BIOCRYST PHARMACEUTICALS INC

Previous wording

We are a global biotechnology company focused on developing and commercializing medicines for hereditary angioedema (“HAE”) and other rare diseases, driven by our deep commitment to improving the lives of people living with these conditions. We have built a robust commercial infrastructure to support the launch and continued success of ORLADEYO, an oral, once-daily therapy discovered and developed internally for the prevention of HAE attacks. Our business strategy includes leveraging this established commercial platform to successfully commercialize a pipeline of potential first-in-class or best-in-class oral small-molecule and injectable protein therapeutics targeting a range of rare diseases. These programs are being pursued through both internal discovery efforts and strategic business development. By utilizing our existing commercial capabilities and focusing on rare disease markets, we believe that we can more effectively optimize our costs and strategically allocate resources to support long-term, sustainable growth.

Current wording

We are a global biotechnology company focused on developing and commercializing medicines for hereditary angioedema (“HAE”) and other rare diseases, driven by our deep commitment to improving the lives of people living with these conditions. We have built a robust commercial infrastructure to support the successful commercialization of ORLADEYO, an oral, once-daily therapy discovered and developed internally for the prevention of HAE attacks. Our business strategy includes leveraging this established commercial platform to successfully commercialize a pipeline of potential first-in-class or best-in-class oral small-molecule and injectable protein therapeutics targeting a range of rare diseases. These programs are being pursued through both internal discovery efforts and strategic business development. By utilizing our existing commercial capabilities and focusing on rare disease markets, we believe that we can most effectively optimize our costs and strategically allocate resources to support long-term, sustainable growth.

Previous wording

ORLADEYO is an oral capsule, once-daily therapy discovered and developed by us for the prevention of HAE attacks. ORLADEYO is approved in the United States and other global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older. In addition, the ongoing APeX-P clinical trial, which is complete through the primary endpoint, is continuing to assess an oral granule formulation of ORLADEYO in pediatric patients who are 2 to 11 years of age at enrollment. The Prescription Drug User Fee Act goal date for our new drug application for ORLADEYO granules in children with HAE aged 2 to 11 is December 12, 2025. ORLADEYO would be the first targeted oral prophylactic therapy for children with HAE.

Current wording

ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of HAE attacks. A capsule formulation of ORLADEYO is approved in the United States and other global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older. In addition, in December 2025, the FDA approved an oral pellet formulation of once-daily ORLADEYO for prophylactic therapy in pediatric patients with HAE aged 2 to <12 years.

Previous wording

Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and nearly five years of commercialization experience with ORLADEYO, we anticipate that the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues. These expectations are subject to numerous risks and uncertainties that may cause our actual results, performance, or achievements to be materially different. There can be no assurance that our commercialization methods and strategies will succeed, or that the market for ORLADEYO will develop in line with our current expectations. See “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—There can be no assurance that our or our partners’ commercialization efforts, methods, and strategies for our products or technologies will succeed, and our future revenue generation is uncertain” in Part II, Item 1A of this report for further discussion of these risks.

Current wording

Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and over five years of commercialization experience with ORLADEYO, we anticipate that the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues. Based on our commercialization experience with ORLADEYO, we believe there is a seasonal impact to our business in the first quarter of each year due to typical first quarter requirements from payors for prescription reauthorization of specialty products, like ORLADEYO, that can temporarily move patients from paid drug to free product. These expectations are subject to numerous risks and uncertainties that may cause our actual results, performance, or achievements to be materially different. There can be no assurance that our commercialization methods and strategies will succeed, or that the market for ORLADEYO will develop in line with our current expectations. See “Risk Factors—Risks Relating to Our Business—Risks Relating to Product Development and Commercialization—There can be no assurance that our or our partners’ commercialization efforts, methods, and strategies for our products or technologies will succeed, and our future revenue generation is uncertain” in Part II, Item 1A of this report for further discussion of these risks.

Previous wording

Revenue from sales of ORLADEYO for the three and nine months ended September 30, 2025 is discussed under “Results of Operations” in this MD&A. Revenue from sales of ORLADEYO in future periods is subject to uncertainties and will depend on several factors, including, but not limited to, the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the number of patients receiving free product, our pricing strategy, and market trends. We monitor and analyze this data on an ongoing basis as we continue to commercialize ORLADEYO and adjust our forecasts accordingly.

Current wording

Revenue from sales of ORLADEYO for the three months ended March 31, 2026 is discussed under “Results of Operations” in this MD&A. Revenue from sales of ORLADEYO in future periods is subject to uncertainties and will depend on several factors, including, but not limited to, the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the number of patients receiving free product, our pricing strategy, and market trends. We monitor and analyze this data on an ongoing basis as we continue to commercialize ORLADEYO and adjust our forecasts accordingly. In addition, on May 6, 2026, we announced that we recently identified a manufacturing issue that will delay the initial product fulfillment of the oral pellet formulation of ORLADEYO. We are currently evaluating the impact of this delay and cannot predict at this time whether or to what extent it may affect future revenue or operating results.

Previous wording

RAPIVAB (peramivir injection) is approved in the United States for the treatment of acute uncomplicated influenza for patients six months and older. Since the 2009 H1N1 pandemic, RAPIVAB has been an important component of the U.S. Government’s influenza preparedness efforts. Peramivir injection is also approved in Canada (RAPIVAB), Australia (RAPIVAB), Japan (RAPIACTA), Taiwan (RAPIACTA), and Korea (PERAMIFLU).

Current wording

RAPIVAB (peramivir injection) is approved in the United States for the treatment of acute uncomplicated influenza for patients six months and older. Peramivir injection is also approved in Canada (RAPIVAB), Australia (RAPIVAB), Japan (RAPIACTA), Taiwan (RAPIACTA), and Korea (PERAMIFLU).

Previous wording

Our operating expenses are also difficult to predict and depend primarily on research and development activities, including drug manufacturing, clinical research activities, and the ongoing requirements of our development programs, as well as the costs of commercialization, direction from regulatory agencies and the factors discussed in the “Risk Factors” section in Part II, Item 1A of this report. Management may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and/or payments.

Current wording

Our operating expenses are also difficult to predict and depend primarily on research and development activities, including clinical research activities, and the ongoing requirements of our development programs, as well as the costs of commercialization, drug manufacturing, direction from regulatory agencies and the factors discussed in the “Risk Factors” section in Part II, Item 1A of this report. Management may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and/or payments.

Previous wording

Neopharmed Gentili S.p.A. Transaction

Current wording

On May 4, 2026, we announced that we entered into a licensing agreement granting an Irish affiliate of Neopharmed Gentili S.p.A. (“Neopharmed”) exclusive rights to commercialize navenibart for HAE in Europe. We received upfront consideration of $70.0 million and will be eligible to receive up to $275.0 million in future regulatory and sales milestone payments. We will also receive tiered royalties on net sales ranging from 18% to 30%. Navenibart is an investigational product that has not yet received regulatory approval in the United States or Europe.

Previous wording

On October 14, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Axel Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), and Astria Therapeutics, Inc., a Delaware corporation (“Astria”). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, at the Effective Time (as defined below), Merger Sub will merge with and into Astria, with Astria surviving as our wholly owned subsidiary (the “Merger”).

Current wording

On October 14, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Axel Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), and Astria Therapeutics, Inc., a Delaware corporation (“Astria”). Pursuant to the Merger Agreement, on January 23, 2026 (the “Closing Date”), Merger Sub merged with and into Astria, with Astria surviving as our wholly owned subsidiary (the “Merger”).

Previous wording

Effective Time will be, subject to certain exceptions, converted into the right to receive (i) 0.59 of a share of our common stock (and, if applicable, cash in lieu of fractional shares), and (ii) $8.55 in cash, without interest, subject to certain adjustments and applicable withholding taxes. Holders of Astria’s Series X Convertible Preferred Stock, warrants, and certain options will also be entitled to certain consideration, as further set forth in the Merger Agreement. The Merger is subject to the approval of Astria’s stockholders, as well as customary regulatory approvals. In connection with entering into the Merger Agreement, certain stockholders of Astria entered into voting and support agreements with us, pursuant to which each such stockholder has agreed, among other things, to vote its, his or her shares of Astria common stock in favor of the adoption of the Merger Agreement and approval of the transactions contemplated thereby and, subject to certain exceptions, not to transfer such shares of Astria common stock prior to the earlier of the Effective Time and the termination of the Merger Agreement, without our prior written consent.

Current wording

Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Astria common stock, par value $0.001 per share, issued and outstanding immediately prior to the Effective Time (excluding shares held by BioCryst, Astria or their wholly owned subsidiaries or dissenting stockholders) was converted into the right to receive (i) 0.59 of a share of our common stock (and, if applicable, cash in lieu of fractional shares), and (ii) $8.55 in cash, without interest, subject to certain adjustments and applicable withholding taxes. Holders of Astria’s Series X Convertible Preferred Stock, warrants, and certain options were treated as set forth in the Merger Agreement.

Previous wording

Cost of product sales for the three months ended September 30, 2025 and 2024 was $2.2 million and $3.2 million, respectively. The decrease in cost of product sales was primarily due to a decrease in inventory reserves recorded during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

The following table summarizes our cost of product sales for the periods indicated:

Previous wording

Cost of product sales for the nine months ended September 30, 2025 and 2024 was $9.6 million and $6.2 million, respectively. The increase in cost of product sales was primarily due to the increase in peramivir sales.

Current wording

Cost of product sales for the three months ended March 31, 2026 and 2025 were $5.4 million and $4.6 million, respectively. The increase in cost of product sales was primarily due to an increase in ORLADEYO sales, partially offset by a decrease in cost of product sales associated with our European ORLADEYO business due to the sale of our European ORLADEYO business to Neopharmed on October 1, 2025.

Previous wording

Research and development expenses include all direct and indirect expenses relating to research and development activities. Direct expenses consist of compensation for research and development personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes and manufacture the product candidates, and conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies. Additionally, direct expenses consist of those costs necessary to discontinue and close out a development program, including termination fees and other commitments. Indirect expenses consist of lab supplies and services, facility expenses, depreciation of development equipment and other overhead of our research and development efforts. Research and development expenses vary according to the number of programs in clinical development and the stage of development of our clinical programs. Later stage clinical programs tend to cost more than earlier stage programs due to the longer length of time of the clinical trials and the higher number of patients enrolled in these clinical trials.

Current wording

Research and development expenses include all costs incurred to discover, develop and advance our product candidates and related technologies. These costs include direct costs, such as compensation for research and development personnel and costs paid to third-parties for laboratory studies, process development and manufacturing of product candidates, and the conduct and management of clinical trials and other clinical and preclinical activities. Additionally, direct expenses include those costs necessary to discontinue and close out a development program, including termination fees and other commitments. Research and development expenses also include indirect costs, such as lab supplies and services, facility costs, depreciation of development equipment and other overhead of our research and development activities. Research and development expenses vary based on the number of programs in development and the stage of development of each program. Later stage clinical programs generally require higher spending than earlier stage programs due to the longer length of time of the clinical trials and the higher patient enrollment.

Previous wording

We do not maintain or evaluate internal research and development costs on a program-by-program basis. As a result, a significant portion of our research and development expenses are not tracked on a program-by-program basis, as the costs may benefit multiple programs. Beginning the quarter ended September 30, 2025, we no longer allocate non-program specific external costs or internal costs to programs. These costs are separately presented on the respective line items listed above. Research and development expenses have been reclassified for the three months ended September 30, 2024 for comparability. There is no impact on total research and development expenses.

Current wording

We do not maintain or evaluate internal research and development costs on a program-by-program basis, and certain costs may benefit multiple programs. Beginning in the quarter ended September 30, 2025, we no longer allocate non-program specific external costs or internal costs to programs. These costs are separately presented on the respective line items listed below. Research and development expenses have been reclassified for the three months ended March 31, 2025 for comparability. There is no impact on total research and development expenses.

Previous wording

The following table summarizes our research and development expenses, including program specific costs and shared or indirect operating costs recognized as research and development expenses for the periods indicated (in thousands):

Current wording

The following table summarizes our research and development expenses, including program specific costs and shared or indirect operating costs, for the periods indicated:

Previous wording

Research and development expenses increased to $44.6 million for the three months ended September 30, 2025 from $41.1 million for the three months ended September 30, 2024. The increase was primarily driven by the following:

Current wording

Research and development expenses increased to $60.3 million for the three months ended March 31, 2026 from $37.3 million for the three months ended March 31, 2025. The increase was primarily driven by the following:

Previous wording

For the three months ended September 30, 2025, interest income was $2.2 million compared to $3.6 million for the three months ended September 30, 2024. The decrease in interest income was primarily the result of an overall decrease in our investment portfolio and a decrease in interest rates. Net foreign currency gains were less than $0.1 million for the three months ended September 30, 2025 and $0.1 million for the three months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026, interest income was $2.3 million compared to $3.0 million for the three months ended March 31, 2025. The decrease in interest income was primarily driven by lower interest rates and an overall decrease in our average investment portfolio. Net foreign currency losses were $0.2 million for the three months ended March 31, 2026 compared to net foreign currency gains of less than $0.1 million for the three months ended March 31, 2025.

Previous wording

Interest expense for the three months ended September 30, 2025 was $19.7 million compared to $24.8 million for the three months ended September 30, 2024. Interest expense is primarily comprised of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and interest expense associated with the borrowings under the Pharmakon Loan Agreement (as defined below), including the amortization of the deferred financing costs, associated with the borrowings under the Pharmakon Loan. The decrease in interest expense was primarily the result of the $75.0 million and $50.0 million partial prepayments on the outstanding principal amount under the Pharmakon Term Loan in April 2025 and July 2025, respectively, and a decrease in the effective interest rate related to the Pharmakon Loan Agreement.

Current wording

Interest expense for the three months ended March 31, 2026 was $19.8 million compared to $23.5 million for the three months ended March 31, 2025. Interest expense was primarily comprised of non-cash interest expense due to the amortization of interest associated with our royalty financing obligations and interest expense associated with the borrowings under the Blackstone Loan Agreement for the three months ended March 31, 2026 and Pharmakon Loan Agreement (as defined in “Note 8—Debt” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report) for the three months ended March 31, 2025. The decrease in interest expense was primarily due to the fact that borrowings under the Blackstone Loan Agreement were not outstanding for the full first quarter of 2026, whereas the historical Pharmakon Loan Agreement was outstanding for the full first quarter of 2025 and a lower effective interest rate.

Previous wording

For the nine months ended September 30, 2025, income tax expense was $1.4 million compared to $1.1 million for the nine months ended September 30, 2024. The increase in income tax expense was primarily driven by the increase in foreign and US taxable income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026, income tax expense was $1.0 million compared to income tax expense of $0.7 million for the three months ended March 31, 2025. The increase was primarily driven by an increase in U.S. state tax expense as a result of increased profitability after adjusting for significant non-deductible permanent differences, primarily related to the in-process research and development expense for the navenibart asset acquired as part of the Merger, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

Our operations have principally been funded through public offerings and private placements of equity securities; our credit facilities; revenues from ORLADEYO; royalty financing transactions; and cash from collaborative and other research and development agreements, including U.S. Government contracts. In addition to the above, we have received funding from other sources, including government grants, research grants, and interest income on our investments.

Current wording

Our operations have principally been funded through our credit facilities; revenues from ORLADEYO; royalty financing transactions; public offerings and private placements of equity securities; and cash from collaborative and other research and development agreements, including U.S. Government contracts. In addition to the above, we have received funding from other sources, including government grants, research grants, and interest income on our investments.

Previous wording

In 2020 and 2021, we entered into the Royalty Purchase Agreements (as defined in “Note 7—Royalty Financing Obligations” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report) with RPI 2019 Intermediate Finance Trust (“RPI”) and OCM IP Healthcare Holdings Limited, an affiliate of OMERS Capital Markets (“OMERS”). Under the Royalty Purchase Agreements, RPI and OMERS are entitled to receive tiered, sales-based royalties on net product sales of ORLADEYO in the United States and certain key European markets (collectively, the “Key Territories”), and other markets where we sell ORLADEYO directly or through distributors. In addition, RPI and OMERS are entitled to receive a tiered revenue share on amounts generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of the Key Territories. Our required payments to OMERS commenced with the calendar quarter beginning October 1, 2023. See “Note 7—Royalty Financing Obligations” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional information about these financing transactions.

Current wording

In 2020 and 2021, we entered into the Royalty Purchase Agreements (as defined in “Note 7—Royalty Financing Obligations” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report) with RPI 2019 Intermediate Finance Trust (“RPI”) and OCM IP Healthcare Holdings Limited, an affiliate of OMERS Capital Markets (“OMERS”). Under the Royalty Purchase Agreements, RPI and OMERS are entitled to receive tiered, sales-based royalties on net product sales of ORLADEYO in the United States and certain key European markets (collectively, the “Key Territories”), and other markets where we sell ORLADEYO directly or through distributors. In addition, RPI and OMERS are entitled to receive a tiered revenue share on amounts generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of the Key Territories. Our required payments to OMERS commenced with the calendar quarter beginning October 1, 2023. No royalty payments are due on direct sales over $550.0 million. See “Note 7—Royalty Financing Obligations” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional information about these financing transactions.

Previous wording

Our principal sources of liquidity at September 30, 2025 were approximately $267.4 million in cash and cash equivalents and available-for-sale investments, of which $14.8 million was considered held for sale as of September 30, 2025.

Current wording

Our principal source of liquidity at March 31, 2026 was $259.0 million in cash and cash equivalents and available-for-sale investments.

Previous wording

The following table summarizes our cash flows for each period presented (in thousands):

Current wording

The following table summarizes our cash flows for each period presented:

Previous wording

During the nine months ended September 30, 2025, net cash provided by operating activities of $55.4 million consisted primarily of net income of $18.0 million and $107.7 million of non-cash items. Non-cash items included $61.3 million of stock-based compensation expense, $39.8 million of non-cash interest expense on royalty financing obligations, and a loss on extinguishment of debt of $6.9 million. Net income and non-cash items were partially offset by $61.1 million of changes in operating assets and liabilities, primarily due to a decrease in royalty financing obligations and increases in receivables and accounts payable and accrued expenses, and $9.2 million in payments of Pharmakon PIK interest.

Current wording

During the three months ended March 31, 2026, net cash used in operating activities of $61.8 million consisted primarily of a net loss of $721.8 million and $71.4 million of changes in operating assets and liabilities, primarily due to decreases in accounts payable and accrued expenses, royalty financing obligations, and prepaid expenses and other assets, partially offset by an increase in receivables. These items were partially offset by $731.4 million of non-cash items, primarily related to $697.8 million of acquired in-process research and development expense, $16.0 million of stock-based compensation expense, $13.3 million of non-cash interest expense on royalty financing obligations, and a $2.8 million of mark-to-market adjustment related to our share-based liability.

Previous wording

During the nine months ended September 30, 2024, net cash used in operating activities of $46.8 million consisted primarily of a net loss of $62.1 million and $76.0 million of changes in operating assets and liabilities, primarily due to a decrease in royalty financing obligations, a decrease in accounts payable and accrued expenses, and an increase in accounts receivable, partially offset by $91.2 million of non-cash items, including $44.1 million of stock-based compensation expense, $42.5 million in non-cash interest expense on royalty financing obligations, and $11.1 million of non-cash interest expense on secured term loan and amortization of debt issuance costs.

Current wording

During the three months ended March 31, 2025, net cash used in operating activities of $27.5 million consisted primarily of $62.1 million of changes in operating assets and liabilities, primarily due to decreases in accounts payable and accrued expenses and royalty financing obligations, and an increase in receivables, partially offset by $34.6 million of non-cash items, including $21.4 million of stock-based compensation expense and $13.5 million in non-cash interest expense on royalty financing obligations.

Previous wording

During the nine months ended September 30, 2025, net cash provided by investing activities of $69.8 million primarily related to sales and maturities of investment securities, partially offset by purchases of investment securities.

Current wording

During the three months ended March 31, 2026, net cash used in investing activities of $268.6 million primarily related to cash paid for the acquisition of Astria, net of cash acquired, of $489.5 million, partially offset by $221.2 million of sales and maturities of investment securities.

Previous wording

During the nine months ended September 30, 2024, net cash provided by investing activities of $34.8 million primarily related to maturities of investment securities, partially offset by purchases of investment securities.

Current wording

During the three months ended March 31, 2025, net cash provided by investing activities of $27.1 million primarily related to maturities of investment securities of $76.0 million, partially offset by purchases of investment securities of $48.8 million.

Previous wording

During the nine months ended September 30, 2025, net cash used in financing activities of $132.0 million primarily consisted of repayment of Pharmakon term loan principal and related prepayment premium and fees totaling $119.6 million, and $16.4 million in principal payments on royalty financing obligations, partially offset by net proceeds from common stock issued under stock-based compensation plans.

Current wording

During the three months ended March 31, 2026, net cash provided by financing activities of $412.6 million primarily consisted of net proceeds from the Term Loans under the Blackstone Loan Agreement of $395.0 million and common stock issued under stock-based compensation plans of $19.5 million, partially offset by withholding taxes paid on stock-based awards of $1.2 million.

Previous wording

During the nine months ended September 30, 2024, net cash used in financing activities of $1.7 million primarily consisted of withholding taxes paid on stock-based awards and principal payments on finance lease liabilities, partially offset by net proceeds from common stock issued under stock-based compensation plans.

Current wording

During the three months ended March 31, 2025, net cash provided by financing activities of $0.5 million primarily consisted of net proceeds from common stock issued under stock-based compensation plans, partially offset by withholding taxes paid on stock-based awards and principal payments on finance lease liabilities.

Previous wording

We intend to contain costs and cash flow requirements by closely managing our third-party costs and headcount, leasing scientific equipment and facilities, and contracting with other parties to conduct certain research and development projects. We may incur additional expenses, potentially resulting in significant losses, as we continue to pursue our research and development activities, commercialize ORLADEYO, and engage in strategic business development. We may incur additional expenses related to the filing, prosecution, maintenance, defense, and enforcement of patent and other intellectual property claims and additional regulatory costs as our clinical programs advance through later stages of development or as regulatory exclusivity for our products expires. The objective of our investment policy is to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. We place our excess cash with high credit quality financial institutions, commercial companies, and government agencies in order to limit the amount of our credit exposure. We have not realized any significant losses on our investments.

Current wording

We intend to contain costs and cash flow requirements by closely managing our third-party costs and headcount, leasing scientific equipment and facilities, and contracting with other parties to conduct certain research and development projects. We may incur additional expenses, potentially resulting in significant losses, as we continue to pursue our research and development activities, commercialize ORLADEYO, and engage in strategic business development. We may incur additional expenses related to the filing, prosecution, maintenance, defense, and enforcement of patent and other intellectual property claims and additional regulatory costs as our clinical programs advance through later stages of development or as regulatory exclusivity for our products expires. The objective of our investment policy is to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. We place our excess cash with high credit quality financial institutions. We invest in marketable debt securities that may consist of U.S. Treasury obligations, U.S. government agency securities, money market funds, certificates of deposit, and corporate notes and bonds in order to limit the amount of our credit exposure. We have not realized any significant losses on our investments.

Previous wording

Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including the progress and results of our current and proposed clinical trials for our most advanced product candidates; the progress made in the manufacturing of our lead product candidates; the success of our commercialization efforts for, and market acceptance of, our products; the overall progression of our other programs; our business development activities; the amount of funding or assistance, if any, we receive from new partnerships with third parties for the development and/or commercialization of our products and product candidates; the development progress of any collaborative agreements for our product candidates; and the amount and timing of funding we receive, if any, from U.S. Government contracts.

Current wording

Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including the progress and results of our current and proposed clinical trials for our product candidates; the progress made in the manufacturing of our lead product candidates; the success of our commercialization efforts for, and market acceptance of, our products; the overall progression of our other programs; our business development activities; the amount of funding or assistance, if any, we receive from new partnerships with third parties for the development and/or commercialization of our products and product candidates; the development progress of any collaborative agreements for our product candidates; and the amount and timing of funding we receive, if any, from U.S. Government contracts.

Previous wording

Our liquidity needs will be largely determined by the success of operations in regard to the successful commercialization of our products and the future progression of our product candidates. From time to time, we evaluate other opportunities to fund future operations, including: (1) out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (2) royalty or other monetization transactions; (3) obtaining additional product candidate regulatory approvals, which would generate revenue, milestone payments and cash flow; (4) reducing spending on one or more research and development programs, including by discontinuing development; (5) restructuring operations to change our overhead structure; and/or (6) securing U.S. Government funding of our programs, including obtaining procurement contracts. We may, in the future, issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings. Our future liquidity needs, and our ability to address those needs, will largely be determined by the success of our products and product candidates; the timing, scope, and magnitude of our research and development and commercial expenses; and key developments and regulatory events and our decisions in the future.

Current wording

Based on our expectations for revenue and operating expenses, we believe our financial resources will be sufficient to fund our operations for at least the next 12 months. Our liquidity needs will be largely determined by the success of operations in regard to the successful commercialization of our products and the future progression of our product candidates. From time to time, we evaluate other opportunities to fund future operations, including: (1) out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (2) obtaining additional product candidate regulatory approvals, which would generate revenue, milestone payments and cash flow; (3) reducing spending on one or more research and development programs, including by discontinuing development; (4) restructuring operations to change our overhead structure; and/or (5) securing U.S. Government funding of our programs, including obtaining procurement contracts. We may, in the future, issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings. Our future liquidity needs, and our ability to address those needs, will largely be determined by the success of our products and product candidates; the success of our business development efforts; the timing, scope, and magnitude of our research and development and commercial expenses; and key developments and regulatory events and our decisions in the future.

Previous wording

•our ability to establish additional collaborative relationships with academic institutions, biotechnology or pharmaceutical companies, and governmental agencies or other third parties;

Current wording

•our ability to establish additional collaborative relationships if and when needed;

Previous wording

•the scope of manufacturing of our drug substance and product candidates required for future new drug application (“NDA”) filings;

Current wording

•the scope of manufacturing of our drug substance and product candidates required for future new drug application filings;

Previous wording

We may, in the future, be required to raise additional capital to complete the development and commercialization of our products and product candidates, and we may seek to raise capital in the future, including to take advantage of favorable opportunities in the capital markets. Additional funding may not be available when needed or in the form or on terms acceptable to us. Our future working capital requirements, including the need for additional working capital, will largely be determined by the advancement of our portfolio of product candidates and the commercialization of ORLADEYO. More specifically, our working capital requirements will be dependent on the number, magnitude, scope and timing of our development programs; regulatory approval of our product candidates; the cost, timing and outcome of regulatory reviews, regulatory investigations, and changes in regulatory requirements; the costs of obtaining patent protection for our product candidates; the timing and terms of business development activities; the rate of technological advances relevant to our operations; the efficiency of manufacturing processes developed on our behalf by third parties; the timing, scope and magnitude of commercial spending; and the level of required administrative support for our daily operations. See “Risk Factors—Risks Relating to Our Business—Financial and Liquidity Risks” and “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—If we fail to obtain additional financing or acceptable partnership arrangements if and when needed, we may be unable to complete the development and commercialization of our products and product candidates or continue operations” in Part II, Item 1A of this report for further discussion of the risks related to obtaining additional capital.

Current wording

We may, in the future, be required to raise additional capital to complete the development and commercialization of our products and product candidates, and we may seek to raise capital in the future, including to take advantage of favorable opportunities in the capital markets. Additional funding may not be available when needed or in the form or on terms acceptable to us. Our future working capital requirements, including the need for additional working capital, will largely be determined by the advancement of our portfolio of product candidates and the commercialization of ORLADEYO. More specifically, our working capital requirements will be dependent on the number, magnitude, scope and timing of our development programs; regulatory approval of our product candidates; the cost, timing and outcome of regulatory reviews, regulatory investigations, and changes in regulatory requirements; the costs of obtaining patent protection for our product candidates; the timing and terms of business development activities; the rate of technological advances relevant to our operations; the efficiency of manufacturing processes developed on our behalf by third parties; the timing, scope and magnitude of commercial spending; and the level of required administrative support for our daily operations. See “Risk Factors—Risks Relating to Our Business—Financial and Liquidity Risks” in Part II, Item 1A of this report for further discussion of the risks related to obtaining additional capital.

Previous wording

While our significant accounting policies are more fully described in “Note 1—Significant Accounting Policies and Concentrations of Risk” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

Current wording

While our significant accounting policies are more fully described in “Note 1—Significant Accounting Policies and Concentrations of Risk” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our Condensed Consolidated Financial Statements.

Previous wording

Government and Managed Care Rebates. We contract with government agencies and managed care organizations or, collectively, third-party payors, so that ORLADEYO will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. We estimate the rebates we will provide to third-party payors and deduct these estimated amounts from total gross product revenues at the time the revenues are recognized, resulting in a reduction of product revenue and the establishment of a current liability. We estimate the rebates that we will provide to third-party payors based upon (i) our contracts with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, and (iii) product distribution information obtained from our specialty pharmacy regarding payor mix.

Current wording

The most subjective of these estimates are government and managed care rebates. We contract with group purchasing organizations associated with managed care organizations and participate in certain government programs or, collectively, third-party payors, so that ORLADEYO will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. We estimate the rebates we will provide to third-party payors and deduct these estimated amounts from total gross product revenues at the time the revenues are recognized, resulting in a reduction of product revenue and the establishment of a current liability. We estimate the rebates that we will provide to third-party payors based upon (i) our contracts with these third-party payors, (ii) the contractually mandated discounts applicable to the programs, and (iii) product distribution information obtained from our specialty pharmacy regarding payor mix.

Previous wording

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with applicable Company personnel to identify services that have been performed on its behalf and estimating the actual work completed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. When evaluating the adequacy of accrued expenses, we consider facts and circumstances known to us at the time, which can include assumptions such as expected patient enrollment, site activation and estimated project duration. Examples of estimated accrued research and development expenses include (i) fees paid to CROs in connection with preclinical and toxicology studies and clinical trials, (ii) fees paid to investigative sites in connection with clinical trials, (iii) fees paid to contract manufacturers in connection with the production of our raw materials, drug substance, drug products, and product candidates, and (iv) professional fees.

Current wording

As part of the process of preparing our consolidated financial statements, we estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with applicable Company personnel to identify services that have been performed on our behalf and estimating the actual work completed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We periodically confirm the accuracy of our estimates with the service providers and adjust if necessary. When evaluating the adequacy of accrued expenses, we consider facts and circumstances known to us at the time, which can include assumptions such as expected patient enrollment, site activation and estimated project duration. Examples of estimated accrued research and development expenses include (i) fees paid to CROs in connection with preclinical and toxicology studies and clinical trials, (ii) fees paid to investigative sites in connection with clinical trials, (iii) fees paid to contract manufacturers in connection with the production of our raw materials, drug substance, drug products, and product candidates, and (iv) professional fees.

Previous wording

The royalty financing obligations are eligible to be repaid based on royalties from net sales of ORLADEYO. Interest expense is accrued using the effective interest rate method over the estimated period each of the related liabilities will be paid. This requires us to estimate the total amount of future royalty payments to be generated from product sales over the life of the agreement. We impute interest on the carrying value of each of the royalty financing obligations and record interest expense using an imputed effective interest rate. We reassess the expected royalty payments each reporting period and account for any changes through an adjustment to the effective interest rate on a prospective basis. The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make estimates that could impact the carrying value of each of the liabilities, as well as the periods over which associated issuance costs will be amortized. A significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest expense and the time periods for repayment.

Current wording

Under the royalty financing obligations, RPI and OMERS are entitled to receive sales-based royalties on net product sales of ORLADEYO. Interest expense is accrued using the effective interest rate method over the estimated period each of the related liabilities will be paid. This requires us to estimate the total amount of future royalty payments to be generated from product sales over the life of the agreements. We impute interest on the carrying values of each of the royalty financing obligations and record interest expense using an imputed effective interest rate. We reassess the expected royalty payments each reporting period and account for any changes through adjustments to the effective interest rates on a prospective basis. The assumptions used in determining the expected repayment terms of the debt and amortization periods of the issuance costs requires that we make estimates that could impact the carrying value of each of the liabilities, as well as the periods over which associated issuance costs will be amortized. A significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest expense and the time periods for repayment.

Previous wording

Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. We have recorded a valuation allowance against substantially all potential tax assets, due to uncertainties in our ability to utilize deferred tax assets, primarily consisting of certain net operating losses carried forward, before they expire. The valuation allowance is based on estimates of future earnings in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable.

Current wording

The liability method is used in our accounting for income taxes. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. We have recorded a valuation allowance against substantially all potential tax assets, due to uncertainties in our ability to utilize deferred tax assets, primarily consisting of certain net operating losses carried forward, before they expire. The valuation allowance is based on estimates of future earnings in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable.

Previous wording

We account for uncertain tax positions in accordance with U.S. GAAP. Uncertain tax positions are recorded based upon certain recognition and measurement criteria. We re-evaluate uncertain tax positions and consider various factors, including, but not limited to, changes in tax law and the measurement of tax positions taken or expected to be taken in tax returns. We adjust the amount of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain tax positions. We recognize interest and penalties related to income tax matters in income tax expense.

Current wording

We account for uncertain tax positions in accordance with U.S. GAAP. Uncertain tax positions are recorded based upon certain recognition and measurement criteria. We re-evaluate uncertain tax positions and consider various factors, including, but not limited to, changes in tax law and the measurement of tax positions taken or expected to be taken in tax returns. We adjust the amount of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain tax positions.