performance period. Up-front payments from a collaboration partner are recognized as deferred revenue when received and recognized as revenue over the estimated performance period. Reimbursement payments from a collaboration partner associated with cost-sharing provisions in a collaboration arrangement are recognized as the related expense is incurred and classified as an offset to operating expenses. Revenue from sales-based royalty payments is included as collaboration and other revenues on the consolidated statements of comprehensive income (loss). Revenue from product supply sold to collaboration partners under a collaboration arrangement via contract manufacturing is included as collaboration and other revenues on the consolidated statements of comprehensive income (loss).

Valuation of Product Options

The Company's collaboration arrangements may contain options which provide the collaboration partner with the right to obtain additional licenses. If an arrangement contains product options, by analogy to ASC 606, the Company evaluates the product options to determine whether they represent material rights, which may include options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent material rights, they are recognized as a separate performance obligation at inception of the arrangement. The Company allocates a portion of the transaction price of the collaboration arrangement to material rights based on the relative standalone selling price. Amounts allocated to material rights are not recognized as revenue until related options are exercised or expire. Key assumptions to determine the standalone selling price of product options in a collaboration arrangement include, but are not limited to, forecasted revenues, development timelines, incremental costs related to the arrangement, discount rates and likelihood of technical and regulatory success.

Research and Development Expenses

Research and development expenses consist of costs associated with research activities as well as those with the Company’s product development efforts, conducting pre-clinical trials, clinical trials and manufacturing activities. Research and development expenses are expensed as incurred. Up-front fees and milestones paid to third parties in connection with technologies which have not reached technological feasibility and do not have an alternative future use are expensed when incurred.

Direct research and development expenses associated with the Company’s programs include clinical trial site costs, clinical manufacturing costs, costs incurred for consultants and other external services, such as data management and statistical analysis support and materials and supplies used in support of clinical programs. Indirect costs of the Company’s research and development programs include salaries, stock-based compensation and an allocation of its facility and technology costs.

When third-party service providers’ billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those third parties, including clinical trial and pharmaceutical development costs, contractual services costs and costs for supply of its drug candidates incurred in a given accounting period, and record accruals at the end of the period. The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities and the expected duration of the third-party service contract, where applicable.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of salaries, benefits, stock-based compensation and related costs for personnel in the Company's executive, finance, legal, information technology, business development, human resources, commercial and other general and administrative functions. Other general and administrative expenses include an allocation of the Company's facility- and technology-related costs and professional fees for legal, consulting and accounting services.

Advertising costs are included in selling, general and administrative expenses and are expensed as incurred. The Company considers advertising costs as expenses related to the promotion of the Company's commercial products. For the years ended December 31, 2024, 2023 and 2022, advertising costs totaled $32.0 million, $28.6 million and $14.6 million, respectively.

Stock-Based Compensation

The Company’s stock-based compensation programs include stock options, restricted stock units (“RSUs”), RSU shares with performance conditions (“PSUs”) and an employee stock purchase program (“ESPP”). Stock-based compensation is recognized based on grant date fair value of stock awards.

The fair value of stock options are estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The fair values of PSUs and RSUs are based on the fair market value of the Company’s common stock on the date of the grant. The fair value of stock awards, with consideration given to estimated forfeitures, is recognized as stock-based compensation expense on a straight-line basis over the requisite service period, which is the vesting period of the grants. The Company estimates forfeitures over the requisite service period using historical forfeiture activity. For stock awards with performance-vesting conditions, the Company does not recognize compensation expense until it is probable that the performance condition will be achieved.

Additionally, the Company granted its CEO options with service and market conditions. A market condition relates to the achievement of a specified price of the Company’s common stock, a specified amount of intrinsic value indexed to the Company’s common stock or a specified price of the Company’s common stock in terms of other similar equity shares. The grant date fair value for the options with service and market conditions is determined by a lattice model with Monte Carlo simulations and is recognized as stock-based compensation expense on a straight-line basis over the respective derived service period.

Under the Company’s ESPP, participating employees purchase common stock through payroll deductions. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on the first business day and the last business day of the relevant purchase period. The fair value of stock purchase rights is estimated using the Black-Scholes-Merton option-pricing model. The fair value of the look-back provision with the 15% discount is recognized on a graded-vesting basis as stock-based compensation expense over the offering period.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for expected future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the net deferred tax asset to zero when it is more likely than not that the net deferred tax asset will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. The amount of the benefit that may be recognized in the financial statements is the largest amount that has a greater than 50% likelihood of being realized. The Company recognizes interest and penalties related to uncertain tax positions within income tax expense.

It is the intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations and not to repatriate the earnings to the U.S. Accordingly, the Company does not provide for deferred taxes on the excess of the financial reporting over the tax basis in its investments in foreign subsidiaries as they are considered permanent in duration.

Effective December 31, 2021, the Company adopted a policy to account for Global Intangible Low-Taxed Income (“GILTI”) as a period cost under the Tax Cuts and Jobs Act. In 2021, the Organization for Economic Co-operation and Development (“OECD”) released a framework for the fundamental reform of international tax rules. The framework provides for two primary “Pillars”; however, only Pillar Two, which provides for a global minimum corporate tax rate of 15%, is expected to be applicable to the Company (Pillar One is not expected to be applicable as the Company does not currently meet the turnover threshold - EUR 20 billion). In December 2022, Pillar Two was adopted by the Council of the European Union (the “EU”) for implementation by EU member states by December 31, 2023, with effect for tax years beginning in calendar year 2024. The OECD, and its member countries, continue to release new guidance on these rules and the Company is continuously evaluating the impact to its financial position. Currently, the global enactment of Pillar Two did not materially impact the Company's effective tax rate or cash flows. However, the Company will continue to monitor and evaluate new legislation and guidance, which could change its current assessment.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than 12 months are recognized on the consolidated balance sheets as ROU assets and short-term and long-term lease liabilities, as applicable. The Company has elected not to recognize leases with terms of 12 months or less on the consolidated balance sheets. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. The Company monitors its plans to renew its leases quarterly or on an as-needed basis. In addition, the Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants.

Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected remaining lease term at lease commencement. The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on an index or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. Lease costs for operating leases are recognized on a straight-line basis over the lease term as an operating expense with unrecognized variable lease payments recognized as incurred. Certain adjustments to the ROU asset may be required for items such as lease prepayments or incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Components of a lease are bifurcated between lease components and non-lease components. The fixed and in-substance fixed contract consideration identified is then allocated based on the relative standalone price to the lease and non-lease components. The Company adopted a practical expedient provided by ASC Topic 842, Leases, and elected to account for the lease and non-lease components together for existing classes of underlying assets and allocates the contract consideration to the lease component only. In contrast, the Company does not apply the practical expedient for leases embedded in manufacturing and supply agreements with certain of its contract manufacturing organizations and has instead allocated contract consideration between the lease and non-lease components based on their relative standalone price.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the treasury stock method for stock awards and if-converted method for convertible notes by dividing net income by the weighted-average number of shares of common stock and potentially dilutive common stock equivalents outstanding. Potential common equivalent shares are excluded if their effect is anti-dilutive.

Embedded Derivatives

The Company evaluates certain of its financial and business development transactions to determine if embedded components of these contracts meet the definition of derivative under ASC 815. In general, embedded derivatives are required to be bifurcated from the host instrument if (i) the embedded feature is not clearly and closely related to the host contract and (ii) the embedded feature, if considered a freestanding instrument, meets the definition of a derivative. The embedded derivative is reported on the consolidated balance sheets at its fair value. Any change in fair value, as determined at each period, is recorded as a component of the consolidated statements of comprehensive income (loss).

Contingent Consideration

Certain of the Company’s license and collaboration agreements include future payments that are contingent upon the receipt, or receipt and subsequent sale, of a Priority Review Voucher (“PRV”). The Company has concluded that these contingent payments represent embedded derivatives. The Company records a liability for such contingent payments at fair value on the date the agreements are effective. The Company estimates the fair value of contingent consideration derivatives through a valuation model that includes 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. Changes in the fair value of the contingent consideration derivatives can result from changes to one or multiple assumptions, including adjustments to the discount rates, the assumed development timeline and the probability of achievement of certain regulatory milestones. At least quarterly, or upon a material change to one or more of the assumptions discussed above, the Company assesses its contingent consideration derivatives and revalues them as necessary. If a revaluation occurs, changes in the fair value of the Company’s contingent consideration derivatives are recognized in the Company’s consolidated statements of comprehensive income (loss). Such changes are classified as other income (loss), net, which corresponds to the classification of any gain recognized upon the actual sale of a PRV.

Commitments and Contingencies

The Company records liabilities for legal and other contingencies when information available to the Company indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Legal costs in connection with legal and other contingencies are expensed as costs are incurred as selling, general and administrative expenses.

Recent Accounting Pronouncements

Recently adopted

In November 2023, the FASB issued ASU 2023-07,“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the CODM and included within segment profit and loss. The amendments are effective for the Company's fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. For more information related to the Company's adoption of ASU 2023-07, please read Note 21, Segment Information.

Recently issued

In December 2023, FASB issued ASU 2023-09,“Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU enhances the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In March 2024, the SEC issued a final rule under SEC Release Nos. 33-11275 and 34-99678,“The Enhancement and Standardization of Climate-Related Disclosures for Investors.” The rule requires disclosure of material climate-related information outside of the audited financial statements and disclosure in the footnotes addressing specified financial statement effects of severe weather events and other natural conditions above certain financial thresholds, certain carbon offsets and renewable energy credits or certificates. The standard is effective for the Company's Annual Report on Form 10-K for the year ended December 31, 2025. In April 2024, the SEC released an order staying this final rule pending judicial review of all the petitions challenging the rule. The Company is evaluating the impact of the rule and related litigation on its consolidated financial statements and related 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 provide disaggregated disclosure of income statement expenses. Public entities are required to disaggregate, in a tabular presentation, each relevant expense caption on the face of the consolidated statements of comprehensive income (loss) such as the following expenses: purchases of inventory, employee compensation, intangible asset amortization, and depreciation. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

3. LICENSE AND COLLABORATION AGREEMENTS

Arrowhead Pharmaceuticals, Inc.

On November 25, 2024, the Company entered into an exclusive global licensing and collaboration agreement and a stock purchase agreement (collectively, the “Arrowhead Agreement”) with Arrowhead Pharmaceuticals, Inc. (“Arrowhead”), providing the Company with exclusive global rights to multiple clinical, preclinical and discovery-stage programs for rare, genetic diseases of the muscle, CNS and the lungs.

The closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. The agreement became effective as of February 7, 2025 (the “Effective Date”).

When the Arrowhead Agreement became effective, the Company paid Arrowhead an up-front payment of $500.0 million and invested $325.0 million in Arrowhead'scommon stock at a premium to the valuation on the closing date. As of the date of this report, the Company expects to record between approximately $500.0 million to $600.0 million in research and development expense for the three months ended March 31, 2025, related to those two payments to Arrowhead. Additionally, the Company will pay Arrowhead a total of $250.0 million in annual installments of $50.0 million over five years, with the first payment due on the first anniversary of the Effective Date. The Company may be obligated to make payments to Arrowhead totaling up to $10.3 billion upon the achievement of certain development, regulatory and sales milestones, inclusive of$300.0 millionin near-term payments associated with the continued enrollmentof certain cohorts of a Phase 1/2 study. Furthermore, upon commercialization, the Company will be required to make tiered royalty payments based on net sales.

For the year ended December 31, 2024, there was no accounting impact as a result of the execution of the Arrowhead Agreement because the closing of the transaction did not occur until subsequent to year-end.

F. Hoffman-La Roche Ltd.

On December 21, 2019, the Company entered into a license, collaboration and option agreement with Roche and a stock purchase agreement (collectively, the “Roche Agreement”) with Roche, providing Roche with exclusive commercial rights to ELEVIDYS outside the U.S. The Company retains all rights to ELEVIDYS in the U.S. and will perform all development activities within the joint global development plan necessary to obtain and maintain regulatory approvals for ELEVIDYS in the U.S. and the EU, unless otherwise agreed to by the parties. Further: (i) research and development expenses incurred under the joint global development plan will be equally shared between the Company and Roche, (ii) Roche is solely responsible for all costs incurred in connection with any development activities (other than those within the joint global development plan) that are necessary to obtain or maintain regulatory approvals outside the U.S, and (iii) the Company will continue to be responsible for the manufacturing of clinical and commercial supplies of ELEVIDYS. The Company has also granted Roche options to acquire ex-U.S. rights to certain future Duchenne-specific programs (the “Options”) in exchange for separate option exercise payments, milestone and royalty considerations, and cost-sharing provisions. The agreement became effective on February 4, 2020. The Roche Agreement is governed by a joint steering committee (“JSC”) formed by representatives from Roche and the Company. The JSC, among other activities, manages the overall strategic alignment between the parties, approves any material update to the joint global development plan and budget and oversees the operations of the subcommittees.

The Company received an aggregate of approximately $1.2 billion in cash consideration from Roche, consisting of an up-front payment and an equity investment in the Company. The Company may receive up to $1.7 billion in development, regulatory and sales milestones related to ELEVIDYS. The Company receives tiered royalty payments on net sales of ELEVIDYS outside of the U.S. based on the average cost to manufacture ELEVIDYS. Of the $1.2 billion up-front cash received from Roche, (i) $312.1 million, net of issuance costs, was allocated to the approximately 2.5 million shares of the Company’s common stock issued to Roche based on the closing price when the shares were issued, (ii) $485.0 million was allocated to the Options, and (iii) $348.7 million was allocated to a single, combined performance obligation (“Combined Performance Obligation”) comprised of: (i) the license of IP relating to ELEVIDYS transferred to Roche, (ii) the related research and development services provided under the joint global development plan, (iii) the services provided to manufacture clinical supplies of ELEVIDYS, and (iv) the Company’s participation in the JSC, because the Company determined that the license of IP and related activities were not capable of being distinct from one another.

The value assigned to the Options is reflected as deferred revenue and will not be recognized until an option is either: (i) exercised by Roche, or (ii) expires. If exercised, the value will be aggregated with the option exercise price and recognized over the applicable performance period. If expired, the value will be recognized immediately. The Company recognizes revenue related to the Combined Performance Obligation on a straight-line basis over the expected performance period of the joint global development plan, which extended through the fourth quarter of 2023. Revenue relating to future development, regulatory and sales milestones will be recognized when the milestone is probable of achievement (which is typically when the milestone has occurred). Any royalties payable by Roche will be recognized in the period earned.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized $114.0 million, $98.5 million and $89.2 million of collaboration and other revenues, respectively, which primarily consists of collaboration revenue, contract manufacturing revenue and royalty revenue related to the Roche Agreement.

On February 12, 2024, Roche declined to exercise a certain Option related to one external, early-stage development program, which resulted in that Option's expiry and the immediate recognition of the value assigned to that Option as collaboration revenue. As such, the Company recognized $48.0 million of collaboration revenue during the year ended December 31, 2024. As of December 31, 2024 and 2023, the Company had total deferred revenue of $455.3 million and $487.4 million, respectively, which is primarily associated with the Roche Agreement, of which $130.3 million and $50.4 million was classified as current. On February 5, 2025, an option for a certain program expired, which resulted in the immediate recognition of the value assigned to that option, $112.0 million, as collaboration revenue during the three months ended March 31, 2025. As of December 31, 2024, the amount is classified as deferred revenue, current portion, on the Company's consolidated balance sheets.

For both the years ended December 31, 2023 and 2022, the Company recognized $89.2 million of collaboration revenue, which relates to the amortization of the Combined Performance Obligation. The fair value allocated to Combined Performance Obligation was fully amortized as of December 31, 2023.

In accordance with the Roche Agreement, the parties agreed to enter into a supply agreement with Roche in order to supply them with clinical and commercial batches of ELEVIDYS (the “Supply Agreement”). Roche utilizes the supply for sales of ELEVIDYS in territories outside of the U.S where Roche has received certain approvals for ELEVIDYS. The Company is eligible to receive royalties on these sales. While the Supply Agreement is in the process of being negotiated at the issuance of this annual report, the Company delivered several batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis. Contract manufacturing revenue and royalty revenue are included in collaboration and other revenues in the accompanying consolidated statements of comprehensive income (loss). The following table summarizes certain Roche activity foreach of the periods indicated. There was no similar activity for the year ended 2022.

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 years ended December 31, 2024, 2023 and 2022, costs reimbursable by Roche and reflected as a reduction to operating expenses were $127.1 million, $106.9 million and $117.8 million, respectively. As of December 31, 2024 and 2023, there were $34.6 million and $29.8 million of collaboration and other receivables included in other current assets on the consolidated balance sheets, respectively.

Genethon

The Company entered into a sponsored research agreement in May 2017 and subsequently a license and collaboration agreement with Genethon in November 2019 (the “Genethon Collaboration Agreement”) for Genethon’s micro-dystrophin gene therapy program for the treatment of Duchenne. The Genethon Collaboration Agreement grants the Company with exclusive rights in the majority of the world (primarily excluding the EU) to Genethon’s micro-dystrophin gene therapy products (“Genethon Products”) and other micro-dystrophin gene therapy products.

Upon signing the Genethon Collaboration Agreement, the Company made an up-front payment of $28.0 million, which was recorded as research and development expense in the Company’s consolidated statements of comprehensive loss for the year ended December 31, 2019. Additionally, for the years ended December 31, 2024, 2023 and 2022, the Company recorded $6.8 million, $6.6 million and $3.5 million, respectively, of research and development expense related to reimbursable development costs incurred by Genethon for Genethon Products. For the years ended December 31, 2024, 2023 and 2022, there wereno development orregulatory milestones deemed probable of being achieved and, accordingly, no additional expense has been recognized.

During May 2024, the Company and Genethon agreed to terminate the Genethon Collaboration Agreement, effective June 2024. This resulted in the elimination of all future shared development costs and future development, regulatory and sales milestone obligations.

Myonexus Therapeutics Inc.

In April 2019, the Company completed its acquisition of Myonexus Therapeutics, Inc. (“Myonexus”), a clinical-stage gene therapy biotechnology company that was developing gene therapies for LGMD for $178.3 million. The Company may also be required to make up to $200.0 million in additional payments to selling shareholders of Myonexus based on the achievement of certain sales-and regulatory- related milestones. The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets (the five LGMD gene therapy programs). As part of the consideration for the transaction, the Company is required to make contingent payments to the selling shareholders of Myonexus upon the receipt and subsequent sale of a PRV with respect to a Myonexus product. As of December 31, 2024 and 2023, the contingent consideration liability was $47.1 million and $37.7 million, respectively. The changes in fair value are recorded within other income (expense), net, in the Company’s consolidated statements of comprehensive income (loss). Please read Note 5, Fair Value Measurements for further information on the change in fair value of the contingent consideration liability.

Nationwide Children’s Hospital

In December 2016, the Company entered into an exclusive option agreement with Nationwide from which the Company obtained an exclusive right to acquire a worldwide license of the micro-dystrophin gene therapy technology for Duchenne and Becker muscular dystrophy. In October 2018, the Company exercised the option and entered into a license agreement with Nationwide, which granted the Company exclusive worldwide rights to develop, manufacture and commercialize a micro-dystrophin gene therapy product candidate. Under this agreement, the Company is liable for future regulatory milestone, sales milestone and sublicense payments as well as lower single-digit royalties upon commercialization.

During the year ended December 31, 2023, the Company recorded $23.0 million as an in-licensed right intangible asset in its consolidated balance sheets, $10.0 million of which related to the regulatory approval of ELEVIDYS, and the remaining related to sales-based milestones as the Company determined that all sales-based milestones were achieved or were probable of being achieved. As of December 31, 2024, the in-licensed right asset with a net carrying value of$20.6 million is being amortized on a straight-line basis over the remaining life of the relevant patent. Royalty payments due to Nationwide associated with commercial sales of ELEVIDYS totaled $30.6 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively, and were recorded as cost of sales in the accompanying consolidated statements of comprehensive income (loss).

BioMarin Pharmaceutical, Inc.

In July 2017, the Company and UWA entered into a settlement agreement with BioMarin, and simultaneously entered into a license agreement, which was subsequently amended in April 2019 (the “BioMarin Agreement”), with BioMarin and Academisch Ziekenhuis Leiden (collectively with the Company, UWA and BioMarin, the “Settlement Parties”). The BioMarin Agreement provides the Company with an exclusive license to certain intellectual property with an option to convert the exclusive license into a co-exclusive license and the Settlement Parties agreed to stop most existing efforts to continue with ongoing litigation and opposition and other administrative proceedings concerning BioMarin’s intellectual property. BioMarin is also eligible to receive tiered royalty payments, ranging from 4% to 8%, based on the net sales for the three products and product candidates.

In November 2021, the Company entered into a second settlement agreement and second amendment to the license agreement (the “Second Amendment”), which waived certain future milestone payments and altered royalty payment terms of the agreement. Under the Second Amendment, the Company may be liable for up to approximately $50.0 million in regulatory milestones for eteplirsen, casimersen and golodirsen. In addition, on and after July 1, 2022, the tiered royalty payments ranged from 4% to 5%. The royalty terms under the license agreement expired in March 2024 in the U.S. and expired as of December 31, 2024 in the EU and other countries.

As a result of the execution of the license agreement with BioMarin, the Company recorded an in-licensed right intangible asset of $6.6 million in its consolidated balance sheets as of December 31, 2017, representing the fair value of the U.S. license to BioMarin’s intellectual property. The intangible asset is being amortized on a straight-line basis over the remaining life of the patent and has a carrying value of $1.8 million as of December 31, 2024.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized royalty expense of $4.4 million, $17.6 million and $30.4 million, respectively, which is included in cost of sales in the accompanying consolidated statements of comprehensive income (loss). For the years ended December 31, 2024, 2023 and 2022, no regulatory milestones were deemed probable of being achieved and, accordingly, no additional in-licensed rights or expenses have been recognized.

University of Western Australia

In April 2013, the Company and UWA entered into an amendment to an existing exclusive license agreement relating to the treatment of Duchenne by inducing the skipping of certain exons. The agreement was further amended in June 2016. Under the amended agreement, the Company may be obligated to make payments to UWA totaling up to $26.0 million upon the achievement of certain development, regulatory and sales milestones. Additionally, the Company is required to pay a low-single-digit percentage royalty on net sales of products covered by issued patents licensed under the agreements with UWA. Corresponding to the FDA approval of EXONDYS 51 in 2016, VYONDYS 53 in 2019, and AMONDYS 45 in 2021, the Company recorded milestone payments of $1.0 million, $0.5 million and $0.5 million as in-licensed right intangible assets in its consolidated balance sheets, respectively. Each in-licensed right is being amortized on a straight-line basis over the remaining life of the relevant patents and have a combined carrying value of $0.5 million as of December 31, 2024. For the years ended December 31, 2024, 2023 and 2022, the Company recorded $12.1 million, $11.8 million and $10.5 million in royalty expense, respectively, which is included in cost of sales, related to agreements with UWA. For the years ended December 31, 2024, 2023 and 2022, no development, regulatory or sales milestones were deemed probable of being achieved and, accordingly, no additional in-licensed rights or expenses have been recognized.

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 $116.8 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 sales of the developed products upon commercialization.

For the years ended December 31, 2023 and 2022, the Company recognized $5.1 million, and $6.0 million in research, option and milestone expense as research and development expense in the accompanying consolidated statements of comprehensive income (loss), respectively, with no similar activity during the year ended December 31, 2024. For the years ended December 31, 2023 and 2022, the Company exercised options in a research and option agreement and recognized$7.5 million and $8.5 million, respectively, of up-front expense as research and development expense in the accompanying consolidated statements of comprehensive income (loss), separately from the research, option and milestone expense listed above, withno similar activity for the year ended December 31, 2024.

Milestone Obligations

Including the agreements discussed above, 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 December 31, 2024, the Company may be obligated to make up to $2.3 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 agreements entered into by the Company as of December 31, 2024, as well as the Arrowhead Agreement that had not yet closed as of December 31, 2024, which are discussed above. For the years ended December 31, 2023 and 2022, the Company recognized approximately$13.2 million and$32.6 million relating to certain up-front, milestone, settlement and other payments as research and development expense, respectively, under these agreements, with no similar activity for the year ended December 31, 2024.

4. GAIN FROM SALE OF PRIORITY REVIEW VOUCHER

In June 2023, the Company entered into an agreement to sell the rare pediatric disease Priority Review Voucher (the “ELEVIDYS PRV”) it received from the FDA in connection with the approval of ELEVIDYS for consideration of $102.0 million, with no commission costs. The closing of the transaction was not subject to the conditions set forth under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and closed in June 2023. The net proceeds were recorded as a gain from sale of the ELEVIDYS PRV during the year ended December 31, 2023, as it did not have a carrying value at the time of the sale.

5. FAIR VALUE MEASUREMENTS

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 “Nasdaq”). The Company's $2.7 million strategic investment is included in other non-current assets in the Company's consolidated balance sheets, with changes in fair value being recorded within other income (expense), net in the consolidated statements of comprehensive income (loss).

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. The Company's commercial paper, government and government agency bonds, corporate bonds and certificates of deposit 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 short-term investments with maturities of less than three months at the date of acquisition are presented as cash equivalents on the consolidated balance sheets as of December 31, 2024 and 2023.

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.

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 selling shareholders as well as to an academic institution under a separate license agreement that meets the definition of a derivative. For more information related to Myonexus, please read Note 3, License and Collaboration Agreements. 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 Company assesses its financial assets measured at fair value on a recurring basis and transfers its financial assets between the relevant fair value hierarchies at the end of each reporting period, as needed. There were no transfers into or out of Level 3 during the year ended December 31, 2024. During the year ended December 31, 2023, the Company's strategic investment in a formerly private biotechnology company transferred into Level 1 from Level 3 as a result of the biotechnology company's listing on the Nasdaq. The following table represents a roll-forward of the fair value of Level 3 financial assets for each of the periods indicated:

At the end of each reporting period, the fair value of the Company's strategic investments that are not publicly traded securities are adjusted if the issuers 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 year ended December 31, 2024, as no impairment indicators were identified nor were similar securities issued. During the year ended December 31, 2023, the Company impaired its investment in Series A preferred stock of Lacerta Therapeutics, Inc. (“Lacerta”) after comparing the fair value of the Lacerta strategic investment to its carrying value, resulting in an impairment loss of $30.0 million. The Company's assessment considered entity-specific impairment indicators, such as the future business prospects of Lacerta's existing programs and expected future cash flows. The fair value as of December 31, 2023 was estimated based on the expectation that the Company would realize no future cash flows associated with its investment in Lacerta. The impairment loss is included in other income (expense), net within the consolidated statements of comprehensive income (loss). During the year ended December 31, 2022, the company recorded impairment losses of $2.6 million related to its strategic investments.

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

A net increase of $9.3 million and $1.2 million were recorded in other income (expense), net in the consolidated statement of comprehensive income (loss) during the years ended December 31, 2024 and 2023, respectively, to account for the change in fair value and termination of liabilities of the Company's existing contingent consideration liabilities. These changes 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, partially offset by the termination of a license agreement with an academic institution that included an embedded derivative during both years ended December 31, 2024 and 2023. As of December 31, 2024 and 2023, the remaining contingent consideration was recorded as a non-current liability on the Company's consolidated balance sheets.

The carrying amounts reported in the 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 13, Indebtedness.

6. 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 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 was approximately eleven andfive months as of December 31, 2024 and 2023, respectively. All of the Company's non-current investments as of December 31, 2024 had maturities betweenoneandtwo years.

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

7. 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:

No individual country outside the U.S. exceeded 10% of total net product revenues for any of the years ended December 31, 2024, 2023 and 2022.

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

As of December 31, 2024 and 2023, the Company's accounts receivable, net were $602.0 million and $400.3 million, respectively, which related to product sales, net of discounts and allowances. Please refer to Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncementsfor discussion of the credit risk associated with accounts receivable, net.

The following table summarizes an analysis of the change in reserves for discounts and allowances for the periods indicated:

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

8. 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 December 31, 2024 or 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:

9. 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 consolidated balance sheets as of December 31, 2024 and 2023. Restricted cash for both years 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.

10. PROPERTY AND EQUIPMENT, NET

Property and equipment are recorded at historical cost, net of accumulated depreciation and accumulated impairment losses. The following table summarizes components of property and equipment, net, for each of the periods indicated:

For the years ended December 31, 2024, 2023 and 2022, depreciation expense totaled $42.7 million, $42.5 million, and $40.0 million, respectively.

11. INTANGIBLE ASSETS, NET

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

The in-licensed rights relate to agreements with UWA, Nationwide, BioMarin and PPMD. These in-licensed rightsare being amortized on a straight-line basis over the remaining life of the related patent because the life of the related patent reflects the expected time period that the Company will benefit from the in-licensed rights. There wereno additions of in-licensed rights during the year ended December 31, 2024. For more information related to the Company's in-licensed rights related to its license or settlement agreements with Nationwide, BioMarin and UWA, please refer to Note 3. License and Collaboration Agreements. For the years ended December 31, 2024, 2023 and 2022, the Company recorded $2.7 million, $1.9 million and $1.9 million, respectively, of amortization expense related to intangible assets.

The following table summarizes the estimated future amortization for intangible assets:

12. ACCRUED EXPENSES

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

13. INDEBTEDNESS

2027 Convertible Notes and Related Transactions

Issuance and Capped Call Transactions

In September 2022, the Company issued $1,150.0 million aggregate principal amount of convertible senior notes due on September 15, 2027. The 2027 Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.25% per annum, payable semi-annually in cash on each March 15 and September 15, commencing on March 15, 2023. The net proceeds were $1,126.7 million after deducting the discounts and offering expenses of $23.3 million, which is amortized under the effective interest method and recorded as additional interest expense over the life of the 2027 Notes. The effective interest rate on the 2027 Notes is 1.67%. The aggregate issuance of the 2027 Notes includes the issuance of $20.0 million in aggregate principal amount of 2027 Notes to the Michael A. Chambers Living Trust, an entity affiliated with Michael Chambers, a member of the Company’s board of directors.

The 2027 Notes may be convertible into 8,100,485 shares of the Company’s common stock at a conversion rate of 7.0439 shares per $1,000 principal amount of the 2027 Notes, or a conversion price of $141.97 per share. Upon conversion, at its discretion, the Company may pay cash, shares of its common stock or a combination of cash and stock. Prior to March 15, 2027, the holders of the 2027 Notes may convert their 2027 Notes at their option upon achievement of certain market conditions or occurrence of certain corporate events.

Only on or after September 20, 2025, should certain market conditions be met, the Company may redeem for cash all or any portion of the 2027 Notes at a redemption price equal to the principal amount of the 2027 Notes, plus accrued and unpaid interest. Holders of the 2027 Notes have the right to require the Company to repurchase for cash all or a portion of their notes at 100% of its respective principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change as defined in the indenture agreement for the 2027 Notes. The 2027 Notes contain customary covenants and events of default, occurrence of which permits the holders to accelerate all outstanding obligations, including principal and interest.

In connection with the issuance of the 2027 Notes, the Company entered into privately negotiated capped call transactions with counterparties intended to minimize the impact of potential dilution upon conversion of the 2027 Notes (the “2022 Capped Calls”), which covers 8,100,485 shares of the Company’s common stock. The 2022 Capped Calls have an initial strike price of approximately $141.97 per share and a cap price of approximately $210.32 pershare. If, upon conversion of the 2027 Notes, the price of the Company’s common stock is between the strike price and the cap price of the capped calls, the counterparties will deliver shares of the Company’s common stock and/or cash with an aggregate value equal to the difference between the price of the Company’s common stockat the conversion date and the strike price, multiplied by the number of shares of the Company’s common stock related to the capped calls being exercised. The Company paid $127.3 million for the 2022 Capped Calls.

Termination of 2019 Term Loan

On September 16, 2022, using proceeds received from the issuance of the 2027 Notes described above, the Company prepaid in full all of its amounts outstanding with respect to the December 2019 term loan with Biopharma Credit PLC and Biopharma Credit Investments V (Master) LP (the “December 2019 Term Loan”) and repaid in full all obligations due. The aggregate payoff amount was approximately $585.5 million, which includes $550.0 million of principal, additional loan consideration and premiums of $25.4 million, and accrued interest of $10.1 million through the repayment date. The loss on debt extinguishment was $26.9 million, and was included in the loss on debt extinguishment in the consolidated statements of comprehensive income (loss) for the year ended December 31, 2022.

2024 Convertible Notes and Related Transactions

Issuance and Capped Call Transactions

In November 2017, the Company issued $570.0 million aggregate principal amount of senior convertible notes due on November 15, 2024. The 2024 Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.50% per annum, payable semi-annually in cash on each May 15 and November 15, commencing on May 15, 2018. The net proceeds were $559.4 million after deducting the discounts and offering expenses of $10.6 million, which is amortized under the effective interest method and recorded as additional interest expense over the life of the 2024 Notes. The effective interest rate on the 2024 Notes is 1.9%.

The 2024 Notes could be convertible into 7,763,970 shares of the Company’s common stock under certain circumstances prior to maturity at a conversion rate of 13.621 shares per $1,000 principal amount of the 2024 Notes, or a conversion price of $73.42 per share, subject to adjustment under certain conditions. Upon conversion, the Company could pay cash, shares of its common stock or a combination of cash and stock, as determined by the Company at its discretion. The holders of the 2024 Notes could convert their 2024 Notes at their option upon achievement of certain market conditions or occurrence of certain corporate events.

The 2024 Notes were not redeemable by the Company prior to the maturity date. Holders of the 2024 Notes, however, had the right to require the Company to repurchase for cash all or a portion of their notes at 100% of its respective principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change as defined in the indenture agreement for the 2024 Notes. The 2024 Notes contained customary covenants and events of default, occurrence of which permitted the holders to accelerate all outstanding obligations, including principal and interest.

In connection with the issuance of the 2024 Notes, the Company entered into privately negotiated capped call transactions with counterparties intended to minimize the impact of potential dilution upon conversion of the 2024 Notes (the “2017 Capped Calls”) which covers 7,763,970 shares of the Company’s common stock. The 2017 Capped Calls had an initial strike price of approximately $73.42 per share and a cap price of approximately $104.88 per share. If, upon conversion of the 2024 Notes, the price of the Company’s common stock was between the strike price and the cap price of the capped calls, the counterparties would deliver shares of the Company’s common stock and/or cash with an aggregate value equal to the difference between the price of the Company’s common stock at the conversion date and the strike price, multiplied by the number of shares of the Company’s common stock related to the capped calls being exercised. The Company paid $50.9 million for the 2017 Capped Calls.

Repurchase and Capped Call Settlement

In September 2022, in connection with the issuance of the 2027 Notes, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding 2024 Notes (the “Repurchase”). 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. The repurchase was not pursuant to the conversion privileges included in the terms of the debt at issuance and therefore was accounted for as a debt extinguishment. Accordingly, on the repurchase date, the Company recorded $98.5 million of debt extinguishment expense which was included in the loss on debt extinguishment within the consolidated statements of comprehensive income (loss) for the year ended December 31, 2022. Corresponding to the Repurchase, the related 2017 Capped Calls were terminated. As a result, the Company received $26.3 million in cash.

Exchange and Capped Call Settlement

In March 2023, the Company entered into separate, privately negotiated exchange agreements with certain holders of the outstanding 2024 Notes (the “Exchange”), which resulted in an exchange of $313.5 million in aggregate principal value of the 2024 Notes for shares of the Company’s common stock. In connection with the Exchange, the Company issued approximately 4.5 million shares of the Company's common stock with a fair value of approximately $693.4 million. The Company also incurred approximately $6.9 million in third-party debt conversion costs. The exchange was not pursuant to the conversion privileges included in the terms of the debt at issuance and therefore was accounted for as a debt extinguishment and resulted in a loss on debt extinguishment of $387.3 million, inclusive of the $6.9 millionin third-party debt conversion costs, which was included in the consolidated statements of comprehensive income (loss) for the year ended December 31, 2023. Corresponding to the Exchange, the related 2017 Capped Calls were terminated. As a result, the Company received $80.6 million in cash.

Conversion and Capped Call Settlement in 2024

Upon maturity as of November 15, 2024 (“the Maturity Date”), the Company converted the remaining outstanding bonds into approximately 1.2 million shares of its common stock equivalent to an aggregate principal amount of $91.6 million. A de minimis number of bonds were not converted and, as a result, the Company paid less than $0.1 million in cash to those bondholders. As the conversions were completed under the original terms of the 2024 Notes, there is no gain or loss impact on the accompanying consolidated statements of comprehensive income (loss).

In May 2024, the Company informed holders of the 2024 Notes of its election to settle the 2024 Notes in shares, which, pursuant to the terms of the 2017 Capped Call agreements, would require the Company to settle the 2017 Capped Calls in shares. On September 16, 2024 (the “Effective Date”), the Company entered into supplements with each of the counterparties to modify the terms of each of the 2017 Capped Calls to require settlement in cash rather than in shares. As a result of the modification, the Company reclassified the fair value of the 2017 Capped Calls of $43.9 million on the Effective Date from stockholders’ equity to derivative assets. As a result of the conversion, the Company ultimately received $45.3 million in cash to settle the remaining 2017 Capped Calls on November 15, 2024. The change in the fair value of the derivative assets from the Effective Date to Maturity Date was a gain of $1.5 million and recorded to other income (expense), net in the consolidated statements of comprehensive income (loss). There wereno derivative assets remaining as of December 31, 2024.

Total Debt Obligations

As of December 31, 2024 and 2023, the Company recorded approximately $1,137.1 million and $1,238.0 million as debt on the consolidated balance sheets, respectively. As of December 31, 2023, the Company reclassified the balance of the 2024 Notes from long-term debt to current liabilities on its consolidated balance sheets, as the 2024 Notes matured in less than twelve months. As of December 31, 2024, all debt was long-term in nature.

The following table summarizes the Company’s debt instruments for the periods indicated:

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $20.6 million, $22.0 million and $53.2 million of interest expense, respectively. Total interest expense for the years ended December 31, 2024, 2023 and 2022 is inclusive of $5.0 million, $5.2 million and $7.5 million of amortization of debt discounts, respectively. The fair values of the 2027 Notes and 2024 Notes are based on open market trades and are 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:

14. EQUITY

In November 2024, the Board of Directors approved a share repurchase program (the “2024 Repurchase Program”) of up to $500.0 million of the Company’s outstanding common stock over the next 18 months. Correspondingly, the Company entered into a Rule 10b-18 repurchase plan that allows it to conduct open market repurchases periodically up to the remaining authorization under the 2024 Repurchase Program. There wereno share repurchases of our common stock during the year ended December 31, 2024.

Repurchased shares are held as treasury stock. The amount paid to repurchase shares will be recorded as a reduction to stockholders’ equity. As treasury stock is not considered shares outstanding, it will be excluded from average common stock outstanding for both basic and diluted earnings per share.

15. STOCK-BASED COMPENSATION

In June 2013, the Company’s stockholders approved the 2013 Employee Stock Purchase Plan (the “2013 ESPP”) which authorized 0.3 million shares of common stock available to be issued. In June 2016, 2019 and 2023, the Company’s stockholders approved an additional 0.3 million,0.5 million and 0.3 million shares, respectively, of common stock available for issuance under the 2013 ESPP. As of December 31, 2024,0.2 million shares of common stock remain available for future grant under the 2013 ESPP.

In June 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan, which authorized 2.9 million shares of common stock to be issued, allows for the grant of stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), RSUs, performance shares and performance units. In June 2020, June 2022 and June 2023, an additional 3.8 million,2.5 million and 2.5 million shares of common stock, respectively, were approved by the Company’s stockholders and added to the 2018 Plan. As of December 31, 2024, together with the roll-over shares from the Company’s 2011 Equity Incentive Plan,3.4 million shares of common stock remain available for future grant under the 2018 Plan.

In March 2024, the Company initiated the 2024 Employment Commencement Incentive Plan (the “2024 Plan”). The 2024 Plan, which authorized 0.6 million shares of common stock to be issued, allows for the grant of stock options, SARs, RSAs, RSUs, performance shares and performance units. In June 2024, there was an addition of 0.5 million shares to the 2024 Plan. As of December 31, 2024,1.0 million shares of common stock remain available for future grant under the 2024 Plan.

Stock Options

In general, stock options have aten-year term and vest over afour-year period, with one-fourth of the underlying shares vesting on the first anniversary of the grant and 1/48th of the underlying shares vesting monthly thereafter, such that the underlying shares will be fully vested on the fourth anniversary of the grant, subject to the terms of the applicable plan under which they were granted.

The fair values of stock options granted during the periods presented are measured on the date of grant using the Black-Scholes-Merton option-pricing model, with the following assumptions:

(1)

The risk-free interest rate is estimated using an average of Treasury bill interest rates over a historical period commensurate with the expected term of the option that correlates to the prevailing interest rates at the time of grant.

(2)

The expected dividend yield iszero as the Company has not paid any dividends to date and does not expect to pay dividends in the future.

(3)

The expected term is estimated using historical exercise behavior.

(4)

The expected volatility is the implied volatility in exchange-traded options of the Company’s common stock.

The amounts estimated according to the Black-Scholes-Merton option-pricing model may not be indicative of the actual values realized upon the exercise of these options by the holders.

The following table summarizes the Company’s stock option activity for the period indicated:

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2024, 2023 and 2022 was $67.31, $70.94 and $48.82, respectively.

The following table summarizes the Company’s shares vested and stock options exercised for each of the periods indicated:

Grant Modification

In June 2017, the Company granted its CEO 3,300,000 options with service and market conditions which were subject to a five-year cliff vesting schedule. On April 19, 2022 (the “Effective Date”), the Company entered into an agreement with its CEO to modify the vesting conditions of the options(the “Amendment”). Under the Amendment, one-third of the options vested (the “Vested Tranche”) on the Effective Date with no required service or market conditions. Subject to the CEO's continued service through each applicable vesting date and the compound annual growth rate of the Company's common stock exceeding that of the Nasdaq Biotech Index in varying percentages, the remaining two-thirds of the options (the “Unvested Tranche”) shall vest in varying increments at any time between the Effective Date and June 26, 2025 (the “Measurement Period”) when (and if) the average of the closing price of the Company’s common stock during any consecutive 20 trading day period during the Measurement Period reaches certain pre-determined target stock prices. Additionally, the CEO is subject to a one-year post-exercise restriction to sell, transfer or dispose shares acquired upon the exercise of any options that vest after deduction of any shares withheld or sold to pay the applicable aggregate exercise price and/or withholding taxes. The aggregate incremental cost of the modification of the CEO's awards was$123.3 million.

During both years ended December 31, 2023 and 2022, respectively,550,110 options relating to the Unvested Tranche became vested as they met the conditions for vesting and, accordingly, all previously unrecognized expense associated with these options was immediately recognized. For the years ended December 31, 2023 and 2022, the Company recorded $13.4 million and $109.9 million as stock-based compensation expense relating to the CEO’s awards, respectively. As of December 31, 2023, the Unvested Tranche was fully expensed.

Excluding the options with market and service conditions granted to the Company’s CEO, the remaining stock options granted during the periods presented in the table have only service-based criteria and vest over four years.

Restricted Stock Units

The Company grants RSUs to members of its board of directors and employees. The following table summarizes the Company’s RSU activity for the period indicated:

(1) Included in RSUs outstanding at the beginning of the year ended December 31, 2024 are 33,000 shares of PSUs (the “March 2022 PSU”) with performance conditions related to regulatory approval of certain of the Company's product candidates and 485,275 shares of PSUs (the “March 2023 PSU”) with performance conditions related to regulatory approval of certain of the Company's product candidates and the achievement of a certain financial performance target.

(2) Included in RSUs granted during the year ended December 31, 2024 are 97,460 shares with performance conditions (the “March 2024 PSU”), which are related to the achievement of certain financial performance targets and regulatory approval of certain of the Company's product candidates and 24,500 shares of the March 2023 PSU, which are related to the achievement of a certain financial performance target.

Stock options and the remaining RSUs granted during the year ended December 31, 2024 have only service-based criteria and vest over four years.

As of December 31, 2024, the following PSUs became vested or eligible for vesting:

•

March 2022 PSU: The expanded regulatory approval of ELEVIDYS in June 2024 resulted in 33,000 shares becoming eligible for vesting, which is contingent on the fulfillment of remaining service conditions.

•

March 2023 PSU: The achievement of a certain financial performance target during the year ended December 31, 2024 resulted in 24,500 shares becoming eligible for vesting, which is contingent on the fulfillment of remaining service conditions.

•

March 2024 PSU: 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 PSU during the year ended December 31, 2024.

As of December 31, 2024, none of the remaining performance conditions associated with the March 2022 PSU and March 2024 PSU were probable of being achieved.

The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2023 and 2022 was $151.20 and $85.39, respectively. The fair values of RSUs vested during the years ended December 31, 2024, 2023 and 2022 totaled $86.9 million, $82.6 million and $33.1 million, respectively.

2013 Employee Stock Purchase Plan

Under the Company’s 2013 ESPP, participating employees purchase common stock through payroll deductions. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on the first business day and the last business day of the relevant purchase period. The 24-month offering period will end between August 31, 2025 and August 31, 2026. The following table summarizes the Company’s ESPP activity for each of the periods indicated:

Stock-based Compensation Expense

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

*Prior to the year ended December 31, 2024, capitalized stock-based compensation costs were not material.

As of December 31, 2024, there was $238.5 million of total unrecognized stock-based compensation expense related to the Company’s stock-based compensation plans, including estimated forfeitures. The expense is expected to be recognized over a weighted-average period of approximatelytwo years. Of this amount, $72.9 million related to options with service conditions only, $7.9 million related to PSUs with certain performance conditions not met and the remaining $157.7 million related to restricted stock units with service conditions only.

16. 401(K) PLAN

The Company sponsors a 401(k) Plan in the U.S. and other retirement plans (“the Plan”) in the rest of the world, all of which are defined contribution plans. The Plan is available to all employees who are age 21 or older. Participants may make voluntary contributions and the Company makes matching contributions according to the Plan’s matching formula. Matching contributions fully vest afterone year of service for all employees. The expense related to the Plan primarily consists of the Company’s matching contributions.

Expense related to the Plan totaled $9.8 million, $8.8 million and $6.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

17. OTHER INCOME(LOSS), NET

The following table summar izes other income (loss), net for the periods indicated:

• Related to the change in fair value of the contingent consideration derivative liabilities and the 2017 Capped Calls derivative assets. For more information, please read Note 5, Fair Value Measurements and Note 13, Indebtedness.

18. INCOME TAXES

The following table summarizes the income (loss) before the provision for income taxes by jurisdiction for the periods indicated:

The following table summarizes the provision for income taxes in the accompanying consolidated financial statements for the periods indicated:

The following table summarizes the reconciliation between the Company’s effective tax rate and the statutory income tax rate for each of the periods indicated:

The significant items impacting the Company’s effective tax rate for each of the periods primarily include state taxes, research and development tax credits, valuation allowance, stock-based compensation, and foreign rate differential. For the year ended December 31, 2023, the Company's effective tax rate was also significantly impacted by the $379.9 million non-deductible premium paid on the conversion of the 2024 Notes.

The following table summarizes the deferred tax assets and liabilities for each of the periods indicated:

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 United States and 15 years for research activities performed outside the United States. 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 $5.1 million and $19.7 million, respectively. The state tax expense of $19.7 million is primarily related to the temporary suspension of utilizing net operating loss carryforwards in certain states the Company operates in.

On a periodic basis, the Company reassesses the valuation allowance on its deferred tax assets, weighing positive and negative evidence to assess the recoverability of such deferred tax assets. In assessing the Company’s ability to realize its net deferred tax assets, the Company considered various factors, including future reversals of existing taxable temporary differences, projected future taxable income, potential carryback claims and tax planning strategies to determine whether it is more likely than not that some portion or all of its net deferred tax assets will not be realized. Based upon these factors, the Company has concluded that it is more likely than not that the Company will not recognize the benefits of its net federal and state deferred tax assets. Accordingly, a full valuation allowance against the U.S. net deferred tax assets is maintained at December 31, 2024 and 2023. The Company continues to monitor its recent earnings history and it is possible that within the next 12 months, there may be sufficient positive evidence to release a portion or all of the Company’s valuation allowance. The release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, the Company’s level of profitability, revenue growth, and expectations regarding future profitability. Release of the valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The total deferred tax asset balance subject to the valuation allowance was approximately $890.6 million as of December 31, 2024. The Company will continue to monitor the need for a full or partial valuation allowance on a quarterly basis.

The Company generated foreign deferred tax assets mainly consisting of net operating loss carryforwards, stock-based compensation and unrealized gain/losses. Based upon the income projections in the majority of the foreign jurisdictions, the Company believes it will realize the benefit of its future deductible differences in these jurisdictions. As such, the Company has not recorded a valuation allowance against the net deferred tax assets in these foreign jurisdictions. Brazil, Germany and the Netherlands have generated deferred tax assets, which consist primarily of net operating loss carryforwards. The Company has concluded that it is more likely than not that it will not recognize the future benefits of the deferred tax assets in these jurisdictions, and accordingly, a full valuation allowance has been recorded against these foreign deferred tax assets.

As of December 31, 2024, the Company had federal and state net operating loss carryforwardsof $134.9 million and $354.8 million, respectively, available to reduce future taxable income. Federal and state net operating loss carry forwards of $69.1 million and $341.0 million will expire at various dates between 2025 and 2041. Federal and state net operating loss carryforwards of $65.8 million and $13.8 million, respectively, can be carried forward indefinitely. Utilization of these net operating losses could be limited under Section 382 of the Internal Revenue Code and similar state laws based on future ownership changes and the value of the Company’s stock. Additionally, the Company has $40.9 million and $48.9 million of federal and state research and development credits, respectively, and $301.9 million of federal orphan drug tax credits available to offset future tax liabilities. These federal and state research and development credits expire between 2034 and 2044 andbetween 2031 and 2039, respectively. The federal orphan drug credits expire between 2034 and 2044. The Company also has foreign net operating loss carryforwards of $13.5 million, mainly derived from the net operating loss generated by its subsidiary in Brazil, which may be carried forward indefinitely.

The Company, or one of its subsidiaries, files income tax returns in the U.S., and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2021 through December 31, 2024. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

The following table summarizes the reconciliation of the beginning and ending amount of total unrecognized tax benefits for each of the periods indicated:

The balance of total unrecognized tax benefits at December 31, 2024, if recognized, would not affect the effective tax rate on income from continuing operations, due to a full valuation allowance against the Company’s U.S. deferred tax assets. The Company does not expect the amount of unrecognized tax benefits to change significantly in the next twelve months. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. It hadno accrual for interest or penalties on its consolidated balance sheets at December 31, 2024 or 2023. No interest and/or penalties were recognized in 2024, 2023, or 2022.

The Company’s intent is to only make distributions from non-U.S. subsidiaries in the future when they can be made at no net tax cost. Otherwise, the Company considers all of its foreign earnings to be permanently reinvested outside of the U.S. and has no plans to repatriate these foreign earnings to the U.S. The Company has no material unremitted earnings from its non-U.S. subsidiaries.

19. LEASES

The Company has real estate operating leases in Cambridge, Andover, Burlington and Bedford, Massachusetts, Dublin and Columbus, Ohio, and Durham, North Carolina that provide for scheduled annual rent increases throughout each lease’s term. The Company has also identified leases embedded in certain of its manufacturing and supply agreements as the Company determined that it controls the use of the facilities and related equipment therein. For more information related to the lease embedded in manufacturing and supply agreements with Catalent, Inc. (“Catalent”), please refer to Note 22, Commitments and Contingencies.

Bedford, Massachusetts

On April 22, 2022, the Company entered into a lease agreement (the “Bedford Lease”) for 288,000 square feet of to-be-constructed research and development and manufacturing space in Bedford, Massachusetts. The term of the Bedford Lease commences upon the landlord’s completion of the initial construction of the core and shell of the building, at which time the Company will obtain control of the premises and commence internal construction activities. The initial term of the Bedford Lease is anticipated to terminate on December 31, 2038. The Company has two options to extend the lease for a period often years each, exercisable under certain conditions and at a market rate determined in accordance with the lease agreement. The lease commenced in May 2023 as the Company obtained control of the premises.

The Bedford Lease provides for a tenant improvement allowance from the landlord of $72.0 millionto be used towards costs incurred by the Company in the design and construction of the premises, which was recorded as a reduction to ROU assets and lease liabilities. In August 2024, the Company entered into an amendment to the Bedford Lease to extend the term in which the tenant improvement allowance could be reimbursed from the landlord (the “Bedford Amendment”) through December 2, 2025. The Company also agreed to reimburse the landlord for certain costs incurred in order to fund the extension of the reimbursement period associated with the tenant improvement allowance, totaling $2.9 million. The Bedford Amendment was accounted for as a modification to the Bedford Lease.

In May 2022, in connection with the execution of the Bedford Lease, the Company issued a letter of credit collateralized by cash deposits of approximately $8.4 million, which was included in other non-current assets of the Company’s consolidated balance sheets. Such letter of credit shall be reduced to approximately $5.6 million at the commencement of the fourth rent year, provided certain conditions set forth in the Bedford Lease are satisfied. Additionally, the Company is responsible for reimbursing the landlord for the Company’s share of the property’s operating expenses and property taxes.

The Company had a lease liability and ROU asset of $143.3 million and $91.6 million, respectively, on the consolidated balance sheets as of December 31, 2024 related to the Bedford Lease. Tenant improvement costs incurred by the Company that had been reimbursed by the landlord totaled $40.3 million as of December 31, 2024 and are recorded as an increase to the lease liability within the Company's consolidated balance sheets.

Columbus, Ohio

In December 2018, the Company entered into a lease agreement for a research and development facility in Columbus, Ohio, which was subsequently amended in May 2022 (the “Columbus Amendment,” together with the Columbus Amendment, the lease agreement is referred to as the “Columbus Lease”). The Columbus Lease expands from its current form of approximately 78,000 square feet to 167,000 square feet through a series of expansion spaces commencing at various periods through January 1, 2025.

Each expansion space commences on the date when the landlord will deliver control of that space for the Company to carry out design and construction activities (the “Columbus Commencement Date”). The Company is obligated to pay rent on each expansion space nine months after the Columbus Commencement Date. The Columbus Lease expires on December 31, 2036, and the Company has options to extend the lease byfive years in both 2036 and 2041. Each option is exercisable under certain conditions and at a market rate determined in accordance with the lease agreement.

The Company commenced design and construction activities on areas of the premises of approximately 18,000 square feet (the “Second Expansion Space”),36,000 square feet (the “Initial Expansion Space”) and 19,000 square feet (the “Third Expansion Space”) on June 1, 2022, October 1, 2022 and September 1, 2023, respectively. As a result, it was determined that the lease related to the Second Expansion Space, the Initial Expansion Space and the Third Expansion Space had commenced on those three dates, respectively. The total ROU asset and lease liability associated with the Columbus Lease, inclusive of the Third Expansion Space, the Second Expansion Space and the Initial Expansion Space, was $11.1 million and $19.3 million, respectively, as of December 31, 2024.

Lease Obligations

As of December 31, 2024, ROU assets for operating leases were $148.3 million and operating lease liabilities were $205.7 million. The following table contains a summary of the lease costs recognized and other information pertaining to the Company’s operating leases for the periods indicated:

The following table summarizes maturities of lease liabilities and the reconciliation of lease liabilities as of December 31, 2024:

20. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the treasury stock method for stock awards and the if-converted method for convertible debt by dividing net income by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding. Given that the Company recorded a net loss for the years ended December 31, 2023 and 2022, there is no difference between basic and diluted net loss per share since the effect of common stock equivalents would be anti-dilutive and are, therefore, excluded from the diluted net loss per share calculation.

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 December 31, 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 December 31, 2023, the anti-dilutive common stock issuable under the Company's equity incentive plans includes 1.1 million shares that have performance or market conditions that were not met. These were anti-dilutive as the Company was in a net loss position at the end of the period.

(3) As of December 31, 2022, the anti-dilutive common stock issuable under the Company's equity incentive plans includes 1.1 million shares that have performance or market conditions that were not met. These were anti-dilutive as the Company was in a net loss position at the end of the period.

21. SEGMENT INFORMATION

The Company, together with its wholly-owned subsidiaries, 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. The Company’s research and development organization is responsible for the research and discovery of new product candidates and supports development and registration efforts for potential future products. The Company’s supply chain organization manages the development of the manufacturing processes, clinical trial supply and commercial product supply. The Company’s commercial organization is responsible for worldwide commercialization of EXONDYS 51, VYONDYS 53 and AMONDYS 45 and domestic commercialization of ELEVIDYS. The Company is supported by other back-office general and administration functions. Consistent with this decision-making process, the Company’s CEO uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.

The Company operates inone segment: discovering, developing, manufacturing and delivering therapies to patients with rare diseases. The Company’s reportable segment derives its revenues from sales of its products, which include the PMO Products and ELEVIDYS, as well as through collaboration and other revenues primarily generated from its collaboration arrangement with Roche and other revenues related to commercial ELEVIDYS supply to Roche and royalty revenue from Roche. The Company’s CEO, as the CODM, manages and allocates resources to the operations of the Company on a total company basis by assessing the overall level of resources available and how to best deploy these resources across functions and in line with the Company's strategic goals. The Company’s accounting policies associated with segment information are described in Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to the consolidated financial statements.

The measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company’s consolidated net income (loss). The CODM uses consolidated net income (loss) to assess the segment’s overall profitability. The table below includes information about the Company’s segment, including significant segment expenses, and a reconciliation to net income (loss):

(a) Research and development-other includes professional services, up-front, milestone, and other expenses, pre-clinical expenses and research and other expenses.

(b) Selling, general and administrative-other includes professional services and other expenses.

(c) Other segment items included in segment net income (loss) include accretion of investment discount, net, change in fair value of derivatives and other, net, as well as the items separately presented and not defined as significant expenses below.

Significant expense categories that are regularly provided to the CODM include cost of sales (excluding amortization of in-licensed rights), compensation and other personnel expenses, manufacturing expenses, clinical trial expenses, facility- and technology-related expenses, research and development- other and selling, general and administrative- other. The other expense or income information are other segment items and include separate presentation of interest expense, income tax expense, depreciation and amortization, stock-based compensation, which are included in the measure of segment income (loss) but are not significant segment expenses.

Assets provided to the CODM for the single segment are consistent with those reported on the consolidated balance sheets.

22. COMMITMENTS AND CONTINGENCIES

Manufacturing Obligations

The Company has entered into long-term contractual arrangements from time to time for the provision of goods and services. The following table presents non-cancelable contractual obligations arising from long-term contractual arrangements, including obligations related to leases embedded in certain supply agreements:

*Total manufacturing commitments include the Catalent Agreement (defined below), for which the Company determined has a lease embedded in it and, as such, has ROU assets and lease liabilities recorded on the consolidated balance sheets as of December 31, 2024.

Thermo Fisher Scientific, Inc.

The Company entered into a development, commercial manufacturing, and supply agreement as related to the Company's adherent manufacturing process for its gene therapy programs in June 2018 and, subsequently, entered into the first, second and third amendments in May 2019, July 2020 and October 2021, respectively, with Brammer Bio MA, LLC, an affiliate of Thermo Fisher Scientific, Inc. (“Thermo”) (collectively, the “Thermo Agreement”).

In October 2021, the Company executed a third amendment (the “Third Amendment”) that modified the terms of the Thermo Agreements, which significantly decreased the Company’s right of use of the facility’s capacity and reduced the fixed and in-substance fixed payments due over the remaining term of the agreement. Under the Third Amendment, the Company has committed to guaranteed purchases under the Third Amendment on a take-or-pay basis regardless of whether services or goods are ordered. During the year ended December 31, 2022, the Company did not satisfy the total annual guaranteed purchase requirements and, as a result, recognized a loss of approximately $54.0 million, which was classified as research and development expense in the accompanying consolidated statement of comprehensive income (loss) for the year ended December 31, 2022, with the outstanding liability reflected as accrued contract manufacturing costs within accrued expenses in the consolidated balance sheets as of December 31, 2022. No similar losses were incurred during the years ended December 31, 2023 or 2024.

In March 2023, the Company executed a fourth amendment (the “Fourth Amendment”) that modified the terms of the Thermo Agreement. The Fourth Amendment removed the previous minimum batch purchase commitment and associated fee for the remaining term of the Thermo Agreement, and instead implemented a fee of up to $60.0 million, to be paid in three installments of $20.0 million each by March 1, 2024, December 31, 2024 and December 31, 2025, respectively. During the year ended December 31, 2024, the Company paid the first $20.0 million installment due March 1, 2024, considered a nonrefundable advance payment.

On July 18, 2024, the Company issued a termination notice to Thermo to terminate the Thermo Agreement. The termination was effective as of August 21, 2024. The aggregate net impact of the termination was $55.4 million of research and development expense in the accompanying consolidated statements of comprehensive income (loss). As the Company had yet to obtain regulatory approval to produce commercial supply of ELEVIDYS at Thermo manufacturing facilities, the Company recorded the charges incurred as research and development expenses during the year ended December 31, 2024. Included in the net impact noted above are non-cash charges due to the termination of $62.7 million, related to the remaining unamortized nonrefundable advance payments. Additionally, there were unbilled service and material costs ordered by the Company as of the termination date of $29.2 million that were expensed as research and development expense during the year ended December 31, 2024. As related to the termination, costs reimbursable by Roche under the Roche Agreement and reflected as a reduction to research and development expenses were $36.5 million.

Catalent, Inc.

The Company entered into a manufacturing collaboration agreement and, subsequently, a manufacturing and supply agreement with Catalent, formerly Paragon Biosciences, Inc. in October 2018 and February 2019, respectively (collectively, the “Catalent Agreements”). Pursuant to the terms of the Catalent Agreements, Catalent agreed to provide the Company withtwo dedicated clean room suites and an option to reservetwo additional clean room suites for its gene therapy programs, subject to certain minimum and maximum volume limitations. In September 2019, the Company exercised the option to gain access to the two additional clean room suites. The Company determined that the Catalent Agreements contained a lease because the Company had the right to direct the use of the facility and related equipment therein. The lease on allfour dedicated clean room suites at Catalent commenced during 2020, which is when the dedicated clean room suites became available for use by the Company. In March 2021, the Company modified the terms of the Catalent Agreements, which decreased the Company’s right of use of certain dedicated clean room suites. As of December 31, 2024, the Company controls two clean room suites.

In November 2022, the Company modified certain terms of the Catalent Agreements which extended the term of the agreement through December 31, 2028, which represented a modification of the existing embedded lease over certain clean room suites. The modification resulted in the recognition of additional ROU assets and lease liabilities of $19.2 million, as well as reclassification of $3.9 million between long-term and short-term manufacturing deposits. The modification also removed certain fixed payments due over the remaining term of the agreement. Further, in order to maintain the Company's dedicated clean room suites, it has committed to guaranteed purchases under the Amendment on a take-or-pay basis regardless of whether services or goods are ordered. The Company has the ability to terminate the Catalent Agreements prior to expiration, subject to the payment of additional financial consideration. As of December 31, 2024, the Company believes it is probable that the guaranteed purchase requirements will be met in the normal course of business throughout the term of the Catalent Agreements.

Aldevron, LLC

The Company entered into a clinical and commercial supply agreement in December 2018, as subsequently amended in June 2020, with Aldevron LLC (“Aldevron”) for the supply of plasmid DNA to fulfill its needs for gene therapy clinical trials and commercial supply (collectively, the “Aldevron Agreements”). Pursuant to the terms of the Aldevron Agreements, Aldevron agreed to reserve a certain amount of manufacturing capacity on a quarterly basis. In return, the Company is required to make advance payments to Aldevron related to the manufacturing capacity. The term of the Aldevron Agreements will expire on December 31, 2026. The Company has the option to extend the term of the Aldevron Agreements by one year if the Company delivers a written notice of its intention to extend to Aldevron no later than June 1, 2025.

In January 2025, the Company modified certain terms of the Aldevron Agreements which extended the term of the agreement through December 31, 2028 (the “Aldevron Amendment”). As a result of the Aldevron Amendment, the Company has the option to extend the term of the Aldevron Agreements by one year if the Company delivers a written notice of its intention to extend to Aldevron no later than June 1, 2028. Both parties have the right to early terminate without additional penalty. The Company has determined that the Aldevron Amendment does not contain an embedded lease because it does not convey the right to control the use of Aldevron’s facility or related equipment therein.

Other Funding Commitments

The Company has several on-going clinical trials in various clinical trial stages. Its most significant clinical trial expenditures are to contract research organizations (“CROs”). The CRO contracts are generally cancellable at the Company’s option. As of December 31, 2024, the Company had approximately $594.5 million in cancellable future commitments based on existing CRO contracts. For the years ended December 31, 2024, 2023 and 2022, the Company recognized approximately $110.1 million,$112.2 million and$78.7 million, respectively, for expenditures incurred by CROs.

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 December 31, 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 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® (formerly/also known as 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 for filing with the Patent Trial and Appeal Board (“PTAB”) at the U.S. Patent and Trademark Office (“USPTO”). The petition seeks to invalidate the ’274 Patent. On August 22, 2024, the PTAB instituted inter partes review of all challenged claims of the ’274 Patent on all asserted grounds.

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 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. After a jury trial in December 2024, the jury found that NS’s ’092 Patent is invalid as obvious and Sarepta’s and UWA’s ’851 Patent is not invalid. The jury did not find that NS’s infringement was willful. The jury awarded Sarepta approximately $115.2 million in damages for NS’s infringement relating to its sales of Viltepso in the United States, and the parties stipulated to approximately $0.8 million in reasonable royalty damages for NS's sales of Viltepso outside of the United States, both through December 15, 2024. Judgement was entered on January 7, 2025. On February 14, 2025, Sarepta filed a motion seeking supplemental damages and NS filed post-trial motions challenging the jury's verdict, as well as briefing relating to its inequitable conduct claim, which was tried to the court in December 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. Sarepta subsequently abandoned its claims and the case was terminated on January 30, 2025.

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. Following a partial motion to dismiss by Sarepta, Genzyme filed its First Amended Complaint on November 21, 2024. In its First Amended Complaint, Genzyme no longer alleges willfulness or indirect infringement before the filing of the complaint. Sarepta answered the First Amended Complaint on December 12, 2024. The Court entered a scheduling order, with a trial scheduled for January 25, 2027.

On December 20, 2024, Brammer Bio MA, LLC filed an arbitration demand against Sarepta relating to Sarepta’s termination of the Thermo Agreement. Brammer Bio MA, LLC alleges claims for breach of contract, breach of the implied covenant of good faith andfair dealing and a violation of MGL c. 93A, and seeks relief including damages, treble damages, and attorneys’ fees and costs. On January 24, 2025, Sarepta filed its answer and asserted counterclaims for declaratory judgment and breach of contract, seeking relief including damages and attorneys’ fees and costs.

23. SUBSEQUENT EVENT

On February 13, 2025 (the “Closing Date”), the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”) and as collateral agent and the lenders party thereto. The Credit Agreement provides for a five-year, $600.0 million senior secured revolving credit facility (the “Revolving Credit Facility”).

Interest rates under the Revolving Credit Facility are variable and equal to the Secured Overnight Financing Rate plus a credit spread adjustment of 0.10% per annum (“Adjusted SOFR”), plus a margin of 1.125% to 1.75% per annum, or, at the Company’s option, at a base reference rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest last quoted by the Administrative Agent as its “base rate” and (c) the one-month Adjusted SOFR rate plus 1.00%, plus a margin of 0.125% to 0.75% per annum. The Company also will pay an unused commitment fee ranging from 0.20% to 0.35% per annum on the unused commitments.

The Credit Agreement contains customary representations and warranties, affirmative covenants, negative covenants and events of default. The Credit Agreement also contains financial covenants that are assessed on the last day of each of the Company’s fiscal quarters, including certain financial ratios.

The Company paid $3.2 million in arrangement and up-front fees on the Closing Date. The Company may voluntarily prepay the outstanding revolving loans under the Revolving Credit Facility in whole or in part without premium or penalty provided that the prepayment shall be in certain amounts as specified therein. The Company is currently evaluating the Revolving Credit Facility to determine the impact on its consolidated financial statements and related disclosures. As of the date of this filing, the Company has not drawn upon the Revolving Credit Facility.