Neurocrine Biosciences Annual Report 2023

Plain-text annual report

2023 Neurocrine Biosciences has four commercial, FDA-approved treatments in the United States and a robust pipeline with multiple mid-to-late- stage programs focused on diseases and disorders across neurology, neuroendocrinology, and neuropsychiatry. COMMERCIALLY AVAILABLE MEDICINES INCLUDE: IN THE U.S. IN THE U.S. AND EU ENDOMETRIOSIS ADRENAL INSUFFICIENCY IN EUROPE TARDIVE DYSKINESIA CHOREA-HUNTINGTON’S DISEASE UTERINE FIBROIDS CONGENITAL ADRENAL HYPERPLASIA PIPELINE OF INVESTIGATIONAL THERAPIES INCLUDE6: Phase 1 Phase 2 Phase 3 NEUROLOGY valbenazine1 Dyskinetic Cerebral Palsy NBI-8271042 Rare Pediatric Epilepsy: Epileptic Encephalopathy with Continuous Spike-and-Wave During Sleep NBI-9213523 Rare Pediatric Epilepsy: SCN8A Development and Epileptic Encephalopathy Syndrome NBI-1076986 Movement Disorders NEUROENDOCRINOLOGY crinecerfont Congenital Adrenal Hyperplasia in Adults crinecerfont Congenital Adrenal Hyperplasia in Children & Adolescents (cid:736)(cid:738)(cid:727)(cid:732)(cid:1027)(cid:728)(cid:727)(cid:672)(cid:741)(cid:728)(cid:735)(cid:728)(cid:724)(cid:742)(cid:728)(cid:3)(cid:731)(cid:748)(cid:727)(cid:741)(cid:738)(cid:726)(cid:738)(cid:741)(cid:743)(cid:732)(cid:742)(cid:738)(cid:737)(cid:728) Congenital Adrenal Hyperplasia (cid:736)(cid:738)(cid:727)(cid:732)(cid:1027)(cid:728)(cid:727)(cid:672)(cid:741)(cid:728)(cid:735)(cid:728)(cid:724)(cid:742)(cid:728)(cid:3)(cid:731)(cid:748)(cid:727)(cid:741)(cid:738)(cid:726)(cid:738)(cid:741)(cid:743)(cid:732)(cid:742)(cid:738)(cid:737)(cid:728)(cid:3)(cid:692)(cid:727)(cid:741)(cid:728)(cid:737)(cid:724)(cid:735)(cid:3)(cid:700)(cid:737)(cid:742)(cid:744)(cid:729)(cid:1027)(cid:726)(cid:732)(cid:728)(cid:737)(cid:726)(cid:748) NEUROPSYCHIATRY valbenazine1 Adjunctive Treatment of Schizophrenia NBI-10658454 Inadequate Response to Treatment in Major Depressive Disorder (cid:735)(cid:744)(cid:745)(cid:724)(cid:727)(cid:724)(cid:747)(cid:732)(cid:742)(cid:743)(cid:724)(cid:743)4 Cognitive Impairment Associated with Schizophrenia NBI-11175685 Schizophrenia NBI-10707704 Major Depressive Disorder NBI-11175675 CNS Indications NBI-11175695 CNS Indications NBI-11175705 CNS Indications NBI-1065890 CNS Indications * Mitsubishi Tanabe Pharma Corporation (MTPC) has commercialization rights in Japan and other select Asian markets 2 Licensed from Idorsia Ltd. 3 Licensed from Xenon Pharmaceuticals, Inc. † AbbVie has global commercialization rights Neurocrine Biosciences has global rights unless otherwise noted. Neurocrine (cid:693)(cid:732)(cid:738)(cid:742)(cid:726)(cid:732)(cid:728)(cid:737)(cid:726)(cid:728)(cid:742)(cid:3)(cid:742)(cid:731)(cid:724)(cid:741)(cid:728)(cid:742)(cid:3)(cid:739)(cid:741)(cid:738)(cid:1027)(cid:743)(cid:742)(cid:3)(cid:724)(cid:737)(cid:727)(cid:3)(cid:735)(cid:738)(cid:742)(cid:742)(cid:728)(cid:742)(cid:3)(cid:738)(cid:737)(cid:3)(cid:705)(cid:693)(cid:700)(cid:672)(cid:676)(cid:675)(cid:681)(cid:680)(cid:683)(cid:679)(cid:680)(cid:3)(cid:746)(cid:732)(cid:743)(cid:731)(cid:3)(cid:711)(cid:724)(cid:734)(cid:728)(cid:727)(cid:724)(cid:3)(cid:707)(cid:731)(cid:724)(cid:741)(cid:736)(cid:724)(cid:726)(cid:728)(cid:744)(cid:743)(cid:732)(cid:726)(cid:724)(cid:735)(cid:3) Company Limited. 1 Mitsubishi Tanabe Pharma Corporation (MTPC) has commercialization rights in Japan and other select Asian markets. 4 Licensed from Takeda Pharmaceutical Company Limited. 5 Licensed from Sosei Heptares. 6 Investigational therapies are not approved for use in any country Dear Fellow Shareholders, Kevin C. Gorman, Ph.D. Chief Executive Ofﬁcer Neurocrine Biosciences is a company dedicated to brave science – because the people we serve need and deserve it. Since our founding in 1993, we’ve focused in areas that lacked recent innovation or, in some cases, had no treatment options. With that focus, we have built a leading neuroscience company dedicated to treatments across neurology, neuropsychiatry, neuroendocrinology and someday, neuroimmunology. As we look to the future, we remain focused on optimizing INGREZZA®, gaining approval for crinecerfont in congenital adrenal hyperplasia (CAH), advancing our growing and diverse pipeline, and improving the lives of our patients. In October 2023, we reported strong results in two Phase 3 studies in adult and pediatric CAH patients reﬂecting the potential of a much-needed new treatment paradigm. Following these results, the U.S. Food and Drug Administration (FDA) granted crinecerfont Breakthrough Therapy designation which serves as an acknowledgement of the serious and life-threatening nature of CAH, highlighting the signiﬁcant unmet need that exists and identifying the product as a potentially valuable treatment. The New Drug Application submission is anticipated to occur in the second quarter of 2024, and we look forward to potentially bringing crinecerfont to CAH patients next year. We are proud of the continued success of INGREZZA® and remain optimistic about its untapped potential. While we’ve made good progress improving the diagnosis and treatment rates of the estimated 600,000 people in the U.S. who have tardive dyskinesia (TD), we estimate only 20% of people living with TD have been offered treatment with a VMAT2 inhibitor like INGREZZA. INGREZZA continues to be the #1 prescribed treatment for patients with TD and we expect to generate sales of over $2 billion in 2024. Last year, we expanded the label to include the treatment of the chorea movements associated with Huntington’s disease (HD). With patent protection to 2038, we have a meaningful opportunity to help even more patients with TD and HD. While crinecerfont represents the most advanced potential new therapy in our pipeline, there are several other exciting programs underway. We have a number of pipeline candidates that will be reporting out Phase 2 proof-of-concept data throughout 2024. In the ﬁrst half of this year, we expect a data readout for NBI-‘845, an AMPA potentiator for the treatment of inadequate response in major depressive disorder. We also expect data in the second half of this year for luvadaxistat, a DAAO inhibitor, for cognitive impairment associated with schizophrenia. Our muscarinic portfolio represents the most broad and diverse number of compounds with what has been a validated asset class. “ Our lead asset, NBI-‘568, is a highly selective orthosteric agonist of the M4 receptor, and we expect a Phase 2 data readout in the second half of 2024. If successful, we will rapidly move NBI-‘568 into registrational studies in schizophrenia and potentially into other neurological conditions. At our 2023 Analyst Day, we shared insight into our R&D Organization’s transformational progression. As our clinical programs advance, we’ve been hard at work revamping our pre-clinical research and development efforts. Over the last few years, we’ve built and transformed Neurocrine’s R&D Organization for scale, sustainability, and competitiveness. Our vision is to be a true global leader in neuroscience and advance a steady ﬂow of innovative molecules from the clinic all the way to commercialization. In the near term, we’ve built a robust R&D innovation engine designed to rapidly deliver four to six development candidates a year. In the long-term, we expect to produce one commercial launch product every other year. This will be accomplished through both internal and external innovation across a range of modalities including biologics and will be focused on higher probability, best-in-class and next-in-class opportunities where we can win. It has been a humbling journey to grow Neurocrine to the leader it is today. On behalf of our Board, management team, and roughly 1,500 team members around the world, I thank our investors, clinical partners and especially patients for the trust you put in us. Seven years ago, Neurocrine was a clinical stage company with no sales and a limited pipeline. Today, Neurocrine is a fully integrated biopharmaceutical enterprise with a broad pipeline, a strong ﬁnancial position, a growing blockbuster in INGREZZA and a potential second blockbuster in crinecerfont. Now more than ever before, the Neurocrine team is conﬁdent we have the right foundation, the right strategy and the right mission to weather the unavoidable setbacks of drug development and to drive our success in helping more patients. Thank you for your unwavering support. Sincerely, Kevin C. Gorman, PH.D. Chief Executive Officer NEUROCRINE BIOSCIENCES, INC. 6027 Edgewood Bend Court San Diego, CA 92130 Notice of Annual Meeting of Stockholders To Be Held on May 22, 2024 TO THE STOCKHOLDERS: NOTICE IS HEREBY GIVEN that the 2024 Annual Meeting of Stockholders of Neurocrine Biosciences, Inc., a Delaware corporation (the “Company”), will be held on May 22, 2024, at 10:30 a.m., local time, at the Company’s corpor 6027 Edgewood Bend Court, San Diego, Califorff nia 92130, for the following purpos accompanying this Notice: r es as more fully described in the Proxy Statement rate offiff ces located at 1. The election of the four nominees for Class I directors named herein to the Board of Directors to serve for a term of three years; 2. An advisory vote on the compensation paid to the Company’s named executive offiff cers; 3. To approve an amendment to the Company’s 2020 Equity Incentive Plan to increase the number of shares of common stock reserved forff issuance thereunder by 3,635,000 shares; 4. The ratificff ation of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024; and 5. To transact such other business as may properly come beforff e the Annual Meeting of Stockholders or any continuation, adjod urnment or postponement thereof. Only stockholders of record at the close of business on March 25, 2024 are entitled to receive notice of and to vote at the Annual Meeting of Stockholders. lAlll sto kckh lholdders ar ie i invitedd to atte dnd hthe Annu lal Meetiingg of Sto kckh lholdders iin person. However, we stronglnglyy u grge our kholdders not to atte dnd hthe Annuall Meetiing ig in person a dnd to iinst dead subbmu stockh l func itional il in forff mat to com lplyy wi hith hthe r lelevan lt l geg lal re iwillll bbe pr ioviddedd. Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instructions as soon as possible to vote your shares. You may vote over the Internet, as well as by telephone or by mailing a proxy or voting instrucr proxy materials. Stockholders attending the Annual Meeting may vote in person even if they have returt ned a proxy. If you hold shares through an account with a brokerage firm, bank or other nominee, please folff other nominee to vote your shares. tion forff m. Please review the instructions on each of your voting options described in these iquirements. hThere willill bbe no presenta itions or exhihibibi itions. No refreff low the instructions you receive from such firff m, bank or yoxy votes. Our Annuall Meetiingg willill bbe pur lelyy hshments iit pr By Order of the Board of Directors, San Diego, Califorff nia April 10, 2024 pp Darin Lippol Chief Legal Offiff cer and Corpor dtl rr ate Secretary Important Notice Regarding the Availability of Proxy Materials forff the Stockholders’ Meeting to be Held on May 22, 2024 at 10:30 a.m. Local Time at 6027 Edgewood Bend Court, San Diego, California 92130. The Proxy Statement and Annual Report to stockholders are available at p . Please have the control number on your proxy card available. y www.proxyvote.com A copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K forff the fisff cal year ended December 31, 2023 is available without charge upon written request to the Company’s Corporate Secretary at 12780 El Camino Real, San Diego, California 92130. TABLE OF CONTENTS Our Compensation Practices Role of the Compensation Committee Compensation Philosophy Overall Compensation Determination Process Compensation Consultant Competitive Assessment of Compensation—Peer Group and Market Data Components of Executive Compensation 2023 Named Executive Officer Compensation Decisions Officer Equity Ownership Guidelines Equity Trading Policies and Procedures Compensation Recoupment Policy Tax and Accounting Considerations Risk Analysis of Our Compensation Program Executive Compensation and Other Information Summary Compensation Table Grants of Plan-Based Awards During 2023 Agreements with Named Executive Officers Outstanding Equity Awards at Fiscal Year-End Option Exercises and Stock Vested During the Year Potential Payments upon Termination or Change-in-Control CEO Pay Ratio Item 402(v) Pay Versus Performance Directors Compensation Summary Non-Employee Director Compensation Philosophy Non-Employee Director Compensation for 2023 Director Compensation Table Non-Employee Director Compensation for 2024 Non-Employee Director Equity Ownership Guidelines Additional Information Related Person Transactions Other Matters Additional Information Special Note Regarding Forward-Looking Statements Appendix A - 2020 Equity Incentive Plan 44 44 45 45 46 47 47 50 54 55 55 56 56 57 59 60 60 64 65 69 69 70 71 71 71 71 71 72 73 Proxy Summary About the Annual Meeting Security Ownership of Certain Beneficial Owners and Management Our Board of Directors General Director Biographies of Class I Directors Nominated for Reelection at the 2024 Annual Meeting of Stockholders Director Biographies of Class II and Class III Directors not Nominated for Reelection at the 2024 Annual Meeting of Stockholders 1 2 5 7 7 7 8 The Board of Directors and Corporate Governance Matters 10 10 10 11 12 12 12 12 13 13 14 14 15 15 15 15 16 16 General Corporate Governance Best Practices Board of Directors Overview Board Leadership Structure Board Independence Classified Board Structure Overboarding Policy Board and Committee Meetings During 2023 Information About Board Committees Compensation Committee Interlocks and Insider Participation Director Nomination Process Board Diversity Matrix Board Self Assessment Board Education Identification and Evaluation of Nominees for Director Proxy Access Process for Stockholder Communications with the Board of Directors The Board's Role in Risk Oversight Corporate Responsibility and Sustainability Risk Assessment Concerning Compensation Practices and Policies Role of Board in Succession Planning Policy Regarding Board Member Attendance at the Company's Annual Meeting Report of the Audit Committee Principal Accountant Fees and Services Compensation Committee Report Proposal One: Election of Directors Proposal Two: Advisory Vote on Compensation Paid to the Company's Named Executive Officers Proposal Three: Approval of an Amendment to the 2020 Equity Incentive Plan Equity Compensation Plans Proposal Four: Ratification of Appointment of Independent Registered Public Accounting Firm Executive Officers Compensation Discussion and Analysis Executive Summary Committee Actions in Connection with Say-on-Pay Vote Pay for Performance / At-Risk Pay 16 17 17 18 18 19 20 21 22 25 37 39 41 42 43 [THIS PAGE INTENTIONALLY LEFT BLANK] This summary highlights inforff mation that is described in more detail elsewhere in this proxy statement. This summary does ly before not contain all the inforff mation you should consider before you vote, and you should read the entire proxy statement carefulff voting. PROXY SUMMARY General Inforff mation Annual Meeting of Stockholders Meeting Date: May 22, 2024 Time: Place: 10:30 a.m. Local Time 6027 Edgewood Bend Court, San Diego, California 92130 Record Date: March 25, 2024 How to Vote Your vote is very important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote in the following ways: one: Call 1-800-690-6903 from any touch-tone telephone to transmit your voting instrucr Telephee Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. Easy-to-follow voice prompts allow you to submu properly recorded. it your proxy and confirff m your instructions have been tions up until 11:59 P.M. Internet: Visit www.proxyvote.com to transmit your voting instrucr the Internet up uu that your instructions have been properly recorded. ntil 11:59 P.M. Eastern Time the day beforff e the meeting date. As with telephone voting, you can confirff m tions and forff electronic delivery orr f inforff mation via Mail: Mark, sign and date your proxy card and returt n it in the postage-paid envelope we have provided or returt n it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Matters to be Voted On Matter Board of Directors Recommendation Page Reference for More Information Proposal One: Elect Class I Directors FOR all nominees Proposal Two: Advisory vote on executive compensation Proposal Three: Approve an amendment to the Company’s 2020 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder by 3,635,000 shares Proposal Four: Ratify Eff public accounting firff m rnst & Young LLP as independent registered FOR FOR FOR 22 24 25 38 1 6027 Edgewood Bend Court San Diego, California 92130 PROXY STATEMENT This Proxy is solicited on behalf of Neurocrine Biosciences, Inc., a Delaware corpor r ation (the “Company” or “Neurocrine use at its 2024 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 22, 2024 beginning at Biosciences”), forff 10:30 a.m., local time, or at any continuations, postponements or adjournments thereof forff statement and the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s corporate offices, located at 6027 Edgewood Bend Court, San Diego, Califorff nia 92130. The Company’s phone number is (858) 617-7600. th in this proxy the purpos es set forff r Why dh iddd I receive these proxyoo materials?ll ABOUT THE ANNUAL MEETING The Company has sent you these proxy materials because the Board of Directors of the Company is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. We intend to mail these proxy materials on or about a April 10, 2024 to all stockholders of record entitled to vote at the Annual Meeting. What is the purpos rr e of to hett Annual MeetMM intt g? At the Annual Meeting, stockholders will act upon u the matters outlined in these proxy materials, including the election of the four nominees forff Class I directors named herein, an advisory vote on the compensation paid to the Company’s named executive offiff cers, approval of an amendment increasing the number of shares of common stock reserved for issuance under the Company’s 2020 Equity Incentive Plan by 3,635,000 shares; and ratificff ation of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firff m forff the fisff cal year ending December 31, 2024. Who can attett nd the Annual MeetMM intt g? All stockholders of record at the close of business on March 25, 2024 (the “Record Date”), or their duly appoi a nted proxies, may attend the Annual Meeting. If you attend, please note that you may be asked to present valid picturt e identificff ation, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. Please also note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement refleff cting your stock ownership as of the record date and check in at the registration desk at the Annual Meeting. Who is eii ntitltt edll to vote at the Annual MeetMM intt g? Stockholders of record at the close of business on the Record Date are entitled to receive notice of and to participate in the Annual Meeting. At the close of business on the Record Date, 100,580,497 shares of the Company’s common stock, $0.001 par value per share, were issued and outstanding. If you were a stockholder of record on that date, you will be entitled to vote all of the shares that you held on that date at the Annual Meeting, or any continuations, postponements or adjournments of the Annual Meeting. Each outstanding share of the Company’s common stock will be entitled to one vote on each proposal considered at the Annual Meeting. 2 What constitutes a quorum? WhaWW t are broker non-votestt ? WhaWW t are advisory vr otestt ? The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the aggregate voting power of the common stock outstanding on the Record Date will constitute a quorumr Meeting. As of the Record Date, 100,580,497 shares of common stock, representing the same number of votes, were outstanding. Thus, the presence of the holders of common stock representing at least 50,290,249 shares will be required to establish a quorumrr presence of a quorumr will be determined by the Inspector of Elections (the “Inspector”). , permitting the Company to conduct its business at the Annual . The Proxies received but marked as abstentions, as well as “broker non-votes,” will be included in the calculation of the number of shares considered to be present at the Annual Meeting. Broker non-votes occur when a holder of shares in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange (the “NYSE”), “non-routine” matters are matters that may substantively affect the rights or privileges of stockholders, such as mergers, stockholder proposals and elections of directors, even if not contested. In addition, as required by Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, advisory votes on executive compensation are non-routine matters for which brokers do not have discretionary authority to vote shares held by account holders. Only ratificff ation of our independent registered public accounting firff m under Proposal Four is considered a routine matter, meaning that if you do not return voting instrucrr tions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposal Four. The vote on Proposal Two is advisory. The outcome of this vote will not be binding on the Company or the Board of Directors and will not create or imply any change to the fidff ucd iary duties of the Board of Directors. However, the Company and the Board of Directors will consider the results of the advisory vote on Proposal Two in making futff urt e decisions about compensation of the Company’s named executive offiff cers. How do Idd vote my shares in person at thett Annual MeeMM tingii ? You may vote your shares held in your name as the stockholder of record in person at the Annual Meeting. You may vote your tee, shares held beneficially in street name in person at the Annual Meeting only if you obtain a legal proxy from the broker, bank, trusr or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submu decide not to attend the Annual Meeting. tions as described below so that your vote will be counted if you later it your proxy or voting instrucr How can I vote mtt y sm hares withott ut attett ndindd g thett Annual MeeMM tingii ? Whether you hold shares directly as the stockholder of record or beneficff ially in street name, you are encouraged to direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you are encouraged to vote by proxy. tions provided on the enclosed proxy card. If you You can vote by proxy over the Internet, by mail or by telephone pursuant to instrucr hold shares beneficff following the voting instrucrr or electronically is 11:59 p.m., Eastern Time, on May 21, 2024. ially in street name, you may also vote by proxy over the Internet or you can also vote by telephone or mail by tion forff m provided to you by your broker, bank, trusrr tee, or nominee. The deadline forff voting by telephone Who will bear the cost of so olicll itintt g votestt for thett Annual MeeMM tingii ? To the extent such costs are incurred, the cost of solicitation of proxies will be borne by the Company. The Company will reimburse expenses incurred by brokerage firms and other persons representing beneficff material to beneficial owners. To assist in soliciting proxies (votes), the Company has retained the profesff Alliance Advisors, LLC, at an appr offiff cers and regular employees, without additional compensation, personally, by telephone or by other appr oximate cost of $30,000. Proxies also may be solicited by certain of the Company’s directors, ial owners of shares in forff warding solicitation sional proxy solicitation firm opriate means. a a Can I change my vote afteff r I return my pm roxyoo ? r Yes. Even afteff r you have submu itted your proxy, you may change your vote at any time before the proxy is exercised by filff ing ate Secretary of the Company either a notice of revocation or a duly executed proxy bearing a later date. Your proxy with the Corpor will also be revoked if you attend the Annual Meeting and vote in person; however, we encourage you to vote your shares via the Internet, telephone or mail, and instructions regarding all three methods of voting are provided on the proxy card. If you hold shares through an account with a brokerage firm, bank or other nominee, please folff low the instructions you receive from such firff m, bank or other nominee to vote your shares. What does it mii ean if Ii receive more thatt n one set of po roxyoo materials?ll If you receive more than one set of proxy materials, then your shares of common stock are registered in more than one name or rent accounts. Please complete a proxy for each separate set of proxy materials that you receive to ensure that all are registered in diffeff of your shares are voted. 3 What are thett Board of Do irectors’ recommendatdd iott ns? Unless you give other instrucr tions on your proxy, the persons named as proxy holders on the proxy will vote in accordance with the recommendations of the Board of Directors. The Board of Directors’ recommendation is set forth together with the description of each item in this Proxy Statement. In summary,rr the Board of Directors unanimously recommends a vote: • • • • election of the four nominees for Class I Directors named herein (see Proposal One); an advisory vote on the compensation paid to the Company’s named executive officers (see Proposal Two); approval of an amendment to the Company’s 2020 Equity Incentive Plan to increase the number of shares of common forff forff forff stock reserved forff forff firm for the fiscal year ending December 31, 2024 (see Proposal Four). ratificff ation of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting issuance thereunder by 3,635,000 shares (see Proposal Three) and; With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion. What vote is required to approve each iteii m? Election of Directors. The affirmative vote of a plurality of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the election of directors is required forff the election of directors. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purpos . es of determining whether there is a quorumr r Other Items. For each other item, the affirmative vote of the holders of a majority of the shares represented in person or by approval. A properly executed proxy marked “ABSTAIN” with respect to es of determining the number of shares represented in person proxy and entitled to vote on the item will be required forff any such matter will not be voted, although it will be counted for purpos or by proxy at the Annual Meeting. Accordingly, an abstention will have the effect of a negative vote forff each item. If you hold your shares in “street name” through a broker or other nominee, your broker or nominee will not be permitted to exercise voting discretion with respect to each of the matters to be acted upon, other than Proposal Four. Thus, if you do not give your broker or nominee specific instrucrr than Proposal Four. Shares represented by such “broker non-votes” will, however, be counted in determining whether there is a . quorumr tions, your shares will not be voted on and will not be counted for any other matter to be acted upon, other r Who counts t tt hett votes? Votes cast by proxy or in person at the Annual Meeting will be tabulated by the Inspector. How can I finff d out the resultsll of the votintt g at thett Annual MeeMM ting? Preliminary vrr oting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file with the SEC within four business days after the Annual Meeting. If final voting results are not availabla e to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary r the finff al results. esults and, within four business days after the finff al results are known to us, file an amended Form 8-K to publish rr What proxy materials all re availaii ble oll n thett internet? The Proxy Statement and annual report to stockholders are available under the “Investors” tab oa n our corporate website at www.neurocrine.com, and at www.proxyvote.com. However, you can only vote your shares at www.proxyvote.com. Please have the control number on your proxy card availabla e. 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The folff lowing tabla e sets forff th certain inforff mation regarding the ownership of our common stock as of March 25, 2024 by (i) each director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) our executive officers and directors as a group; and (iv) all those known by us to be beneficff otherwise indicated in the foot stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 100,580,497 shares of common stock outstanding on March 25, 2024, adjud sted as required by rules promulgated by the SEC. The tabla e is based upon information supplied by our executive officers, directors and principal stockholders and a review of Schedules 13D and 13G, if any, filed with the SEC. Unless otherwise indicated below, the address forff each beneficial owner listed is c/o Neurocrine Biosciences, Inc., 12780 El Camino Real, San Diego, CA 92130. notes to this tabla e and subju ect to community property laws where applicable, we believe that each of the ial owners of more than fivff e percent of our common stock. Unless ff Name and Address of Beneficff Stockholders Owning Greater than 5%: ial Owner Number of Shares of Common Stock Percent of Common Stock BlackRock, Inc. (1) .................................................................................................................................. The Vanguard Group (2) .......................................................................................................................... 13,647,679 9,710,328 Directors and Named Executive Offiff cers: Kevin C. Gorman, Ph.D. (3)..................................................................................................................... Matthew C. Abernethy (4) ....................................................................................................................... Kyle W. Gano, Ph.D. (5).......................................................................................................................... Jude Onyia, Ph.D. (6) ............................................................................................................................... Eiry W. Roberts, M.D. (7)........................................................................................................................ William H. Rastetter, Ph.D. (8)................................................................................................................ Gary A. Lyons (9) .................................................................................................................................... Johanna Mercier (10) ............................................................................................................................... George J. Morrow (11)............................................................................................................................. Leslie V. Norwalk (12)............................................................................................................................. Christine A. Poon (13) ............................................................................................................................. Richard F. Pops (14)................................................................................................................................. Shalini Sharp (15)..................................................................................................................................... Stephen A. Sherwin, M.D. (16)................................................................................................................ All current executive officers and directors as a group (19 persons) (17) ............................................... 1,575,454 321,147 577,993 114,078 209,162 178,895 225,412 42,127 81,274 37,965 4,549 110,786 39,947 128,579 4,496,606 13.6 % 9.7 % 1.6 % * * * * * * * * * * * * * 4.3% * (1) (2) (3) (4) (5) (6) (7) (8) Represents beneficff ial ownership of less than one percent (1%) of the outstanding shares of the Company’s common stock as of March 25, 2024. Based on Amendment No. 12 to Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on January 23, 2024, reporting ownership as of December 31, 2023. According to such filinff g, BlackRock beneficially owns 13,647,679 shares of common stock and sole voting power as to 12,980,857 shares of common stock. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds froff m the sale of shares of the common stock held by BlackRock. No one person’s interest in the common stock held by BlackRock is more than five percent of the Company’s total outstanding common stock. The principal business address forff BlackRock Inc. is listed in such filinff g as 50 Hudson Yards, New York, NY 10001. Based on Amendment No. 8 to Scheduld e 13G filed by The Vanguard Group, Inc. (“Vanguard Group”) on February 1rr December 29, 2023. According to such filinff common stock. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds froff m the sale of shares of the common stock held by Vanguard Group. No one other person’s interest in the common stock held by Vanguard Group is more than five percent of the Company’s total outstanding common stock. The principal business address forff PA 19355. g, Vanguard Group beneficially owns 9,710,328 shares of common stock and sole voting power as to 0 shares of the Vanguard Group is listed in such filinff 3, 2024, reporting ownership as of g as 100 Vanguard Blvd., Malvern, Consists of (a) 514,596 shares of common stock, and (b) 1,060,858 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. All of the outstanding shares of common stock are held by The Gorman & Blais Family Trusrr investment power. t, of which Dr. Gorman has voting and Consists of (a) 31,528 shares of common stock and (b) 289,619 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. Consists of (a) 135,392 shares of common stock and (b) 442,601 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. Consists of (a) 13,354 shares of common stock and (b) 100,724 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. Consists of (a) 23,716 shares of common stock and (b) 185,446 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. 22,531 of the outstanding shares of common stock are held by The Stephen Taylor and Eiry W. Roberts Joint Trusrr t Agreement, of which Dr. Eiry hrr as voting and investment power. Consists of (a) 51,741 shares of common stock and (b) 127,154 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. All of the outstanding shares of common stock are held by the Rastetter Family Trusrr has voting and investment power. t established September 2, 2010, of which Dr. Rastetter 5 (9) (10) (11) (12) (13) (14) (15) (16) (17) Consists of (a) 116,947 shares of common stock, (b) 106,365 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (c) 2,100 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. 110,964 of the outstanding shares of common stock are held by the Gary A. Lyons Revocable Living Trusrr investment power. t U/A 6/8/12, of which Mr. Lyons has voting and Consists of (a) 40,027 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (b) 2,100 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of (a) 77,075 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (b) 4,199 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of (a) 35,865 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (b) 2,100 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of 4,549 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024. Consists of (a) 29,512 shares of common stock, (b) 77,075 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (c) 4,199 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of (a) 37,847 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (b) 2,100 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of (a) 22,305 shares of common stock, (b) 102,075 shares of common stock issuable pursuant to stock options exercisabla e within 60 days of March 25, 2024, and (c) 4,199 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. Consists of (a) 1,127,090 shares of common stock held by our current directors and executive officers, (b) 3,425,269 shares of common stock issuable pursuant to stock options held by our current directors and executive officers that are exercisabla e within 60 days of March 25, 2024, and (c) 20,997 shares of common stock issuable pursuant to the vesting of restricted stock units within 60 days of March 25, 2024. 6 General OUR BOARD OF DIRECTORS The Company’s bylaws, as amended and restated, provide that the Board of Directors is comprised of ten directors. The r Company’s Certificff ate of Incorpor ation provides that the Board of Directors is divided into three classes. There are currently four directors in Class I (William H. Rastetter, Ph.D., George J. Morrow, Leslie V. Norwalk, and Christine A. Poon), three directors in Class II (Richard F. Pops, Shalini Sharp, and Stephen A. Sherwin, M.D.), and three directors in Class III (Kevin C. Gorman, Ph.D., Gary A. Lyons, and Johanna Mercier). With the exception of Kevin C. Gorman, Ph.D., who is the Chief Executive Officff er of the Company, all current members of the Board of Directors meet the definition of “independent director” under the Nasdaq Stock Market qualificff ation standards. ff The directors in Class I hold office until the 2024 Annual Meeting of Stockholders, the directors in Class II hold office until the 2025 Annual Meeting of Stockholders, and the directors in Class III hold office until the 2026 Annual Meeting of Stockholders (or, in each case, until their earlier resignation, removal froff m officff e, or death). After each such election, the directors in each such case will then serve in succeeding terms of three years and until a successor is duld y elected and qualifieff d. Offiff cers of the Company serve at the discretion of the Board of Directors. There are no family relationships among the Company’s directors and executive offiff cers. The term of officff e forff directors William H. Rastetter, Ph.D., George J. Morrow, Leslie V. Norwalk, and Christine A. Poon will expire at the 2024 Annual Meeting of Stockholders. Director Biographies of Class I Directors Nominated for Reelection at the 2024 Annual Meeting of Stockholders Williaii m H. RHH astettertt , Pr h.PP D. has served on the Board of Directors since Februar ry 2010 and as Chairman of the Board of a atory arr ial intelligence and labor utomation to design and develop medicinal chemicals initially for oncology indications. Directors since May 2011. Currently, he serves as the Chairman of the Board of Directors forff Fate Therapeutics, a publicly traded company focff used on cellular therapia es, as well as forff Daré Bioscience, Inc. (previously known as Cerulrr ean Pharma Inc.), a publicly traded company focff used on women’s healthcare. Dr. Rastetter also serves on the Board of Directors forff Regulus Therapeutics Inc., a publicly traded company focff used on RNA-based therapea utics, and on the Board of Directors of Iambic, Inc., a private company using artificff Dr. Rastetter previously served on the board of Grail, Inc., a private company developing deep sequencing appr oaches for disease diagnosis, with an initial focus on the early diagnosis of cancer. Dr. Rastetter serves as an advisor to Illumina Ventures, and is the Chairman of San Diego Squared, a nonprofitff Dr. Rastetter was a partner in the venture capital firff m, Venrock, from 2006 through early 2013 and was Executive Chairman of Biogen Idec, Inc. from 2003 to 2005. Earlier, he served as Chairman and Chief Executive Officer of IDEC Pharmaceuticals Corpor its merger with Biogen Inc. in 2003; he joined IDEC Corporation as its Chief Executive Officer at the company’s foundi From 1984 to 1986, Dr. Rastetter was Director of Corporate Ventures at Genentech, where from 1982 to 1984 he held scientificff positions. He held a series of faculty positions including Associate Professor at the Massachusetts Institute of Technology (“MIT”) from 1975 to 1982. Dr. Rastetter has an S.B. degree in Chemistry f roff m MIT and received M.A. and doctorate degrees in Chemistryrr from Harvard University. focused on STEM awareness and education forff nts in underserved communities. ng in 1986. ration until t stude a ff rr The continued service of Dr. Rastetter on the Company’s Board of Directors is based on Dr. Rastetter’s scientificff and technical expertise combined with his business experience in leading rapidly growing companies in the life sff continued growth is dependent on scientificff strategic and technical insight into the risks and opportunities associated with our business. In addition, Dr. Rastetter’s board and executive leadership experience at other life sff Directors as a whole. ciences industry.rr The Company’s and technical advances, and the Board of Directors believes that Dr. Rastetter offerff s both ciences companies provides valuabla e strategic and governance insight to the Board of Georger J. Morrow has served on the Board of Directors since October 2015. Mr. Morrow served as Executive Vice President, ff tions for Amgen’s broad spectrum of products in more than 50 countries worldwide, and the introduction of multiple Global Commercial Operations at Amgen Inc., a global biotechnology company, from 2003 until his retirement in 2011. He joined Amgen in 2001 as Executive Vice President, Worldwide Sales and Marketing. His responsibilities included oversight of all commercial func new products into global markets. From 1992 to 2001, Mr. Morrow held executive management and commercial positions within several subsidiaries of Glaxo Wellcome, including Group Vu (U.K.), and most recently as President and Chief Executive Officff er of Glaxo Wellcome, Inc. (U.S.). Mr. Morrow currently serves on the Board of Directors of Align Technology, Inc., a publicly traded global medical device company. He has previously served on the boards of Vical, Inc., Otonomy, Inc., Glaxo Wellcome, Inc., Human Genome Sciences, Inc., Safeway, Inc., National Commerce Bank, the John Hopkins School of Publu ic Health, and the Duke University Fuqua School of Business. Mr. Morrow holds a B.S. in Chemistryrr from Southampton College, Long Island University, an M.S. in Biochemistry f University. ice President for Commercial Operations (U.S.), Managing Director roff m Bryn Mawr College and an M.B.A. fromff Duke rr The continued service of Mr. Morrow on the Company’s Board of Directors is based on his extensive commercialization experience at Amgen, his broad executive experience at GlaxoSmithKline Inc., and his years of experience in corporate governance as a board member of several publicly traded companies. Mr. Morrow’s board experience, leadership experience and commercialization expertise prove valuable strategic insights to the Board of Directors. 7 Lesliell V. Norwalkll has served on the Board of Directors since September 2019. Since 2007, Ms. Norwalk has served as Strategic Counsel to healthcare companies at Epstein Becker Green, EBG Advisors, and National Health Advisors. Ms. Norwalk advises several private equity firms on healthcare matters. She serves as a director of Globus Medical, Inc., Modivcare Inc., and Arvinas, Inc., all publicly traded companies, as well as several privately held healthcare companies. Ms. Norwalk previously served on the Board of Directors of Centene, Endologix, Magellan Health, NuVasive, Inc., prior to its acquisition by Globus Medical, and Press Ganey. Ms. Norwalk began her career in the public sector in The White House Office of Presidential Personnel under the first Bush administration, following which, she practiced law at the Washington, D.C. offiff ce of Epstein Becker Green, P.C. From 2001 to 2007, she served in several roles at the Centers forff Medicare & Medicaid Services (CMS) under the George W. Bush administration, including serving as Deputy Administrator, and Counselor and Policy Advisor, before assuming the role of Acting Administrator. Ms. Norwalk holds a J.D. froff m the George Mason University School of Law and a B.A. in Economics and International Relations from Wellesley College. The continued service of Ms. Norwalk to the Company’s Board of Directors is based on her deep knowledge of, aff nd experience with, the healthcare industry arr knowledge and experience provides valuabla e guidance and insight to the Board of Directors. nd government regulations, as well as corpor r ate governance and risk management. Such Christii intt e A. PoonPP has served on the Board of Directors since July 2023. Ms. Poon iis hthe forff mer Execu itive-iin-Resididence iin hthe iFi hsher Collllegge of Bu isiness at hThe Ohihio State Uniiver isi yty, whhere hshe ir in Busiiness froff m 2009 to 2014. hShe servedd as Viice Chhaiirman a dnd Me bmber of hthe Department of Managgement andd Human Resources at hthe Max M. serv ded as Dean andd thhe Johhn W. Be yrry, Sr. hCh iai Boardd of Diirectors of J hohnson & J hohnson from 2005 untilil hher retiiremen it in Mar hch 2009. Ms. Poon jojoiin ded Johhnson & J hohnson iin 2000 as Companyy Group hCh iai Wo lrlddwidide Chhaiir, Phharmaceutiic lals Group, iin 2001, andd servedd as Worldld iwidde hCh iair, Medidi icines a dnd Nutri iitionalls, froff m 2003 to 2005. Priior to jo j ioi ini gng Johhnson & J hohnson, hshe spent 15 yyears at B irist lol-Myyers Sq iuibbbb iin va irious managgement posi iitions. Ms. Poon was allso a Viice Chhaiir of hthe Super iviso yry Boardd of R yoyall Phihililips Ellectro inics andd a me bmber of hthe Boa drd of iDirectors of D iecibbell Thherapea utiics, Inc. hShe currentlyly serves on hthe Boa drd of serves as hth le l dead iinddepe dndent didirector, a dnd hThe Shherwiin-Wililliliams Compa yny. Ms. Poon was nam ded Woman of thhe Year byby hthe He lal hthcare Busiinesswomen’s Asso iciatiio in in 2004 andd nam ded Bu isiness Le dader of hthe Futurt ir in thhe hPharmaceu itic lals Group. hSh be became a membber of J hohnson & J hohnson’s Execu itive Com imittee a dnd iDirectors of Pruddentiiall Fiinan ici lal, Inc., Reggeneron Phharmaceu itic lals, Inc., whhere hshe currentlyly lWalll Street Journal il in 2005. be byy CNB /C/ The continued service of Ms. Poon on the Company’s Board of Directors is based on her expertise in U.S. and international business operations, including extensive experience in capia tal allocation, and her strategic and operational knowledge of the pharmaceutical industry.rr Director Biographies of Class II and Class III Directors not Nominated forff Reelection at the 2024 Annual Meeting of Stockholders . GCC orG marr n, Ph.D. has been employed with the Company since 1993. He was appoi r having served as Executive Vice President and Chief Operating Officer since September 2006 and prior Kevin Cii Offiff cer in January 2008 afteff to that, as Executive Vice President and Chief Business Offiff cer and Senior Vice President of Business Development. He currently serves as Chief Executive Offiff cer and has served on the Board of Directors since January 2008. Dr. Gorman currently serves as a director of Xencor, Inc. a publicly traded clinical-stage biopharmaceutical company. Additionally, he serves on the Board of Directors of the Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufact urt ers of America (PhRMA). From 1990 until 1993, Dr. Gorman was a principal of Avalon Medical Partners, L.P. where he was responsible for the early stage founding of the company and several other biotechnology companies such as Onyx Pharmaceuticals, Inc., Metra Biosystems, Inc., Idund from the University of California, Los Angeles and did furff Pharmaceuticals, Inc. and ARIAD Pharmaceuticals, Inc. Dr. Gorman received his Ph.D. in immunology and M.B.A. in Finance ther post-doctoral training at The Rockefelff nted President and Chief Executive ler University. a ff The continued service of Dr. Gorman on the Company’s Board of Directors is based on the fact that as Chief Executive Offiff cer of the Company, Dr. Gorman has extensive knowledge of our commercial products and our product candidates, our employees and the industry i commitment to the Company. n which we operate. Dr. Gorman has also demonstrated exceptional leadership skills, sound business judgment and a strong rr ff Gary A. Lyons has served on the Board of Directors since joining Neurocrine Biosciences in Februar ry 1993. Mr. Lyons served as the President and Chief Executive Officer of the Company from February 1rr 993 through January 2008. Prior to joining the Company, Mr. Lyons held a number of senior management positions at Genentech, Inc., including Vice President of Business Development and Vice President of Sales. Mr. Lyons is currently the Chairman of the Board of Directors of Travere Therapeutics, a publicly traded ultra-orpha for the treatment of inflammatory/autoimmune and metabolic diseases. traded biotechnology company focff used on developing drugs Mr. Lyons previously served on the Board of Directors of Fresh Tracks Therapea utics, Inc. (formerly Brickell Biotech, Inc.), Eledon Pharmaceuticals, Inc. (formerly Novus Therapeutics), and Facet Biotech Corporation. Mr. Lyons holds a B.S. in Marine Biology from the University of New Hampshire and an M.B.A. froff m Northwestern University’s J.L. Kellogg Graduad te School of Management. n disease commercial-stage company, and serves as a director of Rigel Pharmaceuticals, Inc., a publicly r r The continued service of Mr. Lyons on the Company’s Board of Directors is based on Mr. Lyons’ extensive business development and corporate governance experience and, as the Company’s forff mer Chief Executive Officer, his in-depth understanding of the Company’s strategic plans, business operations, management and culture. With this history wrr ith the Company and management, Mr. Lyons brings a unique perspective and point of view to the Company’s Board of Directors. 8 Johanna Mercier has served on the Board of Directors since April 2021. Ms. Mercier is the Chief Commercial Officer of Gilead Sciences, with responsibility for the global commercialization of Gilead’s medicines across virology, liver and oncology franchises. Ms. Mercier is actively engaged with the policy and advocacy community to ensure affoff company’s medicines in both the developed and resource-limited countries. She is a staunch advocate forff is the executive sponsor for the Women@Gilead employee resource group. Ms. Mercier joined Gilead in 2019 afteff r 25 years at Bristol Myers Squibb, where she served in a number of executive leadership positions, gaining broad experience across geographies and in all aspects of the commercial business. Ms. Mercier holds a B.S. in Biology from the University of Montreal and an M.B.A. fromff Concordia University. She currently serves on the Board of Directors of Arcus Biosciences, Inc., a publicly traded company, and the University of Southern California’s Leonard D. Schaeffeff r Center forff Health Policy and Economics. Ms. Mercier is also a member of World 50. diversity and inclusion and rdability and access to the The continued service of Ms. Mercier on the Company’s Board of Directors is based on Ms. Mercier’s extensive commercialization experience at both Gilead Sciences and Bristol Myers Squibb, as well as her executive leadership experience across geographies and in all aspects of the commercial business. Richard F. PFF opsPP has served on the Board of Directors since April 1998. Mr. Pops is the Chairman and Chief Executive Offiff cer of Alkermes Publu ic Limited Company. He joined Alkermes as Chief Executive Officer in Februar leadership, Alkermes has grown froff m a privately held research-based company with 25 employees to an international, publicly traded pharmaceutical company with more than 2,000 employees. In addition to Alkermes, he currently serves on the Board of Directors of the Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufact urt ers of America (PhRMA). Previously, Mr. Pops served on the Board of Directors of Epizyme, Inc., a biotechnology company focff used on epigenetics, and Acceleron Pharma, Inc., a biopharmaceutical company. He holds a B.A. in Economics froff m Stanforff d University. ry 1991. Under his ff The continued service of Mr. Pops to the Company’s Board of Directors is based on his leadership experience and track record for growing companies, his strength in business strategy and his finff ancial acumen and capital markets experience. In addition, Mr. Pops is recognized for his service to the biopharmaceutical industry arr Organization and the Pharmaceutical Research and Manufact operations and strategy is a significant contribution to the Board of Directors. urt ers of America. His breadth and range of industry err s a member of the Boards of the Biotechnology Innovation xperience from ff Shalini ShaSS rp has served on the Board of Directors since Februarr ry 2020. She also serves on the Board of Directors of Organon & Co., a publicly traded healthcare company focused on improving the health of women throughout their lives. Previously, erved on the Board of Directors of Mirati Therapea utics, prior to its acquisition by Bristol-Myers Squibb Company, Sutro Ms. Sharp srr prior to its merger with Nuvation Bio, Precision BioSciences, Inc., TB Alliance, Array Biopharma, Inc., Panacea Acquisition Corp., Biopharma, prior to its acquisition by Pfizer, and Agenus Inc. Ms. Sharp hr Executive Vice President at Ultragenyx, a biopharmaceutical company committed to bringing to patients novel products for the treatment of serious rare and ultra-rare genetic diseases, and Chief Financial Offiff cer at Agenus Inc., a clinical-stage immuno-oncology company focff used on the discovery and development of therapia es that engage the body’s immune system to fight cancer. Ms. Sharpr previously served in strategic planning and as Chief of Staff tff o the Chairman of the Board of Directors of Elan Pharmaceuticals, and as a management consultant at McKinsey & Company as well as an investment banker at Goldman Sachs. She holds a B.A. and an M.B.A. from Harvard University. as held the positions of Chief Financial Offiff cer and rr The continued service of Ms. Sharp t r o the Company’s Board of Directors is based on her extensive experience as a Chief Financial Officer of a public company, her finff ancial acumen, and her management and leadership skills. Steptt hen A. SheSS rwin, M.DMM . has served on the Board of Directors since April 1999. Dr. Sherwin currently divides his time a ciences industry arr Previously, Dr. Sherwin was Chairman and Chief Executive Officer of Cell Genesys, a company, from 1990 until the company’s merger in 2009 with BioSante Pharmaceuticals (now ANI nd patient care and teaching in his specialty of medical oncology. He is a Clinical sor of Medicine at the University of Califorff nia, San Francisco, and a volunteer Attending Physician in Hematology-Oncology at between advisory work in the life sff Profesff the Zuckerberg San Francisco General Hospital. Dr. Sherwin currently serves on the Board of Directors of Biogen Inc., a publicly traded company. He is an Advisory Partner with Third Rock Ventures and a member of the Scientificff Steering Committee of the Parker Institute for Cancer Immunotherapy. cancer immunotherapya Pharmaceuticals). He was also a Co-founder and Chairman of Abgenix, an antibody company which was acquired by Amgen in 2006, and co-founder and Chairman of Ceregene, a gene therapy company which was acquired by Sangamo Biosciences in 2013. From 1983 to 1990, Dr. Sherwin held various positions in clinical research at Genentech, most recently that of Vice President. Prior to 1983, he was on the staff off Biotech, BioPlus Acquisition Corporation, Neon Therapeutics, and Rigel Pharmaceuticals, Inc., as well as the Biotechnology Innovation Organization (BIO) from 2001 to 2014 and as its Chairman from 2009 to 2011, and was a member of the President’s Council of Advisors in Science and Technology (PCAST) Working Group on Drugr Development froff m 2011 to 2013. Dr. Sherwin holds a B.A. in biology, summa cum laude, froff m Yale University and an M.D. froff m Harvard Medical School, is board-certified in internal medicine and medical oncology, and is a Fellow of the American College of Physicians. f the National Cancer Institute. In addition, Dr. Sherwin previously served on the Board of Directors of Aduro The continued service of Dr. Sherwin for election to the Company’s Board of Directors is based on his experience and credentials in the biotechnology industry arr founder of Abgenix, Inc., the Chairman and co-founder of Ceregene, Inc., and his positions at Genentech, Inc. and the National Cancer Institute. Dr. Sherwin is also currently Chairman Emeritus of the Biotechnology Innovation Organization (BIO). In addition to his biotechnology credentials, Dr. Sherwin’s medical expertise in internal medicine and medical oncology provides a unique contribution to the Board of Directors. s the former Chief Executive Officer of Cell Genesys, Inc., the former Chairman and co- 9 THE BOARD OF DIRECTORS AND CORPORATRR E GOVERNANCE MATTERS General We have long believed that good corporate governance is i ii mportant to ensure that Neurocrine Biosciences is managed forff of its stt long-term benefite has adopted Corporate Governance Guidelines which desdd cribe our corporate governance practices and address corpor governance issuii www.neurocrine.com. es such as Board composm ition, responsibilities and director qualifications. TheTT se guidelines are available at rs. We periodically review our corporate governance policies and practices. TheTT Board of Do kk tockhol ate del r the irectorsrr Corporate Governance Best Practices We are committed to maintaining strong corporate governance practices that promote the long-term interests of the Company and our stockholders and help strengthen the oversight functions of our management and Board of Directors. Additional informff ation about our corporate governance policies and practices, including our committee charters, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Comprehensive Compliance Program, and Incentive Compensation Recoupment Policy, can be found ate social responsibility and on our website, www.neurocrine.com. Additionally, forff more information on our commitment to corpor stewardship, including environmental sustainability, diversity and inclusion and other key initiatives, please see our 2024 Corporate Sustainabia lity Report, which is posted on our website referenced above under the “Sustainability” section of the website. We believe these efforff information posted on or accessible through our website is not incorporated into this Proxy Statement. ts reflect the best interests of our patients, our stockholders and the communities in which we operate and serve. The r We believe that our strong corporate governance practices empower our independent directors to exercise effective oversight of our business generally and our management team specifically, including the performance of our Chief Executive Officff er. The folff lowing tabla e highlights some of our key corpor r ate governance practices: ☒ Director resignation policy forff t majoa rity suppor u directors receiving less than ☒ Stockholder abia lity to call special meetings ☒ Director overboarding policy ☒ Stockholder action by written consent Corporate Governance Best Practices ☒ Diverse Board and policies emphasizing diversity in all new director searches ☒ No poison pill in forff ce ☒ Separate Chairman and CEO ☒ Clawback policy ☒ All directors attended at least 75% of Board and relevant committee meetings ☒ Code of Business Conduct and Ethics ☒ New director orientation and continuing director educd ation ☒ Executive sessions of independent directors held at every regular Board meeting ☒ Annual board and committee assessment ☒ Active stockholder engagement ☒ Proxy access forff stockholders ☒ Robust commitment to corpor responsibility r ate, environmental and social 10 Board of Directors Overview As we continue to focus on discovering an developing life-ff changing treatments forff neuroendocrine, and neuropsychiatric disorders, we rely on our talented and experienced Board to provide leadership, guidance and oversight. Our Board is comprised of individuals with a strong background in executive leadership, capital management and allocation, scientificff of our directors’ backgrounds and experiences results in different perspectives, ideas, and viewpoints, which make our Board more effeff ctive in carrying out its dutd ies. We believe that our directors hold themselves to the highest standards of integrity and that they are committed to representing the long-term interests of our stockholders. research and drug development experience, and Company and industry krr patients with under-addressed neurological, nowledge. We believe that the diversity Our Directors exhibit an effeff ctive mix of skills, experience, diversity and perspectives. 90% 13.3 years 65.8 years 40% 20% of Board members are independent average Director tenure average Director age of Board members are female of Board members are underrepresented minorities The folff lowing matrix highlights the mix of key skills and experiences of our director nominees and continuing directors. This matrix is intended to depict notable areas of focff us for each director, and not having a mark does not mean that a particular director does not possess that skill or experience. Nominees have developed competencies in these skills through educd ation, direct experience and oversight responsibilities. Additional biographical information on each nominee is set out above. Experience, Expertise, or Attribute Industry Err xpertise Finance / Capia tal Management and Allocation Commercial Experience Scientificff Research & Drug Development Experience Governance / Public Company Board Investor Relations / Stockholder Engagement International Markets irs / Publu ic Government Affaff Policy Executive Leadership Experience Accounting / Financial Reporting Risk Oversight / Risk Management Human Capital Management IT / Cybersecurity Pricing and Market Access - U.S. Director Nominees Continuing Directors William Rastetter, Ph.D. George Morrow Leslie Norwalk Christine Poon Kevin Gorman, Ph.D. Gary Lyons Johanna Mercier Richard Pops Shalini Sharp Stephen Sherwin, M.D. (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) (cid:4) 11 Board Leadership Structure It is the Company’s policy to separate the roles of Chief Executive Officer and Chairman of the Board. This separation recognizes the independent roles of the Board of Directors, Chairman of the Board and Chief Executive Officer. The Board of Directors sets Company strategy and provides oversight and accountability for the Chief Executive Officer and Company management. The Chairman of the Board presides over the Board of Directors and provides guidance to the Chief Executive Offiff cer. The Chief Executive Officer and the balance of the Board of Directors set Company goals with the Chief Executive Officff er providing leadership and day to day oversight in furtherance of those goals. The Company believes that separation of the Board of Directors and Company leadership reinforces the independence of the Board of Directors in its oversight of the business and affaff irs of the Company, and creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountabia lity and improving the abia lity of the Board of Directors to monitor whether management’s actions are in the best interests of the Company and its stockholders. Board Independence The Board of Directors annually reviews the independence of each of the directors. With the exception of Kevin C. Gorman, Ph.D., who is the Chief Executive Officer of Neurocrine Biosciences, all current members of the Board of Directors meet the definition of “independent director” under the Nasdaq Stock Market qualificff ation standards. Classified Board Structure The Board of Directors is divided into three classes, designated Class I, Class II and Class III. Our Nominating / Corporate Governance Committee annually reviews the Company’s classifieff d Board structurt e to evaluate whether it continues to be the appropriate structurt e forff believe that maintaining this strucr Governance Committee and the Board believe that the classified board structurt e: the Company. At this time, the Nominating / Corporate Governance Committee and the Board continue to ial to our stockholders. Specifically, the Nominating / Corporate ture is appropriate and beneficff • • • promotes stabia lity and continuity, allowing our Board and management to remain focused on our long-term strategic objectives; enhances independence of our non-employee directors by decreasing potential pressures froff m special interest groups or others who may have motives or interests contrary to the creation of sustainable stockholder value; and allows for the development of institutional knowledge at the board level, which is particularly important in the pharmaceutical industry,rr given the multi-year development cycles of our clinical programs. The Board and the Nominating / Corporate Governance Committee will periodically review and continue to consider whether the classified Board strucr ture aligns with the Company’s long-term strategic objectives. Overboarding Policy The overboarding policy set forth in our Corporate Governance Guidelines limits directors to a maximum of fivff e public company boards, with named executive officers of public companies limited to a maximum of three public company boards and members of the Audit Committee limited to a maximum of three public company audit committees. The Nominating / Corporate Governance Committee reviews our overboarding policy as part of its annual review of our corporate governance practices, which includes the Corporate Governance Guidelines, and compliance with our overboarding policy is reviewed at least annually by the Nominating / Corporate Governance Committee. All directors are currently compliant with our overboarding policy. Certain proxy advisory firms have adopted overboarding policies, where they will recommend a vote against directors who serve on what the proxy advisory firm believes to be too many boards. Further, certain institutional investors will vote against directors if they believe they are overboarded. These policies are generally intended to address concerns that directors on multiple boards may lack sufficient time to perform their board duties effectively. The Nominating / Corporate Governance Committee and the Board acknowledge these concerns, but believe additional facff boards should continue to serve on the Company’s Board of Directors. Among other things, the Board of Directors believe that consideration should be given to the skills and abia lities that a director brings to the Board, how a director contributes to the diversity opriate time, attention and the overall mix of perspectives and backgrounds on the Board, and whether the director dedicates the appr and energy to his or her director dutd ies. The Board of Directors discusses these considerations generally in connection with its evaluation and assessment process and specifically with both current Board members and director candidates who serve on multiple boards of directors. tors should be considered in determining whether a director serving on multiple a All of our directors comply with our overboarding policy, but certain institutional investors may still consider directors to be overboarded if they serve on other audit committees or in roles with heightened responsibilities – such as directors serving as executives of other public companies, board chairs, or lead independent directors. In the case of Dr. Rastetter, who serves as our Board chair and as board chair forff in leading rapidly growing companies in the life sff other companies, we believe his scientific and technical expertise, combined with his business experience brings a unique, highly relevant and valuable skill set to the Board. ciences industry,rr 12 a nted to our Board in July 2023 and also currently serves on hthe Boa drds of Diirectors of Pr dude Dr. Rastetter has attended every Board of Directors meeting over the last three years and dedicates significant time outside of meetings to engage with, and provide advice and counsel to, members of management. Further, Dr. Rastetter joined the Board in February 2010 and durd ing his tenure as a director, the Company's stock price has increased approximately 5,000% as measured through the Record Date. Ms. Poon was appoi ntiiall Fiinan ici lal, Inc., R gegeneron hPharmaceutiic lals, Inc., whhere hshe serves as thhe lle dad iinddepe dndent didirector, a dnd hThe Shherwiin-Williilliams Companyy. Ms. Poon bbriinggs ddeep strategigi kc knowlledgedge of hthe phharmaceu itical il i dndustryy t rr Wo lrlddwidide Chhaiir of hPharmaceutiic lals at J hohnson andd & Johhnson. She also has broad expertise in pharmaceutical operations, including capia tal allocation decisions, as a result of her 30-year career in the healthcare industry.rr Upon her appoi ntment to the Board, Ms. Poon did not immediately join any committees to ensure a smooth onboarding process and to provide the Board with an opportunity to evaluate her other time commitments. Afteff account her exceptional experience and the Company’s evolving needs, Ms. Poon joined the Audit Committee and Nominating / Corporate Governance Committee in February 2rr r a series of discussions with Ms. Poon over the course of several months and taking into o our Boardd as shhe previiouslyly serv ded as iVice hCh iair a dnd 024. a r Board and Committee Meetings During 2023 The Board of Directors held a total of eight meetings during 2023. For 2023, the Board of Directors had an Audit Committee, a Compensation Committee, and a Nominating / Corporate Governance Committee. Charters for each of these committees have been establa ished and approved by the Board of Directors and current copies of the charters forff the Company’s website at www.neurocrine.com. During 2023, no director attended fewff meetings of the Board of Directors and no director attended fewff the Board of Directors on which such director served. er than 75% of the total number of meetings held by any committee of each of the committees have been posted on er than 75% of the aggregate of the total Information About Board Committees The table below provides membership inforff mation forff a oved revisions to the membership of our committees (see page 22 forff Board appr each of the committees of the Board during 2023. In February 2024, our our Board's current committee membership). Name of Director Audit Compensation Nominating / Corporate Governance Committee Composition Committee William H. Rastetter, Ph.D. (Board Chair) Kevin C. Gorman, Ph.D. Gary A. Lyons Johanna Mercier George J. Morrow Leslie V. Norwalk Christine A. Poon Richard F. Pops Shalini Sharp Stephen A. Sherwin, M.D. MEMBER CHAIR MEMBER MEMBER CHAIR MEMBER MEMBER MEMBER CHAIR MEMBER The Company’s Audit Committee is comprised entirely of directors who meet the independence requirements set forth in Nasdaq Stock Market RulRR e 5605(c)(2)(A). Information regarding the func number of meetings held during the fiscal year is set forff The members of the Audit Committee forff serving as the Audit Committee Chair. The Board of Directors has determined that Mr. Pops, Ms. Sharp,r committee finff ancial experts” within the meaning of item 407(d)(5) of SEC Regulation S-K. This committee met five times durd ing 2023. tions performed by the committee, its membership, and the th in the “Report of the Audit Committee,” included in this Proxy Statement. 2023 were Richard F. Pops, Shalini Sharp, and Stephen A. Sherwin, M.D., with Ms. Sharpr and Dr. Sherwin are “audit ff The Company’s Compensation Committee consists of directors George J. Morrow, Richard F. Pops, and Shalini Sharp, with Mr. Pops serving as the Compensation Committee Chair. The Compensation Committee reviews and recommends to the Board of Directors the compensation of executive officers and other employees of the Company. Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees as appr a Committee is an “independent director” as definff ed by Nasdaq Stock Market RulRR e 5605(a)(2). This committee met seven times during 2023. Please also referff Analysis” forff to “Role of the Compensation Committee” section under the section titled “Compensation Discussion and additional inforff mation regarding the role of the Compensation Committee. opriate. Each of the current members of the Compensation 13 During 2023, the Company’s Nominating / Corporate Governance Committee consisted of directors Johanna Mercier, George J. Morrow, and Leslie V. Norwalk, and Stephen A. Sherwin, M.D., with Ms. Norwalk serving as the Nominating / Corporate Governance Committee Chair. Ms. Mercier, Mr. Morrow, Ms. Norwalk, and Dr. Sherwin, are all “independent directors” as defined by Nasdaq Stock Market RulRR e 5605(a)(2). The Nominating / Corporate Governance Committee is responsible for recommending nominees for election to the Board of Directors, succession planning, developing and implementing policies and practices relating to corporate governance, and providing oversight with respect to the folff lowing matters: sustainability matters, supply chain risk, quality systems and drugr safety. The Nominating / Corporate Governance Committee also administers the Company’s Code of Business Conduct and Ethics (the “Code”), which applies to all of the Company’s officers, directors and employees, and is available on the Company’s website at www.neurocrine.com. If we make any substantive amendments to the Code or grant any waiver from a provision of the Code to any executive officer or director, we will promptly disclose the naturt e of the amendment or waiver on our website or in a current report on Form 8-K. The functions of this committee also include consideration of the composition of the Board of Directors and recommendation of individuals for election as directors of the Company. The Nominating / Corporate Governance Committee will consider nominees recommended by stockholders, provided such nominations are made pursuant to the Company’s bylaws and applicable law. This committee met four times durd ing 2023. In January 2024, the Board formed the Science and Medical Technology Committee, which provides oversight of significant judgments relating to the Company’s research and development, including clinical development, activities, portfolff scientificff potential business development transactions. The Science and Medical Technology Committee consists of directors Stephen A. Sherwin, M.D., William H. Rastetter, Ph.D., Gary A. Lyons, and Richard F. Pops, with Dr. Sherwin serving as the Science and Medical Technology Committee Chair. io, and Although Dr. Rastetter was not a member of any Board Committee in 2023, as Board Chair he attended most Board committee meetings. Compensation Committee Interlocks and Insider Participation During 2023, the Compensation Committee consisted of George J. Morrow, Richard F. Pops, and Shalini Sharp. No interlocking relationship existed between any member of the Compensation Committee and any member of any other company’s Board of Directors or compensation committee. Director Nomination Process In selecting non-incumbent candidates and reviewing the qualifications of incumbent candidates forff the Board of Directors, the Nominating / Corporate Governance Committee considers the Company’s corpor following: r ate governance principles, which include the • • • • tively engage their felff Directors should possess the highest ethics, integrity and values, and be committed to representing the long-term interest of the stockholders. They also must have experience they can draw upon to help direct the business strategies of the Company together with sound judgment. They must be actively engaged in the pursuit of information relevant to the Company’s business and must construcr low Board members and management in dialogue and the decision-making process. Directors must be willing to devote suffiff cient time to carrying out their dutd ies and responsibilities effectively, and should be committed to serve on the Board of Directors forff Directors should notify t ate Governance Committee in the event of any significant change in their employment responsibilities or affiliations. Director nominees should meet the director qualificff ation requirements set forth in the Company’s Corpor Guidelines. In evaluating director nominees, the Nominating / Corporate Governance Committee considers the following factors: personal and profesff corporate management and the biopharmaceutical industry,rr held company; gender and ethnic diversity; experience as a board member of another publicly held company; and additionally, forff compliance with Company policies. nominees seeking re-election, meeting attendance, gender and ethnic diversity, and participation and sional integrity, ethics and values including any potential confliff cts of interest; experience in he Chairman of the Board and Chairman of the Nominating / Corpor such as serving as an officer or former offiff cer of a publicly an extended period of time. ate Governance ff rr r It is the Company’s policy to have a diversity of skills, profesff sional experience, educd ation, associations, achievements, training, points of view and individual qualities and attributes represented on the Board of Directors. The Nominating / Corporate Governance Committee considers the diversity of the Board of Directors, including self-iff dentifieff d diversity characteristics, when assessing board composition and evaluating candidates forff election or re-election to the Board of Directors. The Nominating / Corporate Governance Committee’s goal is to assemble a Board of Directors that brings to the Company a variety of perspectives and skills derived from high quality business and profesff sional experience. 14 The Board Diversity Matrix, below, provides the diversity statistics for our Board of Directors as of the date of this Proxy Statement. ard Diversity Matrix Total Number of Directors Part I: Gender Identity Directors Part II: Demographic Background Asian White Female Male 10 4 2 2 6 — 6 In addition to the foregoing, the Nominating / Corporate Governance Committee Charter and Corpor rr ate Governance ff th minimum criteria forff s as it may deem are in the best interests of the Company and its stockholders. The Nominating / Corporate Governance Guidelines set forff such other fact Committee does believe that several members of the Board of Directors meet the criteria forff defined by SEC rules. We believe that all of our directors should have a reputation forff and should demonstrate business acumen, an ability to exercise sound judgment and a commitment to serve the Company. an “audit committee finff ancial expert” as honesty, integrity and highest ethical standards, director nominees. The Nominating / Corporate Governance Committee may also consider Board Self-Assessment The Nominating / Corporate Governance Committee ensures that each member of the Board, the Committees, and the Chair of rent evaluations in order to the Board are assessed annually aimed at enhancing effectiveness. Directors complete a number of diffeff provide performance feedbad ck and suggestions for improved effectiveness or contributions. The assessments are done by way of a questionnaire prepared and distributed by our external corporate counsel, Cooley LLP. The assessments are treated on a confidff ential basis, with the results tallied on an anonymous basis forff review. The results of the evaluation are analyzed by Cooley LLP, our Chief Legal Officer, the Nominating / Corporate Governance Committee, and the Board, who decide whether any changes are needed to the Board’s processes, procedurd es, composition or Committee strucrr and groups were effeff ctively fulff ture. The evaluation carried out in 2023 indicated that all individuals filling their responsibilities. Board Education The Board recognizes the importance of ongoing director educd ation. In order to faci ff litate the Board’s educd ational development, the Board regularly meets with management and are given periodic presentations on our business and recent business developments. When the Board meets in person, Members of the Board also attend dinners on the evening before regularly scheduled Board meetings. Generally, at these dinners the Board meets with senior decision-makers within the Company or outside experts in order to enhance the Board’s understanding of our business and affaff Nominating / Corporate Governance Committee to discuss best practices and new developments relating to corpor the operation of public company boards. The Company also provides fundi director continuing educd ation programs sponsored by educd ational and other institutions. ate governance and ng for members of the Board of Directors to attend outside irs. In addition, on an annual basis an external expert meets with the ff r Identification and Evaluation of Nominees for Director The Nominating / Corporate Governance Committee identifieff s nominees for director by first evaluating the current members service and who are willing to continue are considered for re- a new perspective. If any member of the Board of Directors does not wish to continue in service, or if the of the Board of Directors willing to continue in service. Current members with qualificff ations and skills that are consistent with the Nominating / Corporate Governance Committee’s criteria forff nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining members who would offerff Board of Directors decides not to re-nominate a member forff the desired skills and experience of a new nominee in light of the criteria above generally polls the Board of Directors and members of management forff party search firms. The Nominating / Corporate Governance Committee may also seek input from industry err Nominating / Corporate Governance Committee reviews the qualificff ations, experience and background of the candidates. Final candidates are then interviewed by the Company’s independent directors and executive management. In making its determinations, the Nominating / Corporate Governance Committee evaluates each individual in the context of the Company’s Board of Directors as a whole, with the objective of assembling a group that can best perpetuat interests through the exercise of sound judgment. Afteff Governance Committee makes its recommendation to the Board of Directors. re-election, the Nominating / Corporate Governance Committee identifieff s . The Nominating / Corporate Governance Committee their recommendations and may also seek input from third- xperts or analysts. The r review and deliberation of all feedbad ck and data, the Nominating / Corporate te the success of the Company and represent stockholder a We have not received director candidate recommendations from the Company’s stockholders and do not have a forff mal policy regarding consideration of such recommendations. However, any recommendations received froff m stockholders will be evaluated in the same manner that potential nominees suggested by members of our Board of Directors, management or other parties are evaluated. Accordingly, our Board of Directors believes a formal policy regarding consideration of such recommendations is unnecessary. 15 Proxy Access In Februar ry 2023, our Board of Directors amended and restated our bylaws to provide for proxy access, which, subju ect to certain limitations as set forff th in our bylaws, allows a stockholder or a group of no more than 20 stockholders owning at least three percent or more of the voting power of our outstanding capia tal stock continuously for at least three years to nominate and include in o the greater of two individuals or 20% of the number our Proxy Statement forff of directors in office, provided that (i) the number of such nominees may not exceed 50% of the number of directors in the class whose term expires at such annual meeting and (ii) the stockholders satisfy t he procedurd al, disclosure and other requirements specified in our ff bylaws. For furff provision included in our bylaws does not purpor ther information, please see “Additional Inforff mation”. The foregoing description of the stockholder proxy access t to be complete and is qualifieff d in its entirety by referff ence to our bylaws. an annual meeting director nominees constituting up tu rr Process forff Stockholder Communications with the Board of Directors Stockholders of the Company wishing to communicate with the Company’s Board of Directors or an individual director may send a written communication to the Board of Directors or such director c/o Neurocrine Biosciences, Inc., 12780 El Camino Real, San Diego, CA 92130, Attn: Corpor ate Secretary. Each communication must set forth: r • • the name and address of the Company stockholder on whose behalf the communication is sent; and the number of Company shares that are beneficff ially owned by such stockholder as of the date of the communication. Each stockholder communication will be reviewed by the Company’s Corpor r ate Secretary t rr o determine whether it is appropriate for presentation to the Board or such director. Examples of inappropriate communications include advertisements, solicitations or hostile communications. Communications determined by the Corpor r ate Secretary to be appropriate for presentation to the Board or such director will be submu itted to the Board or such director on a periodic basis. The Board’s Role in Risk Oversight While the Board of Directors has ultimate oversight responsibility for the risk management process, it has delegated portions of this responsibility to various committees. The Board of Directors and its committees oversee risk throughout the business with focus on finff ancial risk, legal/compliance risk, scientificff /clinical development risk, cybersecurity risk management, and strategic risk. The Audit Committee focff uses on majoa r finff ancial risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also has oversight of risk related to data privacy, technology and inforff mation and cybersecurity, including: (i) access to various reports, summaries or presentations related to cybersecurity threats, risk, and mitigation (ii) the potential impact of those exposures on the Company’s business, financial results, operations and reputation, (iii) the steps management has taken to monitor and mitigate such exposures, (iv) the Company’s inforff mation governance policies and programs and (v) major legislative and regulatory drr evelopments that could materially impact the Company’s privacy and data security risk exposure. The Nominating / Corporate Governance Committee and Audit Committee each focus on legal/compliance risk with the Nominating / Corporate Governance Committee taking the lead on the governance and management process and compliance oversight with respect to the folff safety. The Audit Committee takes the lead on SEC reporting and compliance. The Compensation Committee addresses compensation policies and practices as they relate to risk management practices and risk-taking incentives. The participation of the full Board of Directors in setting the Company’s business strategy incorporates assessment of scientificff Directors forff med the Science and Medical Technology Committee, which provides oversight of significant scientificff relating to the Company’s research and development, including clinical development, activities, portfolff development transactions. lowing matters: sustainability, supply chain risk, quality systems and drugr the Company overall. Additionally, in January 2024, the Board of judgments io, and potential business and strategic risks forff 16 Corporate Responsibility and Sustainability At Neurocrine Biosciences, we uphol u d an unwavering spirit of ingenuity and seek to provide lifesaving solutions to patients who have great needs, but few options. We believe operating responsibly and effiff ciently is paramount to creating long-term value for our Company and stakeholders. Our focus as a Company is to operate with the highest standards of business ethics, adhere to the highest product quality and safetff y standards, invest in our people and communities, and minimize the impact on the environment. Our key sustainability areas, programs and strategies are guided by our stakeholders and third-party fraff meworks, including the Sustainability Accounting Standards Board (SASB) biotechnology and pharmaceuticals standard and Task Force on Climate-related Financial Disclosures (TCFD). The Company’s Board of Directors has delegated the oversight of sustainabia lity strategies and policies to the Nominating / Corpor rate Governance Committee and the below grapha ic outlines our sustainabia lity governance strucr ture: For more information on our commitment to corpor rate social responsibility and stewardship, including environmental sustainability, diversity and inclusion and other key initiatives, please see our 2024 Corporate Sustainability Report, which can be found on our website, www.neurocrine.com, under the “Sustainability” section. The informff website is not incorporated into this Proxy Statement. ation posted on or accessible through our Risk Assessment Concerning Compensation Practices and Policies During fisff cal 2023, the Compensation Committee conducted an assessment of how the Company’s compensation policies and practices relate to risk management practices and risk-taking incentives. As part of the process, the Compensation Committee engaged the services of an external, independent compensation consulting firm to conduct an independent risk assessment. Based on this assessment, the Compensation Committee concluded that the Company’s compensation policies and practices are consistent with industry practices forff effeff ct on the Company. similar biopharmaceutical companies and do not create risks that are reasonabla y likely to have a material adverse 17 Role of the Board in Succession Planning A key responsibility of the Board is succession planning for the CEO and other members of the executive management team. In consultation with the Company's CEO and Chief Human Resources Offiff cer, the Nominating / Corporate Governance Committee regularly reviews succession planning relating to the Company's CEO as well as the Company's other executive officers. The Nominating / Corporate Governance Committee then consults with the fulff plans forff Compensation Committee discusses executive management talent, including the readiness of individuals to take on additional leadership roles and developmental opportunities needed to prepare senior leaders forff assessment conducted by the Board and its committees includes a review of both a long-term succession plan and an emergency succession plan. the CEO and the executive team align with the Company's short and long-term strategic goals. Additionally, the l Board to ensure that development, retention and succession greater levels of responsibility. The review and u In suppor t of the Company’s commitment to investing in its employees, high-potential leaders are provided with the opportunity to meet with Board members through formal presentations and at inforff mal events. This engagement gives the Board insight into the Company’s talent and helps to faci planning at the Board and Committee level. litate a regular review and discussion of leadership development and succession ff Policy Regarding Board Member Attendance at the Company’s Annual Meeting The Company does not have a forff mal policy regarding attendance by members of the Board of Directors at the Annual Meeting. Directors Dr. Gorman and Dr. Rastetter attended the 2023 Annual Meeting of Stockholders. 18 REPORT OF THE AUDIT COMMITTEE The folff lowing Repor e t of to hett Audit ComCC mittee does not constitute soliciting material and should nl ot be deemed filed or incorporated by refee rence into any othett of 1934, as amended, except to thett m r ComCC pany filing under thett Securities Act of 1933, as amended, or the SecuSS rities Exchange Act extent thett Company specifii cally incorporates this Repor e t by rb eferff ence therein. The Audit Committee oversees the Company’s finff ancial reporting process on behalf of the Board of Directors. Management rr esponsibility for the Company’s finff ancial statements and the reporting process, including the Company’s systems of has the primary r internal controls. In fulff Company’s audited finff ancial statements as of and forff the acceptabia lity, of the accounting principles, the reasonabla eness of significant judgments and the clarity of disclosures in the financial statements. filling its oversight responsibilities, the Audit Committee has reviewed and discussed with management the the year ended December 31, 2023, including a discussion of the quality, not just The Audit Committee also has reviewed and discussed the Company’s audited finff ancial statements as of and forff the year ended December 31, 2023 with the Company’s independent registered public accounting firff m, who are responsible for expressing an opinion on the conforff mity of those audited finff ancial statements with accounting principles generally accepted in the United States, as well as their judgments as to the quality, not just the acceptabia lity, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under the applicable requirements of the Publu ic Company Accounting Oversight Board (United States) (the “PCAOB”) and the Securities and Exchange Commission. The independent registered public accounting firff m also is responsible for performing an independent audit of the Company’s internal control over finff ancial reporting in accordance with the auditing standards of the PCAOB. In addition, the Audit Committee has discussed the independent registered public accounting firff m’s independence froff m management and the Company, including the matters in the written disclosures and the letter froff m the independent registered public accounting firff m required by appl icable requirements of the PCAOB and considered the compatibility of non-audit services with the auditors’ independence. a The Audit Committee discussed with the Company’s independent registered public accounting firff m the overall scope and their audits. The Audit Committee meets with the independent registered public accounting firff m, with and without plans forff management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s finff ancial reporting. In reliance on the reviews and discussions referred to above a , the Audit Committee recommended to the Board of Directors that the audited finff ancial statements be included in the Company’s Annual Report on Form 10-K forff for filinff stockholder ratificff ation of the selection of the Company’s independent registered public accounting firff m forff December 31, 2024. g with the Securities and Exchange Commission. The Audit Committee and the Board of Directors are also seeking the year ending the year ended December 31, 2023, Respectfulff AUDIT COMMITTEE ly submu itted by: Shalini Sharp Stephen A. Sherwin, M.D. Richard F. Pops 19 Principal Accountant Fees and Services The aggregate feeff s billed to the Company by Ernst & Young LLP, the Company’s independent registered public accounting firm, forff the indicated services for each of the last two fiscal years were as folff lows: ff (1) ................................................................................................................................................................ $ Audit fees Audit related fees (2) .................................................................................................................................................... Tax fees (3)................................................................................................................................................................... ff Total.............................................................................................................................................................................. $ 2023 1,708,578 — 545,664 2,254,242 $ $ 2022 1,170,175 — 533,346 1,703,521 for professional services performed by Ernst & Young LLP for the integrated audit of the Company’s annual finff ancial statements gs and services that are normally (1) (2) (3) ff ff consist of fees Audit fees and internal control over finff ancial reporting and review of financial statements included in the Company’s 10-Q filinff provided in connection with statutt ory arr Audit related fees consist of fees audit or review of the Company’s finff ancial statements. Tax fees consist of fees includes appr oximately $263,000 in 2023 and $221,000 in 2022 for tax compliance. gs or engagements. nd regulatory f ilinff a ff ff rr for professional services performed by Ernst & Young LLP with respect to tax compliance, tax advice and tax planning. Total for assurance and related services performed by Ernst & Young LLP that are reasonabla y related to the performance of the The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of Ernst & Young LLP and has concluded that the provision of such services is compatible with maintaining the independence of that firff m. All of the services rendered by Ernst & Young LLP were pre-approved by the Audit Committee in accordance with the Audit Committee pre-appr oval policy described below. a The Company’s Audit Committee has establa ished a policy that all audit and permissible non-audit services provided by the Company’s independent registered public accounting firff m will be pre-appr audit services, audit related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of the Company’s registered public accounting firff m. Pre-approval is detailed as to the particular service or category orr f services and is generally subju ect to a specific budget. The Company’s independent registered public accounting firff m and management are required to periodically (at least quarterly) report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firff m in accordance with this pre-approval, and the fees for the services performed to date. oved by the Audit Committee. These services may include a 20 COMPENSATION COMMITTEE REPORT The folff lowing Repor e by refee rence into any othett amended, except to thett t of to hett Committee does not constitute soliciting material and should nl Securities Act of 1o specifici ally incorporates this Repor 933, as amended, or the SecuSS eferff ence therein. r ComCC pany filing under thett m m extent the ComCC pany t by rb e ot be deemed filed or incorpor rr ange Act of 1o ated 934, as rities ExchEE The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Respectfulff COMPENSATION COMMITTEE itted by: ly submu George J. Morrow Richard F. Pops Shalini Sharp 21 PROPOSAL ONE: ELECTION OF DIRECTORS The Company’s bylaws, as amended, provide that the Board of Directors is comprised of ten directors. The Company’s rr and Stephen A. Sherwin, M.D.), and three directors in Class III (Kevin C. Gorman, Ph.D., Gary A. ation provides that the Board of Directors is divided into three classes. There are currently four directors in Certificff ate of Incorpor Class I (William H. Rastetter, Ph.D., George J. Morrow, Leslie V. Norwalk, and Christine A. Poon), three directors in Class II (Richard F. Pops, Shalini Sharp,r Lyons, and Johanna Mercier). With the exception of Kevin C. Gorman, Ph.D., who is the Chief Executive Officer of Neurocrine ition of “independent director” under the Nasdaq Stock Biosciences, all current members of the Board of Directors meet the definff Market qualificff ation standards. Additionally, our Corporate Governance Guidelines contain a director resignation policy, which provides that any director nominee who receives a greater number of votes “withheld” than votes “forff ” such election shall tender his or her resignation to the Board of Directors. The Nominating / Corporate Governance Committee will consider all of the relevant facts and circumstances and recommend to the Board of Directors whether to accept or reject the resignation. The Board of Directors will act on the Nominating / Corporate Governance Committee's recommendation within 90 days of the annual meeting. Following the Board’s decision on the Nominating / Corporate Governance Committee’s recommendation, the Company will publicly disclose the Board’s decision whether to accept the resignation as tendered in a Form 8-K fileff d with the Securities and Exchange Commission (the "SEC"). The directors in Class I hold office until the 2024 Annual Meeting of Stockholders, the directors in Class II hold office until the 2025 Annual Meeting of Stockholders and the directors in Class III hold office until the 2026 Annual Meeting of Stockholders (or, in each case, until their earlier resignation, removal froff m office, or death). After each such election, the elected directors will then serve in succeeding terms of three years and until a successor is duld y elected and qualifieff d. Offiff cers of the Company serve at the discretion of the Board of Directors. There are no famff ily relationships among the Company’s directors and executive officff ers. The term of officff e forff directors William H. Rastetter, Ph.D., George J. Morrow, Leslie V. Norwalk, and Christine A. Poon will expire at the 2024 Annual Meeting of Stockholders. Nominees for Election at the Annual Meeting All of the nominees (William H. Rastetter, Ph.D., George J. Morrow, Leslie V. Norwalk, and Christine A. Poon) are currently Class I directors of the Company. Information about a the nominees is set forff th below as of the date of this Proxy Statement: Name of Director William H. Rastetter, Ph.D. (1) ............................................................... George J. Morrow (2)(3) ......................................................................... Leslie V. Norwalk (3).............................................................................. Christine A. Poon (3)(4) .......................................................................... Age 75 72 58 71 Position in the Company Chairman of the Board Director Director Director Director Since 2010 2015 2019 2023 Directors Continuing in Offiff ce The Class II and III directors will remain in officff e after the 2024 Annual Meeting of Stockholders. The names and certain the directors whose terms of offiff ce continue afteff r the Annual Meeting are set forff th below: Age 66 73 54 62 49 75 Position in the Company Chief Executive Officff er and Director Director Director Director Director Director Director Since 2008 1993 2021 1998 2020 1999 a other current information about Name of Director Kevin C. Gorman, Ph.D. ......................................................................... Gary A. Lyons (1) ................................................................................... Johanna Mercier (3) ................................................................................ Richard F. Pops (1)(2)............................................................................. Shalini Sharp (2)(4)................................................................................. Stephen A. Sherwin, M.D. (1)(4) ............................................................ (1) (2) (3) (4) Member of the Science and Medical Technology Committee. Member of the Compensation Committee. Member of the Nominating / Corporate Governance Committee. Member of the Audit Committee. 22 Vote Required The nominees receiving the affirmative vote of a plurality of the shares represented in person or by proxy at the 2024 Annual Meeting of Stockholders and entitled to vote on the election of directors will be elected to the Board of Directors. If a nominee receives a greater number of votes “withheld” than votes “forff ” such election, the nominee shall tender his or her resignation to the Board of Directors in accordance with our director resignation policy. The Nominating / Corporate Governance Committee will consider all of the relevant factors and recommend to the Board of Directors whether to accept or reject the resignation. The Board of Directors will act on the Nominating / Corporate Governance Committee's recommendation within 90 days of the annual meeting. Following the Board’s decision on the Nominating / Corporate Governance Committee’s recommendation, the Company will publicly disclose the Board’s decision whether to accept the resignation as tendered in a Form 8-K fileff d with the SEC. Votes withheld from any director are counted for purpos r es of determining the presence or absence of a quorumr , but have no other legal effeff ct under Delaware law. the Company’s Class I nominees . If any of the Company’s nominees is unabla e or declines to serve as a director at the time of the Annual Meeting, the Unless otherwise instrucr named above a proxies will be voted for any nominee who is designated by the present Board of Directors to fillff any of the Company’s nominees will be unabla e or will decline to serve as a director. The Board of Directors unanimously recommends that stockholders vote “FOR” the Class I nominees named above. ted, the proxy holders will vote the proxies received by them forff the vacancy. It is not expected that 23 PROPOSAL TWO: ADVISORY VOTE ON COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS General At the 2023 Annual Meeting of Stockholders, the Board of Directors, as a matter of good corporate governance, recommended that the stockholders approve an advisory vote on Named Executive Officer compensation (“say-on-pay”) on an annual basis. Approximately 99% of the stockholder votes cast at the 2023 Annual Meeting of Stockholders were for the Company’s recommendation, and in response the Company holds an annual say-on-pay vote. This annual vote is not intended to address any specific compensation item, but rather the overall compensation of the Company’s Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Summary of the Company’s Executive Compensation Philosophy The Compensation Committee of the Board of Directors bases its executive compensation decisions on a number of objectives which include aligning management incentives with interests of stockholders, providing competitive compensation, appropriately balancing compensation risk in the context of the Company’s business strategy and meeting evolving compensation governance standards. The philosophy of the Compensation Committee in establa ishing the Company’s compensation policy forff as well as all other employees is to: executive officff ers • • • • align compensation plans with both short-term and long-term goals and objectives of the Company and stockholder interests; attract and retain highly skilled individuals by offeff are competing for available employees; incentivize employees through a mix of base salary, bonus amounts based on achievement of defined corporate and personal goals and long-term equity awards to generate returns forff pay for performance by ensuring that an ever-increasing percentage of an individual’s compensation is performance- based as they progress to higher levels within the Company. ring compensation that compares favff orably to other employers who stockholders; and As discussed below in the Compensation Discussion and Analysis, we believe we have adopted a compensation philosophy that provides strong alignment between executive pay and performance based on strategic goals designed to provide both near-term and long-term growth in stockholder value. The historical approval rates, on an advisory basis, for the Company’s executive compensation program have been over 92% for each of the 2021, 2022 and 2023 Annual Meetings of Stockholders. The Compensation Committee and our Board of Directors believe that this level of appr indicative of our stockholders’ strong suppor executive compensation by the Compensation Committee and the Board of Directors. t of our compensation philosophy and goals as well as the overall administration of oval of our executive compensation program is u a You are being asked to approve on an advisory basis, the compensation paid to the Company’s Named Executive Offiff cers as th in the Compensation Discussion and Analysis, Summary Crr set forff This vote is not intended to address any specific compensation item, but rather the overall compensation of the Company’s Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. ompensation Table and related notes and narrative set forth herein. Vote Required The say-on-pay vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board of Directors. However, we value the opinions of our stockholders and will review and will continue to consider the outcome of this advisory vote when making futff urt e compensation decisions for our Named Executive Officers and will evaluate whether any actions are necessary to address the stockholders’ concerns. Approval of this advisory vote requires the affiff rmative vote of the majoa rity of shares represented in person or by proxy and entitled to vote on the item. The Board of Directors unanimously recommends voting “FOR” approval of the Company’s Named Executive Offiff cers compensation. 24 PROPOSAL THREE: APPROVAL OF AN AMENDMENT TO THE 2020 EQUITY INCENTIVE PLAN We are asking our stockholders to approve an amendment to the Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) at the Annual Meeting. We refer to such amendment of the 2020 Plan in this Proxy Statement as the “Amended 2020 Plan”. In this Proposal Three, we are seeking stockholder appr a oval of the Amended 2020 Plan to make the folff lowing material changes froff m the 2020 Plan: • • increase the aggregate number of shares of our common stock that may be issued under the Amended 2020 Plan by 3,635,000 shares, subject to adjud stment for certain changes in our capitalization; and increase the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the Amended 2020 Plan by 3,635,000 shares (for a total of 34,135,000 shares), subju ect to adjud stment for certain changes in our capitalization. If this Proposal Three is appr oved by our stockholders, the Amended 2020 Plan will become effeff ctive as of the date of the Annual Meeting. In the event that our stockholders do not approve this Proposal Three, the Amended 2020 Plan will not become effeff ctive and the 2020 Plan will continue to be effeff ctive in accordance with its terms. a Why We Are Asking Our Stockholders to Approve the Amended 2020 Plan We are seeking stockholder appr a oval of the Amended 2020 Plan to increase the number of shares availabla e forff the grant of stock options, restricted stock unit awards and other awards to our employees, directors and consultants, which will enable us to have a competitive equity incentive program to compete with our peer group for key talent. Approval of the Amended 2020 Plan by our stockholders will allow us to continue to grant stock options, restricted stock unit awards and other awards at levels determined appropriate by the Board of Directors or Compensation Committee. The Amended 2020 Plan will also allow us to continue to utilize a broad array of equity incentives in order to secure and retain the services of our employees, directors and consultants, and to provide long-term incentives that align the interests of our employees, directors and consultants with the interests of our stockholders. Requested Shares If this Proposal Three is appr a oved by our stockholders, then subject to adjud stment for certain changes in our capitalization, an additional 3,635,000 shares of our common stock will be availabla e forff issuance under the Amended 2020 Plan. Stockholder Approval If this Proposal Three is appr a oved by our stockholders, the Amended 2020 Plan will become effeff ctive as of May 22, 2024. In the event that our stockholders do not approve this Proposal Three, the Amended 2020 Plan will not become effeff ctive and the 2020 Plan will continue in its current form. Why You Should Vote to Approve the Amended 2020 Plan Equityii Awards Add yh re an Imporm tant Part of Our ComCC pem nsatiott n PhiPP loii sopho The Board of Directors believes that the grant of equity awards is a key element underlying our ability to attract, retain and highly trained and experienced individuals motivate our employees, directors and consultants because of the strong competition forff among biopharmaceutical companies. Therefore, the Board of Directors believes that the Amended 2020 Plan is in the best interests of our business and our stockholders and unanimously recommends a vote in favff or of this Proposal Three. The Amended 2020 Plan will allow us to continue to utilize equity awards as long-term incentives to secure and retain the services of our employees, directors and consultants, consistent with our compensation philosophy and common compensation practice forff our industry.rr To date, equity awards have been a key aspect of our program to attract and retain key employees, directors and consultants. We believe the use of equity awards strongly aligns the interests of our employees with those of our stockholders by placing a considerable proportion of our employees’ total compensation “at risk” because it is contingent on the appr eciation in value of our common stock. In addition, we believe equity awards encourage employee ownership of our common stock and promote retention through the reward of long-term Company performance. a 25 We Carefue lly Managea the UseUU of Equityii Awards add nd Diluii tion is Reasonablell Our compensation philosophy reflects broad-based eligibility for equity awards, and we grant awards to substantially all of our employees. However, we recognize that equity awards dilute existing stockholders, and, thereforff e, we are mindfulff manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity awards necessary to attract, reward, and retain employees, directors and consultants. to responsibly The folff lowing tabla e provides detailed inforff mation regarding our burn rate and the activity related to our equity incentive plans for 2023, 2022 and 2021. Total number of shares of common stock subju ect to stock options granted Total number of shares of common stock subju ect to full value awards granted Weighted-average number of shares of common stock outstanding Burn Rate (1) 2023 1,900,000 1,300,000 97,700,000 3.28% 2022 2,200,000 1,400,000 95,800,000 3.76% 2021 1,800,000 1,400,000 94,600,000 3.38% (1) Burn Rate is calculated as (shares subju ect to stock options granted + shares subju ect to full value awards granted)/weighted average common stock outstanding. Overharr ng The folff lowing tabla e provides certain information regarding our use of equity awards as of the Record Date. Total number of shares of common stock subju ect to outstanding stock options Weighted-average exercise price of outstanding stock options Weighted-average remaining term of outstanding stock options Total number of shares of common stock subju ect to outstanding full value awards Total number of shares of common stock availabla e forff Total number of shares of common stock availabla e forff Total number of shares of common stock subju ect to outstanding stock options and outstanding full value awards Total number of shares of common stock outstanding Per-share closing price of common stock as reported on Nasdaq Global Select Market grant under the 2020 Plan (1) grant under the Neurocrine Biosciences, Inc. Inducement Plan (1) As of Record Date 10,131,428 $94.12 6.81 years 2,712,755 7,494,995 55,182 12,844,183 100,580,497 $140.25 (1) As of the Record Date, there were no shares of common stock availabla e forff Neurocrine Biosciences, Inc. Inducement Plan. grant under any of our equity incentive plans, other than the 2020 Plan and the The SizSS e of Oo ur Share Reserve IncII rease Request Is Reasonablell If this Proposal Three is appr will have 3,635,000 new shares availabla e forff returning to stockholders for additional shares in 2025. a oved by our stockholders, then subject to adjud stment for certain changes in our capitalization, we ent any unforff eseen circumstances, we anticipate grant after the Annual Meeting, and absa 26 The Amendeddd 2020 Planll Combines Compensation and Governance Best Practices The Amended 2020 Plan includes provisions that are designed to protect our stockholders’ interests and to refleff ct corporate governance best practices, including: • • • • • • • a a a r appr the next oval is required forff eciation rightgg stt . All stock options and stock appreciation rights granted under r market value of our common stock additional shares. The Amended 2020 Plan does not contain an annual “evergreen” oval is required to issue service as a non-employee director with respect to any period commencing on the date of the annual a particular year and ending on the date of the annual stockholders meeting forff Stockholdel provision. The Amended 2020 Plan authorizes a fixff ed number of shares, so that stockholder appr any additional shares. No discii ounted stock opto ions or stock appr the Amended 2020 Plan must have an exercise price equal to or greater than the faiff on the date the stock option or stock appreciation right is granted. Limit on non-emplm oyee director compensation. The aggregate value of all compensation granted or paid by us to any individual forff stockholders meeting forff subsu equent year (such period, the “annual period”), including awards granted under the Amended 2020 Plan and cash fees paid to such non-employee director, will not exceed $1,250,000 in total value. In addition, the aggregate value of any equity award(s) granted by us to any individual forff service as a non-employee director upon or in connection with ntment to the Board of Directors will not exceed $2,000,000 in total value (such that the a his or her initial election or appoi aggregate compensation granted or paid by us to any individual forff service as a non-employee director with respect to an annual period in which such individual is firff st appointed or elected to the Board of Directors will not exceed $3,250,000 es of these limitations, the value of any equity awards is calculated based on the grant date fair in total value). For purpos financial reporting purpos value of such awards forff Awards subject to forff fer iture/cl// awback. Awards granted under the Amended 2020 Plan will be subju ect to recoupment in accordance with the Neurocrine Biosciences, Inc. Incentive Compensation Recoupment Policy and any other clawback policy that the Company adopts. In addition, the Board may impose other clawback, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause. Restrit ctions on dividends. The Amended 2020 Plan provides that dividends or dividend equivalents may not be paid or credited to any awards granted under the Amended 2020 Plan. No liberal change in controt l defdd inff definition. A change in control transaction must actuat Amended 2020 Plan to be triggered. No liberal share counting provisiii ons. The following shares will not become availabla e again for issuance under the Amended 2020 Plan: (i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award; (ii) any shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with an award; (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award; and (iv) in the event that a stock appr shares, the gross number of shares subject to such award. ition in the Amended 2020 Plan is not a “liberal” the change in control provisions in the ition. The change in control definff eciation right is settled in lly occur in order forff es. a rr rr • Material amendments require stockholdel a r appr oval. Consistent with Nasdaq rules, the Amended 2020 Plan requires oval of any material revisions to the Amended 2020 Plan. In addition, certain other amendments to the stockholder appr Amended 2020 Plan require stockholder appr a a oval. Vote Required At the Annual Meeting, the stockholders are being asked to appr a ove an amendment of the Company’s 2020 Equity Incentive Plan. The affiff rmative vote of the holders of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the item will be required to appr ove the amendment of the Company’s 2020 Equity Incentive Plan. The Board of Directors unanimously recommends voting “FOR” the approval of an amendment of the Company’s 2020 Equity Incentive Plan. a Summary of the Amended 2020 Plan The material feaff lowing description of the Amended 2020 Plan is a summary only and is qualifieff d in its entirety by referff ence to the complete text of the Amended 2020 Plan. Stockholders are urged to read the actuat l text of the Amended 2020 Plan in its entirety, which is attached hereto as Appendix A. tures of the Amended 2020 Plan are described below. The folff Purpose The Amended 2020 Plan is designed to secure and retain the services of our employees, non-employee directors and the success of the Company and our affiff liates, and to consultants, to provide incentives for such persons to exert maximum efforts forff provide a means by which such persons may be given an opportunity to benefit froff m increases in the value of our common stock. The Amended 2020 Plan is also designed to align employees’ interests with stockholder interests. 27 Typeyy s of Ao wardsdd The terms of the Amended 2020 Plan provide for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards. Shares Available f orff Awards ll Subju ect to adjud stment for certain changes in our capia talization, the aggregate number of shares of our common stock that may the grant of lowing the be issued under the Amended 2020 Plan will not exceed the sum of: (ff i) the number of shares that remained availabla e forff new awards under the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) as of immediately folff effeff ctive date of the 2020 Plan; (ii) 3,300,000 shares that were approved at our 2020 annual meeting of stockholders; (iii) an additional 5,900,000 shares that were approved at our 2022 annual meeting of stockholders; (iv) an additional 6,600,000 shares that were approved at our 2023 annual meeting of stockholders; (v) an additional 3,635,000 shares that are subject to approval by our stockholders under this Proposal Three; and (vi) the Prior Plan’s Returt ning Shares (as definff ed below), as such shares become availabla e from time to time. The “Prior Plan’s Returt ning Shares” are shares of our common stock subject to outstanding awards granted under the 2011 Plan (referred to as the “Prior Plan” in this Proposal Three) that following the effective date of the 2020 Plan: (i) are not issued because such award or any portion thereof expires or otherwise terminates without all of the shares covered by such award having been issued; (ii) are not issued because such award or any portion thereof is settled in cash; or (iii) are forff by us because of the faiff lure to meet a contingency or condition required forff the vesting of such shares. feited back to or repurchased The folff lowing actions will not result in an issuance of shares of our common stock under the Amended 2020 Plan and accordingly will not reduce the number of shares of our common stock availabla e forff expiration or termination of any portion of an award granted under the Amended 2020 Plan without the shares covered by such portion of the award having been issued; or (ii) the settlement of any portion of an award granted under the Amended 2020 Plan in cash. issuance under the Amended 2020 Plan: (i) the If any shares of our common stock issued pursuant to an award granted under the Amended 2020 Plan are forff lure to meet a contingency or condition required forff repurchased by us because of the faiff the vesting of such shares, then such shares will become availabla e again for issuance under the Amended 2020 Plan (such shares, the “Amended 2020 Plan Returning Shares”). feited back to or The folff lowing shares of our common stock will not become availabla e again for issuance under the Amended 2020 Plan: (i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award granted under the Amended 2020 Plan or the Prior Plan (including any shares subject to such award that are not delivered because such award is exercised through a reducd tion of shares subju ect to such award); (ii) any shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with an award granted under the Amended 2020 Plan or the Prior Plan; (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award granted under the Amended 2020 Plan or the Prior Plan; and (iv) in the event that a stock appreciation right granted under the Amended 2020 Plan or the Prior Plan is settled in shares, the gross number of shares subject to such award. The number of shares of our common stock available for issuance under the Amended 2020 Plan will be reduced by: (i) one share forff share issued pursuant to a full value award granted under the Amended 2020 Plan on or afteff each share issued pursuant to an appr eciation award granted under the Amended 2020 Plan; and (ii) 2.13 shares for each r May 18, 2022. a The number of shares of our common stock available for issuance under the Amended 2020 Plan will be increased by: (i) one each Prior Plan’s Returt ning Share or Amended 2020 Plan Returning Share subju ect to an appreciation award; and (ii) 2.13 share forff shares for each Prior Plan’s Returt ning Share or Amended 2020 Plan Returning Share subju ect to a fulff Amended 2020 Plan on or afteff l value award that returt ns to the r May 18, 2022. For purpos r es of this Proposal Three, (i) an “appreciation award” is a stock option or a stock appr a eciation right with respect to which the exercise or strike price is at least 100% of the faiff value award” is a stock award that is not an appreciation award. r market value of our common stock on the date of grant and (ii) a “full Eligll ibilitytt Under the terms of the Amended 2020 Plan, all of our (including our affiff liates’) employees, non-employee directors and consultants are eligible to participate in the Amended 2020 Plan and may receive all types of awards other than incentive stock options. Incentive stock options may be granted under the Amended 2020 Plan only to our (including our affiff liates’) employees. Generally, we do not provide equity grants to consultants. As of the Record Date, we (including our affiff liates) had approximately 1,400 employees, nine non-employee directors, and approximately 24 consultants. 28 Admindd istratiott n The Amended 2020 Plan will be administered by our Board of Directors, which may in turn delegate some or all of the administration of the Amended 2020 Plan to a committee or committees composed of members of the Board of Directors. Our Board of Directors has delegated concurrent authority to administer the Amended 2020 Plan to our Compensation Committee, but may, at any time, revest in itself some or all of the power delegated to our Compensation Committee. Our Board of Directors and Compensation Committee are each considered to be a Plan Administrator for purpos es of this Proposal Three. r Subju ect to the terms of the Amended 2020 Plan, the Plan Administrator may determine the recipients, the types of awards to be granted, the number of shares of our common stock subju ect to or the cash value of awards, and the terms and conditions of awards granted under the Amended 2020 Plan, including the period of their exercisabia lity and vesting. The Plan Administrator also has the authority to provide for accelerated exercisability and vesting of awards. Subject to the limitations set forff Administrator also determines the faiff appreciation rights granted under the Amended 2020 Plan. r market value applicable to an award and the exercise or strike price of stock options and stock th below, the Plan The Plan Administrator may also delegate to one or more executive officers the authority to designate employees who are not executive officers to be recipients of certain awards and the number of shares of our common stock subju ect to such awards. Under any such delegation, the Plan Administrator will specify the total number of shares of our common stock that may be subject to the awards granted by such executive officer. The executive officer may not grant an award to himself or herself.ff Repree icing; Cancellall tion and Re-GraGG nt of Stoctt k OptOO iott ns or Stoctt k ApprA eciatiott n Rightgg stt Under the Amended 2020 Plan, except in connection with a corporate transaction or a change in control or an adjustment forff certain changes in our capia talization, or unless our stockholders have approved such an action within 12 months prior to such an event, the Plan Administrator does not have the authority to reprice any outstanding stock option or stock appreciation right by (1) reducd ing the exercise or strike price of the stock option or stock appreciation right or (2) canceling any outstanding stock option or stock appreciation right that has an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other awards. Dividends add nd Dividend Equivalentstt The Amended 2020 Plan provides that dividends or dividend equivalents may not be paid or credited to any awards granted under the Amended 2020 Plan. ii Limit on Non-Em- plm oyll ee Direii ctortt Compensation The aggregate value of all compensation granted or paid by us to any individual forff service as a non-employee director with the next subsequent year (such period, the “annual period”), including awards granted under the respect to any period commencing on the date of the annual stockholders meeting forff the annual stockholders meeting forff Amended 2020 Plan and cash fees aggregate value of any equity award(s) granted by us to any individual forff with his or her initial election or appoi a aggregate compensation granted or paid by us to any individual forff period in which such individual is firff st appointed or elected to the Board of Directors will not exceed $3,250,000 in total value). For purpos es of these limitations, the value of any equity awards is calculated based on the grant date fair value of such awards for rr financial reporting purpos paid to such non-employee director, will not exceed $1,250,000 in total value. In addition, the ntment to the Board of Directors will not exceed $2,000,000 in total value (such that the service as a non-employee director with respect to an annual service as a non-employee director upon or in connection a particular year and ending on the date of es. ff rr Stoctt k OptOO iott ns Stock options may be granted under the Amended 2020 Plan pursuant to stock option agreements. The Amended 2020 Plan s incentive stock options, or ISOs, and nonstatutory stock options, or permits the grant of stock options that are intended to qualify aff NSOs. The exercise price of a stock option granted under the Amended 2020 Plan may not be less than 100% of the faiff r market value of the common stock subju ect to the stock option on the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not be less than 110% of such fair market value. 29 The term of stock options granted under the Amended 2020 Plan may not exceed ten years froff m the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not exceed five years froff m the date of grant. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiff liates, if a participant’s service relationship with us or any of our affiff liates (referred to in this Proposal Three as “continuous service”) terminates (other than for cause (as definff ed in the Amended 2020 Plan) or the participant’s death or disability (as definff ed in the Amended 2020 Plan)), the participant may exercise any vested stock options for up tu o three months following the participant’s termination of continuous service. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiff liates, if a participant’s continuous service terminates due to the participant’s disability, the participant may exercise any vested stock options for up to 12 months following the participant’s termination dued participant’s stock option agreement or other written agreement with us or one of our affiff liates, if a participant’s continuous service terminates due to the participant’s death (or the participant dies within a specified period following termination of continuous service), the participant’s beneficff explicitly provided otherwise in a participant’s stock option agreement or other written agreement with us or one of our affiff liates, if a participant’s continuous service is terminated for cause, all stock options held by the participant will terminate upon the participant’s termination of continuous service and the participant will be prohibited froff m exercising any stock option froff m and afteff termination date. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiff liates, the term of a stock option may be extended if a participant’s continuous service terminates for any reason other than forff cause and, at any time during the applicable post-termination exercise period, the exercise of the stock option would be prohibited by applicable laws or the sale of any common stock received upon however, may a stock option be exercised afteff such exercise would violate our insider trading policy. In no event, to the participant’s disability. Except as otherwise provided in a o 18 months following the participant’s death. Except as iary may exercise any vested stock options for up tu r its original expiration date. r such u u In addition, the current form of stock option agreement forff employees (other than Dr. Gorman) under the Amended 2020 Plan provides that if an employee’s continuous service terminates dued option agreement and described below), the employee’s stock option will become fully vested as of the date of such retirement, and the employee may exercise such stock option forff “retirement” generally means a termination of an employee’s continuous service upon least fivff e years of continuous service, provided that the employee complies with any other requirements in the Company’s then- current policy regarding retirement. The current form of stock option agreement forff Dr. Gorman under the Amended 2020 Plan does . not provide for any retirement-related benefitsff es of the forff egoing, r the employee has reached age 60 with at to the employee’s retirement (as defined in the employee’s stock up to 12 months following such retirement. For purpos or afteff u r Acceptabla e forff ms of consideration forff the purchase of our common stock pursuant to the exercise of a stock option under the Amended 2020 Plan will be determined by the Plan Administrator and may include payment: (i) by cash, check, bank draft or money order payable to us; (ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; (iii) by delivery t r attestation); (iv) by a net exercise arrangement (for NSOs l delivery orr only); or (v) in other legal consideration appr o us of shares of our common stock (either by actuat oved by the Plan Administrator. a rr Stock options granted under the Amended 2020 Plan may become exercisable in cumulative increments, or “vest,” as determined by the Plan Administrator at the rate specified in the stock option agreement. Shares covered by diffeff granted under the Amended 2020 Plan may be subject to different vesting scheduld es as the Plan Administrator may determine. rent stock options The Plan Administrator may impose limitations on the transferabia lity of stock options granted under the Amended 2020 Plan a stock option granted under the Amended 2020 Plan other than by will or in its discretion. Generally, a participant may not transferff the laws of descent and distribution or, subju ect to approval by the Plan Administrator, pursuant to a domestic relations order. However, the Plan Administrator may permit transfer of a stock option in a manner that is not prohibited by appl Options may not be transferff red to a third party financial institutt icable tax and securities laws. ion forff value. a Limita ii tions on Incentivtt e StoSS ck Options In accordance with current federal tax laws, the aggregate faiff r market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisabla e forff stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise faiff as ISOs are treated as NSOs. No ISO may be granted to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power unless the following conditions are satisfied: the firff st time by a participant durd ing any calendar year under all of our l to qualifyff • • the exercise price of the ISO must be at least 110% of the faiff the date of grant; and the term of the ISO must not exceed five years froff m the date of grant. r market value of the common stock subju ect to the ISO on Subju ect to adjud stment for certain changes in our capia talization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs under the Amended 2020 Plan is 34,135,000 shares. 30 Stoctt k ApprA eciatiott n Rightgg stt Stock appr a eciation rights may be granted under the Amended 2020 Plan pursuant to stock appreciation right agreements. Each a eciation right is denominated in common stock share equivalents. The strike price of each stock appr stock appr r market value of the common stock subju ect to determined by the Plan Administrator, but will in no event be less than 100% of the faiff the stock appreciation right on the date of grant. The term of stock appr eciation rights granted under the Amended 2020 Plan may not a exceed ten years from the date of grant. The Plan Administrator may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock appreciation right may be paid in shares of our common stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the Plan Administrator and set forth in the stock appr conditions upon termination of continuous service and restrictions on transferff as stock options under the Amended 2020 Plan. eciation rights will be subju ect to the same eciation right agreement. Stock appr eciation right will be a a a Restritt ctedtt Stoctt k Awardsdd Restricted stock awards may be granted under the Amended 2020 Plan pursuant to restricted stock award agreements. A cash, check, bank draft or money order payabla e to us, the participant’s restricted stock award may be granted in consideration forff services performed for us, or any other form of legal consideration acceptabla e to the Plan Administrator. Shares of our common stock acquired under a restricted stock award may be subject to forfeiff ture to or repurchase by us in accordance with a vesting scheduld e to be determined by the Plan Administrator. Rights to acquire shares of our common stock under a restricted stock award may be transferred only uponu continuous service forff termination date may be forfeited to or repurchased by us. such terms and conditions as are set forth in the restricted stock award agreement. Upon a participant’s termination of any reason, any shares subject to restricted stock awards held by the participant that have not vested as of such Restritt ctedtt Stoctt k UniUU t Aii wardsdd Restricted stock unit awards may be granted under the Amended 2020 Plan pursuant to restricted stock unit award agreements. Payment of any purchase price may be made in any forff m of legal consideration acceptabla e to the Plan Administrator. A restricted stock unit award may be settled by the delivery orr other forff m of consideration determined by the Plan Administrator and set forth in the restricted stock unit award agreement. Restricted stock unit awards may be subju ect to vesting in accordance with a vesting scheduld e to be determined by the Plan Administrator. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written agreement with us, restricted stock units that have not vested will be forfeited upon f shares of our common stock, in cash, in a combination of cash and stock, or in any the participant’s termination of continuous service forff any reason. u Perforff marr nce Awardsdd The Amended 2020 Plan allows us to grant performance awards. A performance award is an award that may vest or may be exercised, or that may become earned and paid, contingent upon the attainment of certain performance goals during a performance period. A performance award may require the completion of a specifieff d period of continuous service. The length of any performance period, the performance goals to be achieved durd ing the performance period, and the measure of whether and to what degree such performance goals have been attained will be determined by the Plan Administrator in its discretion. In addition, to the extent permitted by appl payment of performance awards. icable award agreement, the Plan Administrator may determine that cash may be used in icable law and the appl a a Performance goals under the Amended 2020 Plan will be based on any one or more of the folff lowing performance criteria: (1) earnings (including earnings per share and net earnings, in either case beforff e or after any or all of: iff nterest, taxes, depreciation and amortization, legal settlements or other income (expense), or stock-based compensation, other non-cash expenses and changes in deferred revenue); (2) total stockholder returt n; (3) returt n on equity or average stockholder’s equity; (4) return on assets, investment, or capital employed; (5) stock price; (6) margin (including gross margin); (7) income (beforff e or after taxes); (8) operating income; (9) operating income after taxes; (10) pre-tax profit; (11) operating cash floff w; (12) sales, prescriptions, or revenue targets; (13) increases in revenue or product revenue; (14) expenses and cost reducd tion goals; (15) improvement in or attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share; (18) cash floff w; (19) cash floff w per share; (20) cash burn; (21) share price performance; (22) debt reduction; (23) implementation or completion of projeo cts or processes (including, without limitation, discovery of a pre-clinical drugr clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory f acceptances, regulatory orr plans, compliance programs or education campaigns); (24) customer satisfaction; (25) stockholders’ equity; (26) capital expenditures; (27) debt levels; (28) financings; (29) operating profit or net operating profit; (30) workforce diversity; (31) growth of net income or operating income; (32) billings; (33) employee hiring; (34) funds from operations; (35) budget management; (36) strategic partnerships or transactions (including acquisitions, joint venturt es or licensing transactions); (37) engagement of thought leaders and patient advocacy groups; (38) enhancement of intellectuat l property portfolff (39) litigation preparation and management; and (40) any other measure of performance selected by the Plan Administrator. candidate to enter a clinical trial, rr ovals, presentation of studies and launch of commercial a r advisory committee interactions, regulatory arr ppr candidate, recommendation of a drugrr ications and granting of patents; g submissions, regulatory f g of patent appl io, filinff g ilinff ilinff a rr 31 Performance goals may be based on a Company-wide basis, with respect to one or more business units, divisions, affiliates or th the performance goals at the time the performance goals are non-U.S. dollar denominated performance goals; (3) to exclude the effects of changes to business segments, and in either absa olute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Plan Administrator (i) in the award agreement at the time the award is granted or (ii) in such other document setting forff establa ished, the Plan Administrator will appropriately make adjud stments in the method of calculating the attainment of the performance goals for a performance period as follows: (1) to exclude restructurt exchange rate effeff cts, as applicable, forff generally accepted accounting principles; (4) to exclude the effects of any statutt ory arr the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by us achieved performance objectives at targeted levels durd ing the balance of a performance period following such divestiture; (8) to exclude the effeff ct of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, rate change, reorganization, recapitalization, merger, consolidation, spin-off, cff ombination or exchange of shares or other similar corpor or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; and (12) to exclude the effects of the timing of acceptance forff ody. any other regulatory brr review and/or approval of submissions to the U.S. Food and Drug Administration or ing and/or other nonrecurring charges; (2) to exclude ate tax rates; (5) to exclude djustments to corpor rr In addition, the Plan Administrator retains the discretion to define the manner of calculating the performance criteria it selects to use forff performance goal. a performance period and to reducd e or eliminate the compensation or economic benefit dued upon the attainment of any Othett r Awardsdd Other forff ms of awards valued in whole or in part by referff ence to, or otherwise based on, our common stock may be granted either alone or in addition to other awards under the Amended 2020 Plan. Subject to the terms of the Amended 2020 Plan, the Plan Administrator will have sole and complete authority to determine the persons to whom and the time or times at which such other awards will be granted, the number of shares of our common stock to be granted and all other terms and conditions of such other awards. Clawll back PolPP icll yc Awards granted under the Amended 2020 Plan will be subju ect to recoupment in accordance with the Neurocrine Biosciences, Inc. Incentive Compensation Recoupment Policy and any other clawback policy that the Company adopts. In addition, the Board may impose other clawback, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property uponu the occurrence of cause. Changes to Ctt apiCC taii l StrSS ucture In the event of certain capitalization adjud stments, the Plan Administrator will appropriately and proportionately adjud st: (i) the class(es) and maximum number of shares of our common stock subject to the Amended 2020 Plan; (ii) the class(es) and maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs; and (iii) the class(es) and number of shares of our common stock and the exercise, strike or purchase price per share of our common stock subju ect to outstanding awards. Corporate Ttt raTT nsaction and Change in Contrott l The folff lowing applies to each outstanding award under the Amended 2020 Plan in the event of a corpor r ate transaction (as defined in the Amended 2020 Plan and described below) or a change in control (as defined in the Amended 2020 Plan and described below), unless provided otherwise in the appl Company or an affiliate, or in any director compensation policy of the Company. For purpos “Transaction” will mean such corporate transaction or change in control. icable award agreement, in any other written agreement between a participant and the r es of this Proposal Three, the term a 32 In the event of a Transaction, any awards outstanding under the Amended 2020 Plan may be assumed, continued or substitutt ed for by any surviving or acquiring corporation (or its parent company) (such entity, the “acquiring entity”), and any reacquisition or repurchase rights held by us with respect to the award may be assigned to the acquiring entity. If the acquiring entity does not assume, continue or subsu titute for such awards, then (i) with respect to any such awards that are held by participants who are employees or non-employee directors and, in each case, whose continuous service has not terminated prior to the effeff ctive time of the Transaction (such participants, the “current employee and director participants”), the vesting (and exercisability, if appl be accelerated in full (and with respect to any such awards that are subju ect to performance-based vesting conditions or requirements, vesting will be deemed to be satisfieff d at the greater of (x) the target level of performance or (y) the actuat measured in accordance with the appl icable performance goals as of the date of the Transaction) to a date prior to the effective time of the Transaction (contingent upon the effectiveness of the Transaction), and such awards will terminate if not exercised (if applicable) at or prior to the effeff ctive time of the Transaction, and any reacquisition or repurchase rights held by us with respect to such awards will lapsa e (contingent upon the effectiveness of the Transaction), and (ii) any such awards that are held by persons other than current employee and director participants will terminate if not exercised (if applicable) at or prior to the effective time of the Transaction, except that any reacquisition or repurchase rights held by us with respect to such awards will not terminate and may continue to be exercised notwithstanding the Transaction. icable) of such awards will l level of performance a a In the event an award will terminate if not exercised at or prior to the effective time of a Transaction, the Plan Administrator may provide that the holder of such award may not exercise such award but instead will receive a payment equal in value to the excess, if any, of (i) the value of the property the participant would have received upon price payable by such holder in connection with such exercise. the exercise of the award, over (ii) any exercise u Except as otherwise provided in the applicable award agreement, in any other written agreement between a participant and the u or within 12 months following the effective time of a Transaction, the vesting (and exercisability, if appl Company or an affiliate, or in any director compensation policy of the Company, in the event that an employee or director’s to such employee or director’s death continuous service is involuntarily terminated without cause (including any such termination dued or disabia lity) upon icable) of any assumed awards (as defined in the Amended 2020 Plan and described below) held by such employee or director as of the date of such termination will be accelerated in fulff l conditions or requirements, vesting will be deemed to be satisfieff d at the greater of (x) the target level of performance or (y) the actuat level of performance measured in accordance with the appl icable performance goals as of the date of such termination), effective as of the date of such termination. For purpos Amended 2020 Plan that was assumed or continued, or any outstanding similar award that was granted in subsu titution forff under the Amended 2020 Plan, in each case by the acquiring entity in connection with the appl es of the forff egoing, an “assumed award” generally means any outstanding award under the an award l (and with respect to any such awards that are subju ect to performance-based vesting icable Transaction. a a a r Under the Amended 2020 Plan, a “corpor r ate transaction” generally means the consummation of any one or more of the following events: (1) a sale or other disposition of all or subsu tantially all of our assets; (2) a sale or other disposition of at least 90% of our outstanding securities; (3) a merger, consolidation or similar transaction where we do not survive the transaction; or (4) a merger, consolidation or similar transaction where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction. Under the Amended 2020 Plan, a “change in control” generally means the occurrence of any one or more of the folff lowing events: (1) the acquisition by any person, entity or group of our securities representing more than 50% of the combined voting power of a merger, consolidation, or similar transaction; (2) a merger, consolidation or of our then outstanding securities, other than by virtuet similar transaction in which our stockholders immediately beforff e such transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in substantially the same proportions as their ownership immediately prior to such transaction; (3) our stockholders approve or our Board of Directors appr oves our complete dissolution or liquidation, or our complete dissolution or liquidation otherwise occurs; (4) a sale, lease, exclusive license or other disposition of all or subsu tantially all of our assets, other than to an entity, more than 50% of the combined voting power of which is owned by our stockholders in subsu tantially the same proportions as their ownership of our outstanding voting securities immediately prior to such transaction; or (5) when a majoa rity of our Board of Directors becomes comprised of individuals who were not serving on our Board of Directors on the date the 2020 Plan was adopted by our Compensation Committee (the “incumbent Board of Directors”), or whose nomination, appointment, or election was not approved by a majoa rity of the incumbent Board of Directors still in offiff ce. a Planll Amendments and TerTT mirr naii tion The Plan Administrator will have the authority to amend or terminate the Amended 2020 Plan at any time. However, except as otherwise provided in the Amended 2020 Plan, no amendment or termination of the Amended 2020 Plan may materially impair a participant’s rights under his or her outstanding awards without the participant’s consent. We will obtain stockholder appr amendment to the Amended 2020 Plan as required by appl Administrator, the Amended 2020 Plan will automatically terminate on March 15, 2030, which is the day beforff e the tenth anniversaryrr of the date the 2020 Plan was adopted by our Compensation Committee. oval of any icable law and listing requirements. Unless terminated sooner by the Plan a a 33 U.S. Federal Income Tax Consequences The folff lowing is a summary of the principal United States federal income tax consequences to participants and us with respect to participation in the Amended 2020 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The inforff mation is based upon current federal income tax rules and thereforff e is subject to change when those rulr es change. Because the tax consequences to any participant may depend on his or her particular situation, each participant should consult the participant’s tax adviser regarding the fedff eral, state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired under the Amended 2020 Plan. The Amended 2020 Plan is not qualifieff d under the provisions of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and is not subju ect to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Our abia lity to realize the benefit of any tax deducd tions described below depends on our generation of taxable income as well as the requirement of reasonableness and the satisfaction of our tax reporting obligations. Nonstatutory Stoctt k OptOO iott ns r Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the faiff market value of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the faiff participant is employed by us or one of our affiff liates, that income will be subju ect to withholding taxes. The participant’s tax basis in those shares will be equal to his or her faiff r market value on the date of exercise of the stock option, and the participant’s capital gain holding period for those shares will begin on that date. r market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the Subju ect to the requirement of reasonabla eness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deducd tion equal to the taxabla e ordinary i by the participant. rr ncome realized Incentive StoSS ck Options The Amended 2020 Plan provides forff the grant of stock options that are intended to qualify aff s “incentive stock options,” as defined in Section 422 of the Internal Revenue Code. Under the Internal Revenue Code, a participant generally is not subju ect to ordinary income tax upon the grant or exercise of an ISO. If the participant holds a share received upon than two years froff m the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the diffeff of that share and the participant’s tax basis in that share will be long-term capital gain or loss. rence, if any, between the amount realized on a sale or other taxabla e disposition exercise of an ISO forff more u u If, however, a participant disposes of a share acquired upon u exercise of an ISO beforff e the end of the required holding period, red to as a disqualifyiff ng disposition, the participant generally will recognize ordinary income in the year of the which is referff disqualifyiff ng disposition equal to the excess, if any, of the faiff over the exercise price. However, if the sales proceeds are less than the faiff stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year. r market value of the share on the date of exercise of the stock option r market value of the share on the date of exercise of the r For purpos es of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon u exercise of an ISO exceeds the exercise price of the stock option generally will be an adjud stment included in the participant’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifyiff ng disposition of the share in the year in which the stock option is exercised, there will be no adjud stment for alternative minimum tax purpos es with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired uponu rr of an ISO is increased by the amount of the adjustment taken into account with respect to that share forff rr purpos es in the year the stock option is exercised. alternative minimum tax exercise We are not allowed a tax deducd tion with respect to the grant or exercise of an ISO or the disposition of a share acquired upon u exercise of an ISO after the required holding period. If there is a disqualifyiff ng disposition of a share, however, we will generally be entitled to a tax deducd tion equal to the taxabla e ordinary i reasonabla eness, the provisions of Section 162(m) of the Internal Revenue Code, and provided that either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount. ncome realized by the participant, subju ect to the requirement of rr 34 Restritt ctedtt Stoctt k Awardsdd Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the r market value of the stock received over any amount paid by the recipient in exchange for the stock. If,ff excess, if any, of the faiff however, the stock is not vested when it is received (for example, if the employee is required to work forff have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the faiff over any amount paid by the recipient in exchange for the stock. A recipient may, however, fileff Service, within 30 days following his or her receipt of the restricted stock award, to recognize ordinary income, as of the date the recipient receives the restricted stock award, equal to the excess, if any, of the faiff stock award is granted over any amount paid by the recipient for the stock. r market value of the stock on the date it becomes vested an election with the Internal Revenue r market value of the stock on the date the restricted a period of time in order to The recipient’s basis for the determination of gain or loss upon u stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested. the subsequent disposition of shares acquired fromff a restricted Subju ect to the requirement of reasonabla eness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deducd tion equal to the taxabla e ordinary i by the recipient of the restricted stock award. rr ncome realized Restritt ctedtt Stoctt k UniUU t Aii wardsdd Generally, the recipient of a restricted stock unit award structurt ed to comply with the requirements of Section 409A of the Internal Revenue Code or an exception to Section 409A of the Internal Revenue Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the faiff exchange for the stock. To comply with the requirements of Section 409A of the Internal Revenue Code, the stock subject to a lowing events: a fixed calendar date (or dates), restricted stock unit award may generally only be delivered upon one of the folff separation froff m service, death, disability or a change in control. If delivery orr ccurs on another date, unless the restricted stock unit award otherwise complies with or qualifieff s forff (including delivery urr ponu an additional 20% federal tax and interest on any taxes owed. achievement of a performance goal), in addition to the tax treatment described above an exception to the requirements of Section 409A of the Internal Revenue Code r market value of the stock received over any amount paid by the recipient in , the recipient will owe a the subsequent disposition of shares acquired fromff stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered. The recipient’s basis for the determination of gain or loss upon u a restricted Subju ect to the requirement of reasonabla eness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deducd tion equal to the taxabla e ordinary i by the recipient of the restricted stock unit award. rr ncome realized Stoctt k ApprA eciatiott n Rightgg stt Generally, if a stock appr a on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received uponu exercise. eciation right is granted with an exercise price equal to the fair market value of the underlying stock such Subju ect to the requirement of reasonabla eness, the provisions of Section 162(m) of the Internal Revenue Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deducd tion equal to the taxabla e ordinary i by the recipient of the stock appr eciation right. a rr ncome realized Sectiott n 162(m) (( Limita ii tions Under Section 162(m) of the Internal Revenue Code, compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxabla e year for any covered employee is generally non-deductible. Awards granted under the Amended 2020 Plan will be subju ect to the deducd tion limit under Section 162(m) of the Internal Revenue Code and will not be eligible to qualify f transition relief provided by the Tax Cuts and Jobs Act. For furff the Internal Revenue Code and such transition relief, please see the section entitled “Compensation Discussion and Analysis—Tax Considerations—Internal Revenue Code Section 162(m).” the performance-based compensation exception under Section 162(m) of the Internal Revenue Code pursuant to the ther information regarding the deducd tion limit under Section 162(m) of orff ff 35 New Plan Benefitff s under the Amended 2020 Plan The folff lowing tabla e sets forff th certain information regarding future benefits under the Amended 2020 Plan. Name Kevin C. Gorman, Ph.D. Matthew C. Abernethy Kyle W. Gano, Ph.D. Jude Onyia, Ph.D. Eiry W. Roberts, M.D. All current executive officers as a group All current directors who are not executive officers as a group All current employees, including current offiff cers who are not executive officers, as a group Position Chief Executive Officff er Chief Financial Officff er Chief Business Development and Strategy Officer Chief Scientificff Offiff cer Chief Medical Offiff cer Number of Shares (1) (1) (1) (1) (1) (1) (2) (1) (1) (2) a oval of this Proposal Three. Accordingly, the benefitsff Awards granted under the Amended 2020 Plan to our executive officers and other employees are discretionary and are not subju ect to set benefitsff or amounts under the terms of the Amended 2020 Plan, and the Board of Directors and the Compensation Committee have not granted any awards under the Amended 2020 Plan that are subject to stockholder appr or amounts that will be received by or allocated to our executive officers and other employees under the Amended 2020 Plan are not determinable. or amounts under the terms Awards granted under the Amended 2020 Plan to our non-employee directors are discretionary and are not subju ect to set benefitsff of the Amended 2020 Plan, and the Board of Directors and the Compensation Committee have not granted any awards under the Amended 2020 Plan that are subju ect to stockholder appr oval of this Proposal Three. However, pursuant to our current equity compensation program for non-employee directors, each of our current non-employee directors are granted annual awards in the form of a stock option, a restricted stock unit award, or a stock option and a restricted stock unit award, depending on each individual’s election, on the date of each of our annual meetings of stockholders, provided that such individual is a non- employee director on such date and will be continuing as a non-employee director following such date. The total dollar value of each non-employee director’s annual awards in 2024 will be $400,000. The number of shares of our common stock subju ect to each such award will be based on the valuation methodology establa ished by the Board, which is in part based on the faiff On and after the date of the Annual Meeting, any such awards will be granted under the Amended 2020 Plan if this Proposal Three is approve stockholders. For additional inforff mation regarding our equity compensation program for non-employee directors, see the “Directors Compensation Summary” sectiion abbove r market value of our common stock on the grant date and, thereforff e, is not determinable at this time. d by our a a a . Plan Benefits under the 2020 Plan The folff lowing tabla e sets forff th, forff each of the individuals and various groups indicated, the total number of shares of our common stock subju ect to awards that have been granted (even if not currently outstanding) under the 2020 Plan as of the Record Date. Position Chief Executive Officff er Chief Financial Officff er Chief Business Development and Strategy Officer Chief Scientificff Offiff cer Chief Medical Offiff cer Name Kevin C. Gorman, Ph.D. Matthew C. Abernethy Kyle W. Gano, Ph.D. Jude Onyia, Ph.D. Eiry W. Roberts, M.D. All current executive officff ers as a group All current directors who are not executive officers as a group Each nominee for election as a director: William H. Rastetter, Ph.D. George J. Morrow Leslie V. Norwalk Christine A. Poon Each associate of any executive officers, current directors or director nominees Each other person who received or is to receive 5% of purchase rights All current employees, including all current offiff cers who are not executive officers, as a group Number of Shares 714,432 291,523 306,842 337,360 276,450 3,029,527 228,747 27,136 22,756 24,947 16,375 — — 11,388,239 THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL THREE 36 The folff lowing tabla e sets forff th information regarding all of the Company’s equity compensation plans as of December 31, 2023: EQUITY COMPENSATION PLANS Plan Category Equity compensation plans approved by security holders (1) ......................... Equity compensation plans not approved by security holders (2) ................... Total ................................................................................................................. Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) 12,463,037 50,140 12,513,177 Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b) (3) $84.51 $74.03 $84.46 Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column a) (c) 10,985,754 55,182 11,040,936 (1) (2) (3) future issuance under equity compensation plans approved by security holders as of December 31, 2023 are issuance under the 2020 The number of securities remaining availabla e forff from the 2020 Plan and the Neurocrine Biosciences, Inc. 2018 Employee Stock Purchase Plan (the "ESPP"). The shares availabla e forff Plan may be issued in the forff m of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards, subju ect to limitations set forff future issuance, which are included under column (c). Consists of stock options and restricted stock unit awards that were issued to certain employees under the Neurocrine Biosciences, Inc. Inducement Plan, -year vesting period and the restricted stock unit awards generally have which was not approved by security holders. These stock option grants have a four vesting periods of three to four The weighted average exercise price excludes restricted stock unit awards, which have no exercise price. th in the 2020 Plan. The ESPP had 460,579 shares remaining availabla e forff years. ff ff 37 PROPOSAL FOUR: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM General The Audit Committee has selected Ernst & Young LLP to audit the financial statements of the Company forff the current fiscal year ending December 31, 2024. Ernst & Young LLP has audited the Company’s finff ancial statements since 1992. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they so desire, and are expected to be availabla e to respond to appropriate questions. Stockholders are not required to ratify t ff he selection of Ernst & Young LLP as the Company’s independent registered public accounting firff m. However, the Audit Committee is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify t he selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratifieff d, the Audit Committee in their discretion may direct the selection of a different independent registered public accounting firff m at any time durd ing the year if they determine that such a change would be in the best interests of the Company and its stockholders. ff Vote Required The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the item will be required to appr he Audit Committee’s selection of Ernst & Young LLP. The Board of Directors unanimously recommends voting “FOR” approval and ratificff ation of such selection. In the event of a negative vote on such ratificff ation, the Audit Committee will reconsider its selection. ove and ratify t a ff 38 The folff lowing tabla e sets forff th information regarding our executive officers and other management team members as of the Record Date: EXECUTIVE OFFICERS Name Kevin C. Gorman, Ph.D................................................................ Matthew C. Abernethy ................................................................. Eric Benevich ............................................................................... David W. Boyer............................................................................ Julie S. Cooke............................................................................... Ingrid Delaet ................................................................................. Kyle W. Gano, Ph.D..................................................................... Darin M. Lippoldt......................................................................... Jude Onyia, Ph.D. ......................................................................... Eiry W. Roberts, M.D................................................................... Age 66 44 58 45 58 58 51 58 60 60 Position rr Chief Executive Officff er and Director Chief Financial Offiff cer Chief Commercial Officff er Chief Corpor ate Affairs Officer Chief Human Resources Offiff cer Chief Regulatory Orr Chief Business Development and Strategy Officer Chief Legal Offiff cer and Corpor Chief Scientific Officer Chief Medical Offiff cer ate Secretaryr fficer rr a See above for biographical inforff mation concerning Kevin C. Gorman, Ph.D. Matthew C. Abernethyh was appoi a nted Chief Financial Offiff cer in November 2017 and is responsible for leading corpor rr ate finance activities, commercial supply chain operations, inforff mation technology, investor relations, faci at Neurocrine Biosciences. Mr. Abernethy has over 15 years of biotech and medical device experience in finance and investor relations. He joined Neurocrine Biosciences from Zimmer Biomet, where he held various positions from February 2rr 2017, including most recently, Vice President, Investor Relations and Treasurer and Vice President of Finance forff Global Product Engines. He began his career with KPMG LLP and became a certifieff d public accountant (inactive). Mr. Abernethy earned his B.S. in Accounting and Business Administration froff m Grace College and an MBA from the University of Chicago. lities, and European operations 009 to November the Americas and ff Eric Benevich was appoi a nted Chief Commercial Officer in May 2015 and is responsible for all aspects of commercial development, marketing and sales of the Neurocrine Biosciences product portfolff experience in the pharmaceutical industry arr nd previously served in various positions of increasing responsibility at AstraZeneca, Amgen, Peninsula Pharmaceuticals and Avanir Pharmaceuticals in the sales and marketing of drugs such as Prilosec®, Epogen®, ,, Enbrel® and Neudexta®. Mr. Benevich has a BBA in International Business froff m Washington State University. io. Mr. Benevich has over 30 years of commercial David W. BWW oyer was appoi a nted Chief Corpor r ate Affaiff rs Offiff cer in September 2019 and is responsible for patient advocacy and r irs, specializing in the life sff ate communications, government relations, and public policy at Neurocrine Biosciences. Mr. Boyer brings nearly engagement, corpor 20 years of experience in public affaff Biosciences afteff r nine years with the BGR Group, where he served as a Principal and the Head of the Health & Lifesff ciences Practice, leading the firm’s healthcare advocacy, policy and strategy development, and strategic consulting team. During his tenure at the BGR Group, Mr. Boyer led public policy, advocacy, and strategic communications initiatives for a wide range of healthcare clients. Prior to joining the BGR Group, Mr. Boyer served as Special Assistant to the President forff Legislative Affairs under President George W. Bush, Assistant Commissioner forff Legislation at the U.S. Food and Drug Administration, and Special Assistant to the Secretary arr U.S. Department of Health and Human Services. In addition to his public service, Mr. Boyer held senior advocacy positions at the Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufact holds a B.A. in Government from Georgetown University. ciences and biopharmaceutical sectors. He joins Neurocrine urt ers of America (PhRMA). Mr. Boyer t the ff a Julie S. Cooke was appoi nted Chief Human Resources Offiff cer in September 2017. She joined Neurocrine Biosciences from the Sanford Burnham Prebys Medical Research Institute where she served as Senior Vice President forff Human Resources and was a member of the executive management team. Previously, Ms. Cooke held multiple positions at Life Technologies, including being the human resource partner to the Chief Operating Officer, Division Presidents and Global Function Leads. Prior to Life Tff she ran human resources and was a member of the executive management team at SGX Pharmaceuticals. Ms. Cooke began her career at PepsiCo., The Pepsi Bottling Group, and Gateway, where she held positions of increasing responsibility in human resources. She holds a Bachelor of Arts in Economics froff m Colorado College. echnologies, Ingrid Delaet, Ptt h.PP D. was appoi a nted Vice President, Regulatory Arr ffairs in 2021, and Chief Regulatory Orr fficer in October ffairs, quality assurance, medical writing, and program management teams. Dr. irs at Intercept Pharmaceuticals, which she joined in 2016. Between 1997 and 2016, Dr. Delaet held various positions of 2022. She is responsible for leading the regulatory arr Delaet has more than 25 years of drug development experience in several therapea utic areas, including immunology, hepatology, cardiovascular, and metabol ic diseases. Prior to joining Neurocrine Biosciences, she served as Senior Vice President, Regulatoryrr Affaff increasing responsibility at Bristol-Myers Squibb in the United States, firff st in Clinical Research and Development and then in Global Regulatory Arr ffairs, where she served as Therapeutic Area Lead for Immunology. Prior to Bristol-Myers Squibb, she held positions in clinical research at CellPro, Inc. and Wyeth-Ayerst Research. She received her Ph.D. in Immunology and her M.Sc. in Pharmaceutical Sciences from The Free University of Brusrr sels, Belgium. a 39 Kyle W. Gano, Ph.PP D. was appoi a nted Chief Business Development Officer in 2011, and Chief Business Development and a ations with AbbVie, Mitsubishi Tanabe Pharma, Sentia Medical Sciences, Jnana Therapeutics, Voyager Therapea utics, Strategy Offiff cer in 2020, and is responsible for all business and corporate development activities, including the management of ongoing collabor Xenon Pharmaceuticals, Idorsia, Takeda Pharmaceutical Company Limited, and Sosei Heptares. From 2001 to 2011, Dr. Gano held several positions of increasing responsibility at Neurocrine Biosciences spanning marketing analytics to business development. Dr. Gano received his B.S. in Chemistry f his Ph.D. in Organic Chemistry arr roff m the University of Oregon, B.S. in Biochemistry f nd M.B.A. in Finance froff m the University of Califorff nia, Los Angeles. roff m the University of Washington, and rr rr Darin Mii pp . LMM ippol dtll was appoi a nted Chief Legal Offiff cer and Corporate Secretary i rr n October 2014 and has oversight of all legal, l property, and compliance matters. Mr. Lippoldt is also serving as Chair of the Biotechnology Innovation Organization intellectuat (BIO) General Counsels’ Committee forff President, General Counsel, Chief Compliance Officer and Corpor r Prior to Volcano, Mr. Lippoldt served as Associate General Counsel at Amylin Pharmaceuticals, Inc. He previously practiced corporate and securities law with the law firms of Fulbright & Jaworski LLP and Matthews and Branscomb, P.C. Mr. Lippoldt received a B.B.A. in Finance, an M.A. in International Relations and a J.D. from St. Mary’s University. 2023-2024. Prior to joining Neurocrine Biosciences, Mr. Lippoldt served as Executive Vice ation, a company he joined in 2010. f Volcano Corpor ate Secretary orr r Jude Onyin a, Ph.D. was appoi a nted Chief Scientific Officer in November 2021 and leads the drug discovery and non-clinical development teams responsible for bolstering and advancing the company’s pipeline of therapea utic candidates. Additionally, in Februar ry 2023, Dr. Onyia joined Voyager Therapea utics, Inc.'s board of directors. A scientist with more than 25 years of experience in the pharmaceutical industry,rr Dr. Onyia is the former Vice President of Biotechnology Discovery Research at Eli Lilly and Company. At Lilly, Dr. Onyia contributed to the discovery and/or advancement of more than 60 clinical candidates across multiple therapeutic areas, which led to seven approved medicines. He also was responsible for more than 50 pre-candidate programs across multiple therapeutic areas. Dr. Onyia holds a B.S. in Forest Biology from the State University of New York (SUNY)UU Science and Forestry, as well as a Ph.D. in Cell and Molecular Biology from the SUNYU College of Environmental Health Science Center, both at Syracuse NY. Eiryii W. Roberts,tt M.D. was appoi a nted Chief Medical Offiff cer in January 2018 and is responsible for all clinical development irs activities at Neurocrine Biosciences. Dr. Roberts has over 25 years of research and development experience in the cross all phases of drug development froff m research through commercialization in multiple therapeutic areas, and medical affaff pharmaceutical industry arr including neuroscience, inflammation, oncology and metabolic diseases. She joined Neurocrine Biosciences from Eli Lilly and Company where she had worked since May 1991. During her tenure at Lilly, Dr. Roberts held various positions of increasing responsibility, including Vice President, Clinical Pharmacology/Managing Director of Chorusr , a position she held from October 2014 until December 2017, and Vice President of Research and Development, BioMedicines Business Unit. Dr. Roberts is a physician who trained in pharmacology and medicine in the United Kingdom, qualifyiff ng from the University of London in 1987. Her post-graduad te clinical training was in clinical pharmacology and cardiology at St. Bartholomew’s Hospital and the Royal London Hospital. Dr. Roberts also serves as a director of Amicus Therapeutics, a clinical-stage biopharmaceutical company focff used on rare diseases. 40 This Compensation Discussion and Analysis describes Neurocrine Biosciences’ executive officer compensation program for 2023. It provides qualitative information on the factors relevant to these decisions and the manner in which compensation is awarded to the folff lowing individuals who are our Named Executive Officers (“NEOs”) for 2023: COMPENSATION DISCUSSION AND ANALYSIS Kevin C. Gorman, Ph.D., Chief Executive Officer • • Matthew C. Abernethy, Chief Financial Offiff cer • • • KylKK e W. Gano, Ph.D., Chief Business Development and Strategy Offiff cer Jude Onyia, Ph.D., Chief Scientificff Offiff cer Eiry Wrr . Roberts, M.D., Chief Medical Officer Executive Summary Busineii ss Overview Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company with a simple purpos people with great needs, but few options. We are dedicated to discovering and developing life-ff changing treatments forff under-addressed neurological, neuroendocrine, and neuropsychiatric disorders. The Company’s diverse portfolff and Drug Administration (“FDA”) appr oved treatments forff insufficiency, endometriosis and uterine fibroids in collabor approved treatment for classic congenital adrenal hyperplasia ("CAH") and a diversified portfolff in multiple therapeutic areas. For three decades, we have appl between brain and body systems to treat complex conditions. We relentlessly pursue medicines to ease the burden of debilitating diseases and disorders. patients with io includes U.S. Food tardive dyskinesia, chorea associated with Huntington's disease, adrenal ation with AbbVie Inc. ("AbbVie"), a European Medicines Agency ied our unique insight into neuroscience and the interconnections io of advanced clinical-stage programs e: to relieve suffering for a a a r We launched INGREZZA® (valbenazine) in the U.S. as the firff st FDA-approved drug forff the treatment of tardive dyskinesia in the treatment of aduld ts with chorea associated with Huntington's disease in August 2023. INGREZZA net product 2023 and accounted for appr a oximately 99% of our total net product sales for 2023. May 2017 and forff sales totaled over $1.8 billion forff In addition to our marketed products: • • • We have a robust pipeline including multiple compounds in mid- to late-phase clinical development across our core therapeutic areas. Our diverse portfolff neuroendocrinology and neuropsychiatry. io featurt es novel mechanisms to treat intractable diseases focused on neurology, ration ("MTPC") launched DYSVAL® (valbenazine) in Japan for the Our partner Mitsubiu shi Tanabe Pharma Corpor treatment of tardive dyskinesia in June 2022 and subsequently in other select Asian markets, where it is marketed as REMLEAS® (valbenazine). We receive royalties at tiered percentage rates on MTPC net sales of valbenazine. Our partner AbbVie launched ORILISSA® (elagolix tabla ets) in the U.S. forff associated with endometriosis in August 2018 and ORIAHNN® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsa ules) in the U.S. for the treatment of heavy menstrual bleeding dued receive royalties at tiered percentage rates on AbbVie net sales of elagolix. the treatment of moderate to severe pain to uterine fibff roids in June 2020. We 2023 Corporate Ptt erPP for rmance Highlgg igll htgg stt We delivered a strong performance in 2023, as demonstrated by the folff lowing achievements and developments: • • • • • • INGREZZA net product sales for 2023 increased 28.6% year-over-year to over $1.8 billion, reflecting higher prescription demand and increased commercial activities, including continued investment in our branded direct-to- consumer INGREZZA advertising campaign and benefit froff m the expansion of our sales forff ce completed in April 2022. In the third quarter of 2023, the FDA approved INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease. Announced positive top-line data from the Phase 3 clinical studi Crinecerfont subsu equently received Breakthrough Therapy designation froff m the FDA forff from the Phase 3 studi 2024. es will suppor u t t es of crinecerfont in aduld ts and pediatrics with CAH. the treatment of CAH. Data t a New Drug Application ("NDA") submission to the FDA in the second quarter of In the fourth quarter of 2023, we announced that all patent litigation brought by Neurocrine Biosciences against the companies that filff ed an Abbreviated New Drugr Application ("ANDA" versions of INGREZZA prior to the expiration of the Orange Book-listed patents have been resolved. Pursuant to the terms of the respective settlement agreements, such companies have the right to sell generic versions of INGREZZA in the U.S. beginning March 1, 2038, or earlier under certain circumstances. ) to the FDA seeking appr oval to market generic A a Expanded strategic partnership with Voyager Therapea utics Inc. ("Voyager") to advance multiple gene therapy programs, ERTM capsids, forff each enabled by Voyager's next-generation TRACRR the treatment of neurological diseases. In the third quarter of 2023, we announced the FDA accepted the NDA for INGREZZA oral granules, a new sprinkle formulation of INGREZZA capsules forff oral administration. The agency set a Prescription Drug User Fee Act target action date of April 30, 2024. 41 2023 Compensation ProPP gro am Highlgg igll htgg stt Consistent with our goal of attracting, motivating and retaining a high-caliber executive team, our executive officff er compensation program is designed to pay for performance. A summary orr outcomes aligned with this philosophy are highlighted below forff 2023. f key compensation decisions and compensation related • • • • • Pay for Perfor rmance / At-Risk Pay - Our executive compensation program is designed so that a significant portion of pay is variable or “at risk” and the realized value of compensation is linked with Company performance and value delivered to stockholders. For 2023, the percentage of pay that is “at risk” forff respectively, helping us align pay with performance (refer to "Pay forff Performance / At-Risk Pay" below). our CEO and NEOs is approximately 80% and 73%, djustments - Salary increases forff 2023 were generally dued Base Salary Ar competitive market positioning relative to market data. Merit based increases for NEOs ranging from 4.5% – 11.0% were approved forff to Company performance in 2022 and maintaining 2023. Annual Cash Incentives - Our annual cash award opportunity is based on corpor corporate goals and the individual performance of each executive officer. Corpor our specific strategic goals that we believe will create long-term stockholder value. For 2023, we achieved our corporate goals at an overall level of 110% and we paid an annual cash incentive award to our CEO at 110% of target and to our other NEOs at 110% - 121% of target. ate performance compared to pre-establa ished ate goals are selected to directly align with rr r Long-Term Equity Awards: Equity Mixii the forff m of long-term equity awards comprised of a mix of stock options, performance-based restricted stock units ("PRSUs") and restricted stock units ("RSUs"). For our CEO, the aggregate grant date fair value of long-term equity awards granted in 2023 consisted of appr oximately 50% stock options, 35% PRSUs and 15% RSUs. For NEOs other than our CEO, the aggregate grant date fair value of long-term equity awards granted in 2023 consisted of appr options, 15-25% PRSUs and 15-20% RSUs. - A significant portion of our CEO’s and other NEO’s compensation is delivered in oximately 55-65% stock a a inked to Perfor rmance - The performance conditions for PRSUs granted to our NEOs in 2021 with a PRSU Payouts Ltt perforff mance period ending in March 2023 were not achieved and no portion of these PRSUs vested. The Compensation Committee did not take any actions to mitigate the negative impact on payouts forff performance philosophy. these awards consistent with our pay forff Committee Actions in Connection with Say-on-Pay Vote The Compensation Committee of the Board of Directors (the “Committee”) is committed to ensuring that our executive offiff cer compensation program is effeff ctive and aligned with our stockholders’ interests and concerns. Accordingly, critical components of our Committee’s process continue to be (1) reviewing emerging compensation “best practices”, with a focff us toward companies of similar size, as measured by market capitalization and revenues, (2) soliciting advice from our Committee’s independent compensation consultant and (3) listening and responding to feedbad ck from our stockholders via our annual say-on-pay vote and through our stockholder outreach effoff rts. We seek a say-on-pay advisory vote froff m our stockholders regarding our executive officer compensation program on an annual basis. Each year, the Committee considers the results of the advisory vote as it completes its annual review of each pay element and the compensation provided to our NEOs and other executive offiff cers. 2023 Say-on-Pay Voting Results Over the last ten years, we have received 97% (on average) of votes cast in support of our executive compensation programs. Given the significant level of stockholder support, the Committee concluded that: a In 2023, we received appr oximately 93% of votes cast in support of our 2023 executive officer compensation program. (cid:4) executive offiff cer compensation program continues to align executive officff er pay with stockholder interests; (cid:4) our executive offiff cer compensation program provides competitive pay that encourages retention and effeff ctively incentivizes performance of talented NEOs and executive offiff cers; (cid:4) no significant changes to the structurt e of our programs are necessary; and (cid:4) the Committee will continue to consider the outcome of our say-on-pay votes and our stockholders’ views when making future compensation decisions for the NEOs and executive offiff cers. 42 During 2023, we continued our stockholder engagement effoff rts in order to solicit feeff dback on a variety of topics, including sustainabia lity and executive compensation practices. We contacted a number of our largest stockholders and spoke with all stockholders that wanted to provide us with feedbad ck. Specifically, we reached out to 21 of our largest stockholders (representing approximately 53% of the outstanding shares of our common stock) and met with stockholders representing appr oximately 13% of the outstanding shares of our common stock. While the engagements are primarily conducted by management, Board members (including Compensation Committee members) are also availabla e to participate, when appr suppor t forff u stockholder feedff compensation program and our stockholders’ interests. our sustainabia lity and executive compensation practices. We are pleased with our say-on-pay advisory vote results and bad ck, and we will continue to engage with our stockholders to ensure alignment between our executive officff er opriate. Overall, stockholders have expressed strong a a Pay forff Perforff mance / At-Risk Pay Our executive officer compensation program is designed to reward achievement of the specific strategic goals that we believe our stockholders. Consistent with our goal of attracting, motivating will advance our business strategy and create long-term value forff and retaining a high-caliber executive team, our executive officer compensation program is designed to pay for performance. We utilize compensation elements that meaningfulff ly align our NEOs’ interests with those of our stockholders to create long-term value. As such, a significant portion of our Chief Executive Officer’s and other executive officers’ compensation is “at-risk,” performance- based compensation, in the forff m of long-term equity awards that have performance-based vesting criteria or have value directly dependent on the Company’s stock price (or in the case of stock options, only if the Company's stock price increases), and annual cash incentives that are only earned if we achieve pre-establa ished corpor ate goals. r With respect to long-term equity awards, the Committee annually considers the appropriate mix of equity awards. The Committee believes that combining performance-based vesting equity awards with time-based vesting equity awards appropriately promotes a focff us on delivering sustainable long-term value to our stockholders, while also suppor executive officers. ting the long-term retention of our u The graphi a cs below illustrate the primary err lements of our Chief Executive Officer’s compensation mix for 2023 and the aggregate compensation mix for 2023 for the other NEOs as a group. The percentages in the chart below reflect the actuat earned, cash incentives paid, and the grant date fair value of equity awards granted, in each case as reported in our 2023 Summaryrr Compensation Table. l base salaryrr CEO 2023 Compensation Mix All Other NEOs 2023 Compensation Mix 43 Our Compensation Practices Below are key elements of our executive officer compensation program, as well as problematic pay practices that we avoid: WHAT WE DO WHAT WE DON'T DO (cid:4) Heavily weight our executive officff er compensation toward “at risk,” performance-based compensation (cid:4) Balance short-term and long-term incentive compensation (cid:4) Use multi-year vesting forff all executive offiff cer equity awards (cid:4) Grant performance-based equity awards annually in the form of performance-based restricted stock units ("PRSUs") (cid:4) Have an incentive compensation recoupment or clawback policy (cid:4) Structurt e our executive offiff cer compensation program to opriate risk-taking and encourage minimize inappr a appropriate risk-taking (cid:4) Cap aa nnual cash incentives at a maximum payout amount (cid:4) Select peer companies that we compete with for executive offiff cer talent, have a similar business and are of similar size as us, and review their pay practices (cid:4) Solicit advice from the Committee’s independent compensation consultant (cid:4) Have meaningfulff equity ownership guidelines forff executive officers and the Board of Directors × Provide guaranteed bonuses or base salary increases × Allow forff the repricing of stock options without stockholder appr a oval × Pay dividends or dividend equivalents on unearned shares × Permit hedging or other forff ms of speculative transactions by employees or directors × Permit pledging by employees or directors × Provide single-trigger change in control benefitsff × Include gross-ups in executive employment agreements or change-in-control arrangements (excluding the Chief Executive Officff er's employment agreement, which was last amended in 2007) × Provide excessive perquisites to our executive officers × Provide retirement or pension benefitff s to our executive offiff cers that are not availabla e to employees generally (cid:4) Hold annual say-on-pay advisory vote Role of the Compensation Committee As discussed in greater detail below, the Committee takes into consideration a peer group, survey data and advice from an independent compensation consultant when setting the compensation philosophy and compensation strucr Committee’s complete roles and responsibilities are set forff availabla e at http://w// ww.neurocrine.com/investors/co// Committee include reviewing, revising, and appr rporate-governance/. S// oving: a th in a written charter, which was adopted by the Board of Directors and is ome of the significant roles and responsibilities of the ture for the Company. The • • • • • • • • • • r all executive officers, including perquisite benefits, if any; the compensation philosophy of the Company; the corporate goals and objectives relating to the compensation of the Company’s employees, including executive offiff cers, and evaluating the performance of the Company, and its executive officers, in light of these corpor and objectives; compensation forff all promotions to executive officer positions and the hiring of all new executive officers, including employment agreements; recommendations to the fulff group data and advice from an independent compensation consultant; guidelines forff grants for all non-executive officer employees of the Company; equity and incentive plans, including amendments or modifications to such equity and incentive plans; equity ownership guidelines forff the Compensation Discussion and Analysis forff registration statements, proxy statements or information statements; and the Committee report on executive compensation to be included in the Company's annual proxy statement in accordance with applicable SEC rulrr es and regulations. salaries, merit salary increases, cash incentive payments, stock-based grants and performance-based stock l Board of Directors regarding all director compensation by taking into consideration peer inclusion in any of the Company's annual reports on Form 10-K, executive officff ers and directors; ate goals 44 In addition, the Committee also has the folff lowing oversight responsibilities: • • • • • • overseeing the development, implementation and effeff ctiveness of the Company’s policies and strategies with respect to human capital and talent management, including diversity and inclusion initiatives; administering the Company’s equity and incentive plans and employee benefitff plans; overseeing the implementation of clawback policies allowing the Company to recoup certain compensation paid to employees; reviewing and taking into consideration stockholder feedff say-on-pay vote; retaining independent compensation consultants and advisors when appropriate to advise the Committee on compensation policies and plans; and complying with requirements established by the SEC, assessing the risks arising froff m the Company’s compensation policies and taking any actions required as a result thereof. bad ck regarding compensation matters, including our annual Compensation Philosophy We believe that in order to create value for our stockholders, it is critical to attract, motivate and retain key executive offiff cer talent by providing competitive compensation packages. Accordingly, we design our executive officer compensation program to: ATTRACT, DEVELOP & RETAIN MOTIVATE & REWARD MAXIMIZE executive officers with the skills and expertise to execute our business plans within the highly competitive life sciences industry executives fairly over time for actions consistent with creating long-term stockholder value stockholder value via an appropriate blend of short-term and long-term incentives Our compensation philosophy for executive offiff cers provides that cash compensation should be strucr tured such that at least one-third of each executive officer’s target total cash compensation, consisting of base salary arr dependent upon the Company’s achievement of specific corporr Chief Executive Officer’s target total cash compensation is at risk under our annual cash incentive plan. Long-term equity compensation forff designed to motivate executive officers to increase long-term stockholder value and to reward and retain key employees. executive offiff cers is generally a combination of performance-based and time-based vesting equity awards, and it is rate goals that drive stockholder value. Starting in 2020, 50% of our nd target cash incentives, is at risk and Overall Compensation Determination Process The implementation of the compensation philosophy is carried out under the supeu rvision of the Committee. The Committee uses the services of an independent compensation consultant who is retained by, and reports directly to, the Committee. Management, under guidelines and procedures approved by the Committee, determines the compensation of our non-executive officer employees. In the early part of each year, the Committee deliberates and makes decisions regarding the base salary, target cash incentives the new fiscal year, as well as performance-based compensation payouts forff and long-term equity award components of compensation to be awarded to our executive officers, including our Chief Executive Offiff cer, forff for our other NEOs, the Committee solicits the input of our Chief Executive Officer, who recommends to the Committee the base salary, target cash incentives and long-term equity award components of compensation to be awarded to our NEOs for the new fisff cal year, as well as performance-based compensation payouts forff making the finff al decisions on compensation forff during discussions of their respective compensation packages nor do they participate in appr NEO compensation packages. all of our NEOs. Our NEOs, including our Chief Executive Officer, are not present oving any portion of their own or other a the prior fiscal year. The Committee remains solely responsible for the prior fiscal year. In setting compensation 45 The Committee considers a variety of facff tors, as described below, which may vary from year to year, to set the compensation of our NEOs at levels that the Committee considers to be competitive and appropriate for each NEO, using the Committee’s profesff sional experience and judgment: (cid:4) Company performance (cid:4) Market data from the independent compensation consultant (cid:4) Individual performance (cid:4) Retention risk (cid:4) Independent compensation consultant recommendations (cid:4) Chief Executive Offiff cer’s recommendations (other than for himself),ff based on direct knowledge of NEO performance and his extensive industry err xperience (cid:4) Internal pay equity among individuals and positions (cid:4) Criticality and scope of job funff (cid:4) Total targeted and historical compensation (cid:4) Any other factors the Committee determines appr ction a opriate In addition, during the first quarter of the year, Company-wide performance goals for the then current year are finff alized by the Committee and the Board of Directors, and progress toward these goals is reviewed at meetings throughout the year. Later in the year, the Committee reviews the Company’s compensation philosophy, policies and procedurd es. Committee meetings in the four of the year generally focus on Company goal achievement, selection of the peer group for the following year and executive offiff cer performance. th quarter ff Compensation Consultant The Committee uses the services of an independent compensation consultant who is retained by, and reports directly to, the Committee to provide the Committee with an additional external perspective with respect to its evaluation of relevant market and ractices. In the summer of 2022, the Committee engaged the services of Frederic W. Cook & Co., Inc. (“FW Cook”) as its industry prr independent compensation consultant to assist the Committee with evaluating our executive and director compensation programs and to make recommendations for our 2023 compensation programs, including updating the Committee on new developments in areas that fall within the Committee's oversight. FW Cook serves solely at the pleasure of the Committee and their fees Committee. FW Cook conducted analyses and provided advice on, among other things, the appropriate peer group, executive offiff cer compensation and compensation trends in the life sff ciences industry.rr oved by the a are appr ff In weighing its recommendations for executive offiff cer compensation forff 2023, the Committee directed FW Cook to advise the Committee on both best practices and peer practices when designing and modifying our executive officer compensation program in order to achieve our objectives. As part of its duties, FW Cook provided the Committee with the folff lowing services with respect to 2023 compensation decisions: • • • • • • • • the peer group and relevant executive officer pay survey data and an analysis of the carried out a comprehensive review of our peer group for use in making 2023 executive officer compensation decisions; provided compensation data forff compensation of the Company’s executive offiff cers as compared to this market data; provided a competitive assessment of, and comparison to, incentive design and executive officer pay program structurt e based on peer group data; conducted a comprehensive pay for performance assessment; provided recommendations regarding the annual cash incentive and long-term equity incentive program design for 2023; assisted the Committee with the design of 2023 pay programs consistent with the Company’s business strategy and pay philosophy; provided background information and data for 2023 adjud stments to the Company’s executive officff er compensation program consistent with good governance practices and the Company’s objectives; and prepared an analysis of the Board of Directors’ 2023 compensation program. ff The Committee annually assesses whether the work of its compensation consultant has raised any conflicff t of interest, taking ors: (i) the provision of other services, if any, to the Company by the compensation consultant; into consideration the following fact (ii) the amount of fees the Company paid to the compensation consultant as a percentage of the firff m’s total revenue; (iii) the compensation consultant’s policies and procedurd es that are designed to prevent conflicff relationship of the compensation consultant or the individual compensation advisors employed by the firm with an executive officff er of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Committee; and (vi) any stock of the Company owned by the compensation consultant or the individual compensation advisors employed by the t of interest with respect to a firm. The Committee has determined, based on its analysis of the above FW Cook providing services to the Committee. ts of interest; (iv) any business or personal factors, that there was no conflicff 46 Competitive Assessment of Compensation—Peer Group and Market Data 2023 Peer Group. In September 2022, when developing a proposed list of our peer group companies to be used in connection with making compensation decisions for 2023, FW Cook selected primarily recently commercial biopharmaceutical companies or late- stage high valuation pre-commercial companies with revenues generally between $200 million and $2.5 billion, market capia talization generally between $2.6 billion and $26.4 billion and employee headcount generally under 3,000, which FW Cook recommended as a reasonabla e range in relation to our then-current revenue, market capitalization and headcount. Based on these criteria, FW Cook recommended, and our Committee appr a oved, the folff lowing peer group for 2023: ACADIA Pharmaceuticals, Inc. BeiGene, Ltd. Exelixis, Inc. Ionis Pharmaceuticals, Inc. Sarepta Therapea utics, Inc. United Therapea utics Corpor r ation Alkermes plc Biohaven Ltd. Horizon Therapeutics plc Jazz Pharmaceuticals plc Seagen Inc. Alnylam Pharmaceuticals, Inc. BioMarin Pharmaceuticals, Inc. Incyte Corpor ration Mirati Therapeutics, Inc. Ultragenyx Pharmaceutical Inc The 2023 peer group reflects the folff lowing changes froff m our 2022 peer group: (i) the removal of Alexion Pharmaceuticals, to its acquisition by AstraZeneca, and (ii) the removal of Nektar Therapea utics, as its market cap and revenue fell below the Inc., dued targeted range. At the time of approval of our 2023 peer group, our Company was approximately in the 55th percentile of the peer group for market capitalization and forff revenue. 2023 Marketkk Data. In late 2022, FW Cook completed an assessment of executive officer compensation based on the 2023 peer group to inform the Committee’s determinations of executive officer compensation forff compiled froff m multiple sources, including: (i) the 2023 peer group companies’ publicly disclosed inforff mation, or public peer data; and (ii) survey data from the Radforff d Global Compensation Database forff companies that had annual revenue between $$500 of sufficient comparative data for an executive officer’s position. The public peer data and survey data, collectively referff Proxy Statement together as market data, were reviewed by the Committee, with the assistance of FW Cook, and used as one reference point, in addition to other factors, in setting our executive offiff cers’ compensation forff illimillion and $d $3.0 bib llion. The components of this data were based on the availabia lity red to in this peer companies and biotechnology and pharmaceutical this assessment was 2023. The data forff 2023. Use of 2o 023 Marketkk Data. The Committee generally reviews target total direct compensation, comprising both target cash compensation and equity compensation, against the market data described above compensation program as a whole is positioned competitively to attract and retain the highest caliber executive officers and that the total direct compensation opportunity for the executive officer group is aligned with our corporate objectives and strategic needs. The Committee does not have a specific target compensation level for the NEOs; rather, the Committee reviews a range of market data reference points with respect to target total direct compensation, target total cash compensation (including both base salary arr nd the oximation of grant date fair value). In making target annual cash incentive) and equity compensation (valued based on an appr compensation determinations, the Committee considers the market data, along with the other factors described above under “Overall Compensation Determination Process.” primarily to ensure that our executive officff er a a Components of Executive Compensation The Committee considers each executive officer’s performance, contributions to Company goals, responsibilities, experience, qualificff ations, and where in the competitive range the executive offiff cer’s compensation compares to the Company’s peer group when determining the appropriate compensation forff independently and each component in the context of each executive officer’s total compensation. Compensation forff currently consists of three key elements that are designed to reward performance in a simple and straightforward manner: base salaries, annual performance-based cash incentives and long-term equity awards, which generally include restricted stock units ("RSUs"), and stock options, which both vest based on continued service over time, and PRSUs, which vest upon that we believe will create stockholder value. The tabla e below summarizes the purpos . Element, with those associated with at-risk pay shown in pink font each executive officff er. The Committee considers each component of compensation e and key characteristics of each Compensation achievement of key corpor our NEOs ate goals u r ff r 47 Compensation Element Base Salary Purpose of This Element Designed to compensate competitively at levels necessary to attract and retain qualifieff d executive officers in the life sff ciences industry;rr generally based on the scope of each executive offiff cer’s responsibilities, as well as his/her qualificff ations, breadth of experience, performance record and depth of applicable functional expertise; establa ished and adjud sted to be appropriate as compared to the appl icable market data, enabla ing the Company to attract, motivate, reward and retain highly skilled executive officers; gives executive officers a degree of certainty in light of having a majoa rity of their compensation at risk. a Key Characteristics Fixed cash compensation where year-to-year adjud stments to each executive officer’s base salary are based upon sustained superior performance, changes in the general level of base salaries of persons in comparable positions and any average merit within our industry,r such year for all employees salary increase forff of the Company establa ished by the Committee, as well as other fact ors the Committee judges to be pertinent durdd ing an assessment period. ff In making base salary decisions, the Committee exercises its judgment to determine the appropriate weight to be given to each of these factors. Although adjud stments may also be made during the year for special circumstances, no mid-year adjud stments have been made in the past five years. Annual Cash Incentives Motivates executive officers to achieve our short-term strategic plan and milestones that are designed to drive long-term growth and performance while providing flexibility to respond to opportunities and changing market conditions. Long-Term Equity Incentives (RSUs) Long-Term Equity Incentives (Stock Options) Long-Term Equity Incentives (PRSUs) Motivates executive officers to achieve our business objectives by tying compensation to the performance of our common stock over the long term; creates an ownership culture; motivates our executive officers to remain with the Company by mitigating swings in incentive values during periods when market volatility impacts our stock price; directly motivates an executive officer to maximize long-term stockholder value and serve as an effeff ctive tool for incentivizing and retaining those executive offiff cers who are most responsible for influencing stockholder value. tivates executive officers to achieve our business objectives by tying incentives to the appreciation of our common stock over the long-term and creates an ownership culture. Creates a strong link to the Company’s long- term perforff mance, creates an ownership culture and closely aligns the interests of our executive offiff cers with those of our stockholders because the value that the grants deliver is directly dependent on attainment of performance metrics and our stock price. 48 Annual cash award opportunity based on corporate performance compared to pre- establa ished corpor target and maximum payout opportunities forff each executive officer. ate goals with pre-establa ished rr oved by the Committee annually and The cash incentive program, including corporate goals and target payouts, are reviewed and appr a may include individual performance targets forff each executive officer. The corporate goals are prepared in an interactive process between management and the Committee based on the Company’s business plan and budget forff the year. Cash incentive payments are linked to the attainment of overall corporate goals and the individual performance of each executive offiff cer, or other factors the Committee determines appropriate. RSUs generally vest on an annual basis, ratably years subject to executive officer’s ff over four continued service; the ultimate value realized varies with our common stock price. ff years subject to Stock options with an exercise price equal to the fair market value on the date of grant generally vest monthly over four executive offiff cer’s continued service; the ultimate realizable value, if any, depends on the appreciation of our common stock price froff m the date of grant. The Committee views stock options as performance-based compensation, as stock options provide a returt n to our executive offiff cers only if the market price of our common shares appreciates over the stock option term. u achievement of PRSUs only vest upon objectively measurable performance metrics tied to our business strategy that focff us executive offiff cers on achieving these long-term Company performance metrics and increasing stockholder value. Other Compensation Provides benefitff s that promote employee health and welfare, which assists in attracting and retaining our executive officers; certain additional benefitff s refleff ct market standards and are reasonabla e and necessary to attract and/or retain each of our executive officers and allow the executive officers to realize the full benefit of the other elements of compensation we provide. Executive officers are eligible to participate in the Company’s employee benefitff plans on the l-time employees. same terms as all other fulff These plans include medical, dental and lifeff insurance and eligibility to participate in the Company’s employee stock purchase plan. Additional benefitff s include disabia lity insurance premiums, an annual physical examination and financial planning services. The terms of the Company’s 401(k) Savings Plan (the “401(k) Plan”) provide for executive offiff cer and broad-based employee participation on the same general terms. Under the 401(k) Plan, all Company employees are eligible to receive basic matching contributions from the Company that vest annually over three years from date of hire. Severance and Change in Control Benefits rves our retention objectives by helping our executive officers maintain continued focff us and dedication to their responsibilities to maximize stockholder value, including in the event of a transaction that could result in a change in control of the Company. Provides protection in the event of a termination of employment under specified circumstances, including following a change in control of the Company as described below under “Potential Payments Upon Termination or Change-in- Control.” tive r the executive Compensation components forff offiff cers in the event of a termination by the Company without cause or termination by the executive offiff cer due to construcrr termination within six months afteff consummation of a change in control include payments for annual base salary,r compensation payment, cash compensation forff the value of all outstanding stock awards, limited Company-paid health insurance benefits, and any accruerr d vacation and any accruerr d benefitff s under any plans of the Company in which the executive officer is a participant. Eligibility for these benefits requires a signed release agreement by the executive offiff cer. a cash Pursuant to his employment agreement, which was last amended in 2007, our Chief Executive Offiff cer is entitled to tax gross-ups in the event of certain levels of payments he may receive upon a change in control. We have not entered into any new change in control gross-upsu executive offiff cers since 2007, nor does the Company intend to enter into any new agreements containing such gross-ups. Accordingly, Dr. Gorman is the only NEO entitled to such tax gross-ups. for 49 2023 Named Executive Offiff cer Compensation Decisions 2023 Base Salaries In Februar ry 2023, our Committee approved the 2023 base salaries for the NEOs as set forff th in the table below. In making these 2023 decisions, the Committee considered the Company’s performance in 2022, market data for each individual NEO’s position, as well as the individual’s historical salary l responsibilities forff forth above a Company’s performance in 2022, (ii) maintaining competitive positioning relative to the market data, (iii) retention of our NEOs and (iv) our NEOs’ experience, job criticality and performance. the coming year, along with the other factors described under “Overall Compensation Determination Process” set . Specifically, the Committee determined that the increases reflected in the table below were appr evels, our then-current budget forff djustments, anticipated role and opriate due to (i) the employee salary arr a rr Named Executive Offiff cer Kevin C. Gorman, Ph.D., Chief Executive Officer Matthew C. Abernethy, Chief Financial Offiff cer Kyle W. Gano, Ph.D., Chief Business Development & Strategy Officer Jude Onyia, Ph.D., Chief Scientificff Offiff cer Eiry W. Roberts, M.D., Chief Medical Offiff cer 2023 Annual CasCC h IncII entives 2023 Base Salary $946,000 $646,061 $602,912 $638,250 $660,348 % Change from 2022 Base Salary 10.0% 4.5% 9.5% 11.0% 4.5% In Februar ry 2023, the Committee appr a oved the 2023 target bonus opportunities as a percentage of base salary f orff rr the NEOs as th in the table below. Afteff set forff opportunities of our NEOs. r considering market data forff Executive Offiff cer Chief Executive Officer All Other Executive Officers each NEO’s position, no changes were made to the target bonus 2023 Target Bonus (% of Base Salary) 100% 50% In March 2023, the Committee appr oved the corporate goals for our 2023 annual cash incentive plan. The most significant and a impactful goals and achievements are summarized in the table below. Our corpor strategic goals that we believe will create long-term stockholder value, including achieving a net revenue target from sales of INGREZZA, ensuring commercial readiness forff disease, scaling pre-launch commercial infraff structurt e forff and achieving certain other corpor goals for 2023 in order to enabla e a holistic assessment of complementary goals that collectively refleff ct achievement of our 2023 performance objectives and build the founda 150% of their target bonus opportuni the launch of INGREZZA for the treatment of chorea associated with Huntington's crinecerfont to treat CAH, advancing and expanding our clinical pipeline, rate and finff ancial goals. The Committee did not assign specific relative weightings to the corpor long-term success. The maximum bonus payout for each NEO was capped at ate goals are directly aligned with our specificff tion forff ff ty. ate r r t During meetings conducted throughout the year and culminating in February 2rr 024, the Committee engaged in a robust dialogue with management, the Board Chair and other Board members (including at Board meetings), and its independent compensation consultant to evaluate the accomplishments and performance of the Company relative to the 2023 corporate goals. The Committee discussed the relative importance of each of these goals and ultimately determined that the folff to lowing goals were the most impactfulff the creation of long-term stockholder value: (i) the INGREZZA net sales goal; (ii) the advancement of our clinical pipeline, including positive top-line results in two phase 3 studies of crinecerfont in aduld ts and pediatrics forff resolution of all patent litigation brought by us against the companies that fileff d ANDAs INGREZZA. The Committee furff ther determined that the Company achieved the high-end of the range for INGREZZA net sales goal, over achieved the most critical goals associated with the advancement of the Company's clinical pipeline, overachieved with respect to the resolution of all patent litigation brought by us against the companies seeking appr oval to market generic versions of INGREZZA, and partially achieved other important goals. After these discussions, the Committee determined our 2023 corporate goal achievement at 110%. the treatment of CAH; and (iii) a positive seeking appr oval to market generic versions of AA a a 50 Business Area / Initiative Target Achievements / Relevant Developments Achieve INGREZZA net sales in 2023 between $1.70B and $1.84B Achieved INGREZZA net sales of $1.84B Commercial Activities Prepare forff associated with Huntington's disease launch of INGREZZA for chorea Completed launch-ready activities Stage-appropriate crinecerfont launch readiness Completed foundational activities and build-out of initial commercial team sNDA Approval: Obtain FDA appr treatment of chorea associated with Huntington disease oval of sNDA for valbenazine for a Obtained FDA appr a oval in August 2023 Phase 2 and Phase 3 Clinical Pipeline: • Report topline data in two Phase 3 studt CAH (aduld ts and pediatrics) ies in • Reported positive top-line data froff m the Phase 3 clinical studi t pediatrics with CAH es of crinecerfont in aduld ts and Advance and Expand Clinical Pipeline • Achieve enrollment targets in all studi t es • Met enrollment targets in most studies Overall Achievement Achieved High End of Range Achieved Achieved Achieved Over Achieved in Part* • Report top-line data on two Phase 2 studt ies • Reported top-line data on one Phase 2 study t Phase 1 Studies: Complete IND/CTA submission for 4 new chemical entities IND/CTA submissions completed forff chemical entities. five new Development: Identify 3 n ff one biologic ew development candidates, including Identifieff d two new development candidates Over Achieved Achieved in Part • Meet annual budget forff expense by year-end non-GAAP operating • Met annual budget forff expense by year-end non-GAAP operating Achieved in Part Financial/Operational • Retire convertible notes due May 2024 • Company made strategic decision in 2023 not to retire the convertible notes. As of December 31, 2023, $170.4 million aggregate principal amount of the convertible notes remained outstanding General Business and People • Maintain or improve sustainabia lity ratings • Improved overall sustainabia lity ratings over Achieved prior year • Continue to maintain company culture of • Enhanced compliance training and related integrity, ethics and compliance communication Legal Manage litigation matters to a positive outcome ly resolved all patent litigation brought Successfulff by us against the companies seeking appr market generic versions of INGREZZA oval to a Over Achieved Overall Achievement: 110% * Although the enrollment goals associated with the Phase 2 and Phase 3 Clinical Pipeline were partially achieved, the Committee considered the es in CAH to be the most impactful to the Company and the long-term benefit of stockholders and t reporting of top-line data in two Phase 3 studi this specific goal was deemed to be “Over Achieved”. 51 Notwithstanding the Committee’s determination of our 2023 corporate goal achievement at 110%, the Committee had discretion to eliminate any NEO’s bonus or to reduce or increase the amount of any NEO’s bonus payout amount. However, our ry 2024, the CEO's bonus payment cannot be increased above the corpor Committee determined whether to exercise its discretion to increase or decrease the bonus payout amount for each NEO after considering their individual performance contributing to achievement of our corporate goals. Following such review, Dr. Roberts was awarded an increased bonus payout amount in recognition of her success in advancing and expanding our clinical development programs, including the generation of positive top-line data froff m the Phase 3 clinical studi with CAH. es of crinecerfont in aduld ts and pediatrics ate goal achievement level forff the Company. In Februar r t Afteff r making these determinations, the Committee appr a Named Executive Offiff cer Kevin C. Gorman, Ph.D. Matthew C. Abernethy Kyle W. Gano, Ph.D. Jude Onyia, Ph.D. Eiry W. Roberts, M.D. oved the bonus payout amounts set forth in the tabla e below. 2023 Target Bonus 2023 Actual Bonus Paid % of Base Salary 100% 50% 50% 50% 50% $ $946,000 $323,030 $301,456 $319,125 $330,174 % of Target Bonus 110% 110% 110% 110% 121% $ $1,040,600 $355,335 $331,602 $351,038 $399,511 2023 Long-Tgg erTT m Err quity Att wardsdd 2023 Equity Award MixMM . In 2023, the Committee granted long-term equity awards to our NEOs in the forff m of stock options, opriate balance of long-term RSUs and PRSUs afteff r determining that these three types of equity awards continued to provide the appr and performance-based incentives for our executive officff ers. The Committee generally maintained the overall value of the equity awards provided to the NEOs, with the exception of Dr. Gorman, and continued to place emphasis on performance-based incentives that align our NEOs’ finff ancial interests with those of our stockholders. For Dr. Gorman, the Committee altered the mix of equity awards in 2023 to slightly decrease the amount of RSUs and PRSUs and increase the amount of stock options to further tie incentive compensation to the appreciation of our common stock and long-term stockholder value creation. For Dr. Gorman, the Committee allocated approximately 50% of the aggregate value of Dr. Gorman's long-term equity awards in the forff m of stock options, 35% of such value in the form of PRSUs and approximately 15% of such value in the form of RSUs. The 35% allocation of Dr. Gorman’s long-term equity awards to PRSUs is consistent with other companies in the Company’s peer group. For the NEOs, other than Dr. Gorman, the Committee decided to generally allocate appr awards in the forff m of stock options, 15-25% of such value in the form of PRSUs and 15-20% of such value in the form of RSUs, primarily based on each NEO’s expected impact on the achievement of the performance metrics underlying the PRSUs. oximately 55-65% of the aggregate value of each NEO’s long-term equity a a Sizeii of 2023 Equity Awards. In determining the size of the total equity compensation opportunity in 2023, the Committee: • • • aimed to have the aggregate target award value result in target total direct compensation at a level that is competitive in the marketplaces in which we compete; focff used a larger portion of total direct compensation in the form of long-term performance equity awards which only vest upon achievement of the specificff , objective criteria described below, which if achieved, the Committee believes will drive long-term differentiated value relative to our peers and maximize long-term stockholder value; and considered the recommendations of Dr. Gorman forff the other NEOs. The folff lowing tabla e summarizes the annual 2023 long-term equity awards for the NEOs: Named Executive Offiff cer Kevin C. Gorman, Ph.D. Matthew C. Abernethy Kyle W. Gano, Ph.D. Jude Onyia, Ph.D. Eiry W. Roberts, M.D. Stock Options RSUs PRSUs $* $ 6,678,750 $ 3,187,500 $ 3,187,500 $ 3,375,000 $ 2,625,000 # of Shares $* # of Shares $* 133,656 $ 2,226,250 63,789 $ 1,062,500 63,789 $ 1,062,500 67,541 $ 1,125,000 875,000 52,532 $ 21,506 $ 4,795,000 10,264 $ 750,000 750,000 10,264 $ 10,868 $ 1,500,000 8,453 $ 1,250,000 # of Shares (Target) Total ($*) 50,979 $13,700,000 7,974 $5,000,000 7,974 $5,000,000 15,948 $6,000,000 13,290 $4,750,000 * Represents the target grant date faiff but the PRSUs were granted in May 2023 following Committee appr Compensation Table and the Grants of Plan-Based Awards Table included in this Proxy Statement forff oved by the Compensation. The Committee appr r value of the awards appr oval of performance metrics and vesting requirements forff a a a oved the PRSU award values in February 2rr 023, these awards. See the Summary the actuat l grant date fair value of such awards. 52 heach fof hwhiichh must occu br byy thhe endd off a hthree-yyear pe frforff mance periiodd e dindi gng on Decembber 31, 2025. The metrics 2023 Equity Award VesVV ting CriCC teria. The Committee determined that the 2023 equity grants vest as follows: (i) the stock options vest in equal monthly installments over a four-year period; (ii) the RSUs vest in equal annual installments over a four-year period; and (iii) the PRSUs vest on the date, or dates, that the Committee determines achievement of two u dnde lrlyiyi gng performance metriics, underlying the PRSUs target certain regulatory mrr ilestones and the advancement of certain clinical programs, including advancing our late-stage clinical pipeline, that we believe will drive stockholder value within the three-year performance period ending on December 31, 2025. The actuat metrics, with minimum, target, upsu ide, and maximum levels specified in the Grants of Plan-Based Awards During the Fiscal Year Ended December 31, 2023 tabla e. The Committee set the specific performance targets underlying each performance metric at challenging levels that the Committee determined would require subsu tantial effort to be achieved. We believe disclosing the specific performance targets while the performance period is ongoing could cause competitive harm, as providing this information could provide competitors with insights in our strategy and clinical development programs that would be harmfulff disclose the specific performance targets in 2026 following the Committee’s determination of performance and certificff ation. l number of earned units subju ect to the PRSUs will be determined based on the level of achievement of such to us. However, we will Prior YeaYY r PRSPP Us Perforff marr nce 2021 PRSUs. In Februar ry 2021, the Company granted PRSUs to the NEOs, except for Dr. Onyia who received his PRSU grant in November 2021 in connection with his new hire employment package, with a performance condition based on the Company's achievement of certain clinical and regulatory orr both adult and adolescent studies of crinecerfont for the treatment of CAH within the 27-month performance period commencing on January 1, 2021 and ending on March 31, 2023 (the “2021 PRSUs”). The Committee believed achievement of this performance metric would substantially increase stockholder value. The specificff performance conditions underlying the 2021 PRSUs, as well as payout levels at minimum, target, and maximum achievement are set forth in the following tabla e: utcomes forff Achievement Level Minimum Target Max Perforff mance Condition Payout Level (as a % of target) Positive Phase 3 data in both adult and adolescent studies of crinecerfont for the treatment of CAH. CEO & Chief Medical Offiff cer: 75% Other NEOs: 67% Positive Phase 3 data in both adult and adolescent studies of crinecerfont for the treatment of CAH and submu adolescent or adult indication. ission of an NDA to the FDA for either the CEO & Chief Medical Offiff cer: 100% Other NEOs: 100% Positive Phase 3 data in both adult and adolescent studies of crinecerfont for the treatment of CAH and submu ission of two NDAs to the FDA, one for each of the adolescent and aduldd t indications. CEO & Chief Medical Offiff cer: 125% Other NEOs: 133% lAl hthough ough hthe Compa yny dididd announce pposiitiive top-lilin de data froff m thhe hPhase 3 lcliiniic lal st diudi t es of criinecerfont iin dad luldd ts andd iwi hth CA iH in 2023, hthese res lults were not re iceivedd p irior to hthe e ppedidiat irics Marchh 31, 2023 for thhe 2021 PRSUs. Acco drdiinglglyy, hthe performance co dindi itions of hthe 2021 PRSUs were not hthe 2021 PRSUs vestedd, andd eachh of our NEOs forfeiit ded hthe 2021 PRSUs. ixpira ition of thhe 27-monthh performance pe iri dod endidi gng on hachiievedd, no por ition of hachiievement of two u dnde lrlyiyi gng separate performance metriics r lelat ded to regulgulatoryy,rr 2022 PRSUs.UU In January 2022, the Company granted PRSUs to the NEOs that vest on hth de date, or ddates, hthat hthe Com imittee ddetermiines lcliiniic lal andd commerciiall mililestones, each within the three-year performance ending on December 31, 2024 (the “2022 PRSUs”). One of the two performance conditions underlying the 2022 PRSUs is based on the Company receiving FDA appr oval of INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease (the “INGREZZA HD Metric”). The specific performance condition underlying the INGREZZA HD Metric, as well as payout levels at target and maximum achievement of the INGREZZA HD Metric are set forth in the tabla e below. Assuming a target level of achievement for both the INGREZZA HD Metric and the second performance condition, the relative weight of the INGREZZA HD Metric is 40% of the total 2022 PRSU award. If the Company failed to achieve the INGREZZA HD Metric within the performance period, then no portion of the underlying RSUs associated with the INGREZZA HD Metric would vest. a INGREZZA HD Metric Achievement Level Target Max Perforff mance Condition for INGREZZA HD Metric Company receives FDA approval of INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease Company receives FDA approval of INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease and such approval does not require a black box warning Payout Level (as a % of target with respect to the INGREZZA HD Metric) 100% 175% 53 In August 2023, the Committee certifieff d that the Company had received FDA approval of INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease and that the INGREZZA HD Metric was achieved at the target performance level. Accordingly, the Committee appr HD Metric. As of the date of this Proxy Statement, the performance period for the second performance condition forff related to regulgulatoryy arr pperformance co dindi ition whihille hthe performance pe iri dod iis ongoi ppr didiscllose hthe spe icifific performance co dindi ition f lolff ppe iri dod. louldd to us. However, we willill llo iwi gng hthe Com imittee's cer iftifiicfff atiion of a hchiievement or ex ipira ition of thhe performance oved a payout at 100% of each NEO’s target amount of RSUs associated with the INGREZZA the 2022 PRSUs ilmilestones is s ongoing. We bbeliliev de diis lclosiingg thhe specififiicfff performance ta grget for thihis seco dnd is in our strategygy andd cliliniic lal ddevellopment proggrams thhat w lould bd b he harmf lulff ongoi gng co luldd cause competi iitiv he harm, as pr iovididi gng hthiis iinformatiion c iovidde competiitors dnd commer ici lal iwi hth iin isightght a Retirement Benefitsff The Company’s matching contribution to the 401(k) Plan for 2023 was 100% of eligible participant contributions, subject to applicable federal limits. Our NEOs are eligible for these benefits on the same basis as our other employees. The Company made no additional discretionary contributions to the 401(k) Plan in 2023. Offiff cer Equity Ownership Guidelines Since 2014, we have maintained equity ownership guidelines forff our executive officers. The Committee amended these our Chief Executive Officer from three to six times his base salary. The guidelines in November 2018 to increase the guideline forff equity ownership guidelines are designed to furff ensuring that our executive officers have a meaningfulff guidelines establa ish a minimum equity ownership level by position, with such values determined based on the value of our common stock owned by such persons as of certain measurement dates. When creating our equity ownership guidelines, the Committee adopted the view that the in-the-money value of vested stock options are of equivalent ownership value to the value of such stock options had they been exercised forff shares of our common stock. Accordingly, all shares directly or beneficially owned by the executive offiff cer, including the net exercisabla e value of outstanding vested stock options (where the market price of our common stock exceeds the strike price of such option) are included in determining the value of equity owned under our equity ownership guidelines. ther align the interests of the executive officers with those of our stockholders by financial stake in the Company’s long-term success. The equity ownership The equity ownership requirements are as follows: Chief Executive Officer All other executive officers 6 times base salaryrr 1 times base salary New executive officers are granted a fivff e-year period to reach the equity ownership requirements set forth in the guidelines and are expected to make annual progress toward the equity ownership requirements durd ing this fivff e-year period. When an executive offiff cer does not meet the equity ownership requirements set forth in the guidelines, he/she is restricted froff m selling any held shares until such requirements are met. Additionally, should an executive officer who does not meet the equity ownership requirements choose to exercise a stock option or vest in any RSUs, he or she is required to retain all shares acquired through those transactions, aside froff m any shares necessary to fulfillff guidelines is attained. such transaction related tax obligations, until full compliance with the equity ownership Annual compliance with the equity ownership guidelines is assessed durd ing the first quarter of each year. As of March 25, 2024, each of our executive officers was in compliance with the equity ownership guidelines. Equity Trading Policies and Procedures a arance of impropriety. Such prohibited activities would include the purchase of put or call options, or the The Company has policies and procedurd es in place that prohibit direct or indirect participation by employees and directors of the Company in transactions involving trading activities in Company common stock which by their aggressive or speculative naturt e may give rise to an appe writing of such options as well as short sales, hedging transactions such as “cashless” collars, forff ward sales, equity swaps and other related arrangement which may indirectly involve short-sale and any other transactions designed forff in the Company’s stock price. In addition, no offiff cer, director or employee of the Company may margin, or make any offeff any Company common stock, including without limitation, borrowing against such stock, at any time. Under the policies, a contribution of the Company’s securities to an exchange fund not designed to hedge any decrease in the market value of Neurocrine's equity securities is not considered a forff m of hedging; however, such contribution by an employee or director remains subject to the other provisions of the Company’s insider trading policy, including provisions regarding quarterly trading blackout periods and pre- clearance requirements. from short-term movement r to margin, profitff To the Company’s knowledge, there were no transactions involving hedging, pledging or margining Company common stock during 2023, nor were there any such transactions as of the Record Date. 54 The Company also requires directors and executive offiff cers to complete all equity related open-market purchase and sale transactions via a 10b5-1 plan. The 10b5-1 plans typically cover, among other transactions, direct sales and purchases of Company stock, as well as same-day-sales related to option exercises and sales of stock forff plans are required to have a waiting period from the election date to the date of the firff st transaction. Additionally, Company policy restricts the executive officers froff m amending a 10b5-1 trading plan. the vesting of RSUs. All 10b5-1 tax payments upon u Compensation Recoupment Policy In Februar ry 2017, we adopted a clawback policy, which provides that, in the event (i) we are required to prepare an accounting restatement forff any fisff cal quarter or year due to our material noncompliance with any finff ancial reporting requirement and (ii) it is determined that misconduct contributed to the noncompliance that resulted in the obligation to restate our financial statements, we may take action to recover froff m any offiff cer whose misconduct contributed to the noncompliance which resulted in the obligation to restate our financial statements, the incentive compensation, including cash and equity, that was paid or vested to such offiff cer during the twelve-month period preceding the restatement obligation (the "Prior Clawback Policy"). The SEC and the Nasdaq recently adopted final rulr es implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reforff m and Consumer Protection Act, which require listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officff ers. In October 2023 and in accordance with these finff al rules, the Committee appr oved an Incentive Compensation Recoupment Policy (the "Clawback Policy") that provides forff recoupment of certain cash and equity-based incentive compensation paid to current and forff mer executive officers of the Company in the event of an accounting restatement of the Company’s finff ancial statements. The Clawback Policy appl r October 2, 2023 (the "Effective Date"), and replaces and supersedes our Prior Clawback Policy with respect to all incentive compensation that is received by a covered officer on or afteff covered officer prior to the Effective Date. For mor to our 2023 Annuall Report on Form 10-K. ies to all incentive compensation that is received by a covered officer on or afteff r the October 2, 2023. The Prior Clawback Policy continues to appl y to any incentive compensation that is received by a lClawbba kck Polili ycy, whihi hch iis fifilledd as an e hixhibibit ie inforff ma ition, see thhe fullll text of our a a a Tax and Accounting Considerations Internal Revenue Code Sectiott n 162(m) (( Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), compensation paid to each of the Company’s “covered employees” that exceeds $1 million per taxabla e year is generally non-deductible unless the compensation qualifieff s forff grandfatff hered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effeff ct on November 2, 2017 and not materially modified on or afteff r such date. certain In light of the repeal of the performance-based compensation exemption under Section 162(m), the Committee may authorize compensation that is not deductible if it is determined to be appropriate and in the best interests of the Company and our stockholders. Accountintt g ConCC siderations The Company accounts forff equity compensation paid to our employees under the FASB ASC Topic 718, which requires us to estimate and record an expense over the service period of the equity award. Our cash compensation is recorded as an expense at the time the obligation is incurred. The accounting impact of our compensation programs are one of many factors that the Committee considers in determining the structurt e and size of our executive officer compensation programs. Risk Analysis of Our Compensation Program Our Committee has reviewed our compensation policies as generally applicable to our employees and believes that our policies do not encourage excessive or inappropriate risk taking and that the level of risk that they do encourage is not reasonabla y likely to have a material adverse effect on the Company. As part of its assessment, the Committee considered, among other fact allocation of compensation among base salary and short- and long-term compensation, our approach to establa ishing Company-wide and individual finff ancial, operational and other performance targets, our bonus structurt e of payouts at multiple levels of performance (including maximum payout caps and payments for performance below target levels) and the nature of our key performance metrics. We believe these practices encourage our employees to focus on sustained, long-term Company growth, which we believe will ultimately contribute to the creation of stockholder value. ors, the ff 55 EXECUTIVE COMPENSATION AND OTHER INFORMATION The folff lowing tabla es set forff th the compensation paid by the Company forff 2021, 2022 and 2023 to the NEOs named below. Name and Principal Position (1) Kevin C. Gorman, Ph.D..................... Chief Executive Officff er Matthew C. Abernethy ...................... Chief Financial Offiff cer Kyle W. Gano, Ph.D.......................... Chief Business Development and Sd Sttr tateg Oy Offifficer Jude Onyia, Ph.D. .............................. Chief Scientificff Offiff cer Eiry W. Roberts, M.D........................ Chief Medical Offiff cer Year 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 Summary Compensation Table Salary ($) (2) $825,000 $860,000 $946,000 $588,800 $618,240 $646,061 $517,000 $550,605 $602,912 $52,340 $575,000 $638,250 $604,700 $631,912 $660,348 Bonus ($) (2) $701,250 $989,000 $1,040,600 $264,960 $373,262 $355,335 $271,425 $332,428 $331,602 $26,170 $330,625 $351,038 $272,115 $345,182 $399,511 Option Awards ($) (3) $6,093,752 $4,875,106 $6,678,790 $2,625,019 $2,310,061 $3,187,536 $2,625,018 $2,775,053 $3,187,536 $4,500,035 $225,008 $3,375,024 $2,625,019 $2,625,057 $2,625,024 Stock Awards ($) (4) $6,406,366 $5,125,079 $7,021,386 $2,375,068 $1,570,128 $1,812,563 $2,375,067 $1,725,086 $1,812,563 $3,000,136 $1,275,146 $2,625,124 $2,875,113 $2,075,144 $2,125,112 All Other Compensation ($) (5) $55,044 $53,342 $64,036 $53,003 $52,632 $56,387 $22,814 $38,485 $55,602 $2,949 $55,520 $233,780 $48,649 $57,986 $63,852 Total ($) $14,081,412 $11,902,527 $15,750,812 $5,906,850 $4,924,323 $6,057,882 $5,811,324 $5,421,657 $5,990,215 $7,581,630 $2,461,299 $7,223,216 $6,425,596 $5,735,281 $5,873,847 (1) (2) (3) (4) (5) a are as of December 31, 2023. 2021, 2022 and 2023 (other than Dr. Onyia's 2021 new hire award) are based on per share Black-Scholes values of l grant date fair value in accordance with Accounting Standards Codification 718-10, Compensation—Stock Compensation nd bonus figures represent amounts earned durdd ing each respective fisff cal year, regardless of whether part or all of such amounts were paid in The titles and capacities set forth in the tabla e above Salary arr subsu equent fiscal year(s). Bonuses are awarded pursuant to a bonus program. The amounts shown are the fulff (ASC 718). The assumptions used to calculate the grant date fair value of option awards are set forff Statements included in the Company’s Annual Report on Form 10-K forff date fair values of option awards forff $53.52, $34.81 and $49.97, respectively. The grant date fair value of Dr. Onyia's new hire option award granted in 2021 is based on per share Black-Scholes value of $37.45. Stock awards consist of RSUs and PRSUs and may be subject to deferred delivery arr accordance with Accounting Standards Codification 718-10, Compensation—Stock Compensation (ASC 718). The assumptions used to calculate the grant date fair value of stock awards are set forth under Note 9 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K forff r values of RSUs and PRSUs granted in 2021, 2022 and RSUs granted in 2023 are based on the Company’s closing market price per share on the grant date, which was $117.63 for all 2021 grants, $79.02 for all 2022 grants and $103.52 for all 2023 RSU grants (other than Dr. Onyia's 2021 new hire grant, forff which the Company's closing market price per share on the grant date was $84.74). The fair values of PRSUs granted in 2023 are based on the Company's closing market price per share on the grant date, which was $94.06 for 2023 PRSU grants. The PRSU values included in the tabla e above highest level of performance metrics are achieved, the PRSU values based on the maximum number of shares issuable to each NEO forff Dr. Gorman – $9,590,075, Mr. Abernethy – $1,499,975, Dr. Gano – $1,499,975, Dr. Onyia – $2,999,950, and Dr. Roberts – $2,500,021. Includes all other compensation as described in the table below. are based on the target number of shares subject to the PRSU awards. If the the year ended December 31, 2023 filed with the SEC on Februarr the year ended December 31, 2023 filed with the SEC on Februarr th under Note 9 of the Notes to the Consolidated Financial rrangements. The amounts shown are the fulff l grant date fair value in ry 9, 2024. The faiff 2023 are as folff lows: a ry 9, 2024. The grant 56 All Oll ell ther Compensation TablTT Name Kevin C. Gorman, Ph.D. ......................................... Matthew C. Abernethy ............................................ Kyle W. Gano, Ph.D................................................ Jude Onyia, Ph.D..................................................... Eiry W. Roberts, M.D. ............................................ 401(k) Employer Match $17,100 $18,500 $19,800 $17,100 $18,500 $19,800 $15,510 $17,895 $19,800 — $18,500 $19,800 $17,100 $18,500 $19,800 Insurance Premiums (1) $37,944 $34,842 $44,236 $33,431 $32,732 $34,987 $7,304 $20,590 $33,155 $2,249 $35,620 $37,380 $30,149 $38,086 $42,452 Year 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 Inducement Advance (2) Other (3) — — — — — — — — — — — $175,000 — — — — — — $2,472 $1,400 $1,600 — — $2,647 $700 $1,400 $1,600 $1,400 $1,400 $1,600 Total Other $55,044 $53,342 $64,036 $53,003 $52,632 $56,387 $22,814 $38,485 $55,602 $2,949 $55,520 $233,780 $48,649 $57,986 $63,852 (1) (2) (3) The amounts in this column represent the costs for medical insurance forff Company-wide plans, as well as disabia lity insurance premiums and related tax gross- up amounts. For Dr. Onyia, the amount in this column reflects a one-time cash inducement advance in the amount of $175,000, which was deemed earned on November 29, 2023 when Dr. Onyia completed two fulff l years of employment with the Company. The cash inducement advance was granted as part of Dr. Onyia's new hire package when he joined the Company in November 2021. The amounts in this column include expenses associated with executive physical examinations and employer contributions to health savings accounts. Grants of Plan-Based Awards During 2023 The folff lowing tabla e sets forff th certain information regarding plan based awards granted by the Company during 2023 to the NEOs below: timated Future Payouts Under PRSU Awards (1) Name Kevin C. Gorman, Ph.D. Approval Date 2/1/2023 Grant Date 2/13/2023 Minimum (#) Target (#) Upside (#) Maximum (#) 5/19/2023 5/19/2023 (1) 28,038 50,979 76,468 101,957 Matthew C. Abernethy .. Kyle W. Gano, Ph.D...... Jude Onyia, Ph.D. .......... Eiry W. Roberts, M.D.... 2/1/2023 2/1/2023 5/19/2023 2/1/2023 2/1/2023 2/13/2023 2/13/2023 5/19/2023 (1) 4,385 7,974 11,960 15,947 2/13/2023 2/13/2023 5/19/2023 5/19/2023 (1) 4,385 7,974 11,960 15,947 2/1/2023 2/1/2023 5/19/2023 2/1/2023 2/1/2023 5/19/2023 2/1/2023 2/13/2023 2/13/2023 5/19/2023 (1) 8,771 15,948 23,920 31,894 2/13/2023 2/13/2023 5/19/2023 (1) 2/13/2023 7,309 13,290 19,934 26,579 All Other Stock Awards: Number of Shares of Stock or Units (#)(2) All Other Option Awards: Number of Securities Underlying Options (#)(2) Exercise Price of Option Awards ($/Sh)(2) Grant Date Fair Value (3) 21,506 10,264 10,264 10,868 8,453 — $2,226,301 — $4,795,085 133,656 $103.52 $6,678,790 — $1,062,529 — $750,034 63,789 $103.52 $3,187,536 — $1,062,529 — $750,034 63,789 $103.52 $3,187,536 — $1,125,055 — $1,500,069 67,541 $103.52 $3,375,024 — $875,055 — $1,250,057 52,532 $103.52 $2,625,024 (1) Represents the number of shares that may be earned under the PRSUs granted to NEOs in 2023 under the Company’s Amended 2020 Plan. The PRSUs will vest on the date, or dates, that the Committee determines achievement of two underlying performance metrics, each of which must occur beforff e December 31, 2025. Such metrics relate to the advancement of certain regulatory mrr ilestones and clinical programs which we believe will drive stockholder value within the 36-month performance period commencing on January 1, 2023 and ending on December 31, 2025. The actuat determined based on the level of achievement of such metrics, with minimum, target, upsu ide and maximum levels specified. l number of units subju ect to the PRSUs will be 57 (2) (3) Option awards granted have an exercise price equal to the closing market price of the Company’s common stock on the date of grant. All option awards are time-based awards, which vest monthly, on a pro-rata basis, over four over a four-year period. Refleff cts the grant date per share Black-Scholes value of $49.97 for option awards and the grant date per share value of $103.52 for RSUs, each granted on Februarr ry 13, 2023, and $94.06 for PRSUs which were granted on May 19, 2023, all of which were calculated in accordance with ASC 718. years and have an option term of ten years. RSUs vest annually, on a pro-rata basis, ff Agreements with Named Executive Offiff cers Kevin Cii . GCC orG marr n, Ph.D. has an employment contract that provides that: (i) Dr. Gorman will serve as the Company’s Executive Vice President and Chief Operating Officer commencing on August 1, 2007 at an initial annual salary orr to annual adjustment by the Board of Directors (subsu equent to entering into the employment contract, Dr. Gorman became Chief Executive Officer and his annual base salary f the Company with or without cause, construcr annual bonus as determined by the Board of Directors, based upon in 2007 and continuing for the term of the agreement, Dr. Gorman will be eligible to receive equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors. esignation; (iii) Dr. Gorman is eligible for a discretionary achieving certain performance criteria; and (iv) each year starting 2023 is $946,000); (ii) the agreement terminates upon death, disabia lity, termination by orff tive termination or voluntary r f $400,000, subju ect u rr rr Matthew C. Abernethyh has an employment contract that provides that: (i) Mr. Abernethy will be entitled to receive an initial tive termination or voluntary r base salary of $420,000 per year, which was his base salary f salary for 2023 is $646,061); (ii) the agreement terminates upon death, disabia lity, termination by the Company with or without cause, esignation; (iii) Mr. Abernethy is eligible for a discretionary annual bonus as determined by the construcr Board of Directors, based upon achieving certain performance criteria; (iv) Mr. Abernethy is eligible to receive equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors; (v) Mr. Abernethy shall receive a one-time cash inducement advance in the amount of $180,000, which was deemed earned in 2020 as Mr. Abernethy completed two full years of employment with the Company; and (vi) Mr. Abernethy shall receive relocation benefitsff relocation advance in the amount of $140,000. 2018, subju ect to future adjud stments (Mr. Abernethy’s annual base , including a one-time cash orff u rr rr Kyle W. Gano, Ph.PP D. has an employment contract that provides that: (i) Dr. Gano will serve as the Company’s Chief Business f $310,000, subju ect to annual adjustment by the Development Officer commencing on November 12, 2014 at an initial annual salary orr Board of Directors (Dr. Gano’s annual base salary f termination by the Company with or without cause, construcr discretionary annual bonus as determined by the Board of Directors, based upon Gano is eligible to receive stock option awards with the equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors. esignation; (iii) Dr. Gano is eligible for a achieving certain performance criteria; and (iv) Dr. 2023 is $602,912); (ii) the agreement terminates upon death, disabia lity, tive termination or voluntary r u orff rr rr Jude Onyin a, Ph.D. has an employment contract that provides that: (i) Dr. Onyia will serve as the Company’s Chief Scientificff Offiff cer commencing on November 29, 2021 at an initial annual salary orr orff Directors (Dr. Onyia's annual base salary f the Company with or without cause, construcr annual bonus as determined by the Board of Directors, based upon u receive stock option awards and equity awards with the number of shares, vesting terms, and exercise price as set forth in the agreement and as shall be determined by the Board of Directors; and (v) Dr. Onyia shall receive a one-time cash inducement advance in the amount of $175,000, which was deemed earned on November 29, 2023 when Dr. Onyia completed two fulff employment with the Company). death, disabia lity, termination by esignation; (iii) Dr. Onyia is eligible for a discretionary 2023 is $638,250); (ii) the agreement terminates upon rr tive termination or voluntary r achieving certain performance criteria; (iv) Dr. Onyia is eligible to f $575,000, subju ect to annual adjustment by the Board of l years of u rr Eiryii W. Roberts,tt M.D. has an employment contract that provides that: (i) Dr. Roberts will serve as the Company’s Chief Medical Officer commencing on January 8, 2018 at an initial annual salary orr Directors (Dr. Roberts’ annual base salary f orff the Company with or without cause, construcr annual bonus as determined by the Board of Directors, based upon u to receive stock option awards with the equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors; (v) Dr. Roberts shall receive a one-time cash inducement advance in the amount of $225,000, which was deemed earned in early 2021 when Dr. Roberts completed two fulff (vi) Dr. Roberts shall receive relocation benefitsff f $520,000, subju ect to annual adjustment by the Board of 2023 is $660,348); (ii) the agreement terminates upon death, disabia lity, termination by esignation; (iii) Dr. Roberts is eligible for a discretionary tive termination or voluntary r achieving certain performance criteria; (iv) Dr. Roberts is eligible , including a one-time cash relocation advance in the amount of $220,000. l years of employment with the Company; and rr rr 58 Outstanding Equity Awards at Fiscal Year-End. The folff of December 31, 2023: lowing tabla e sets forff th the outstanding equity awards held by the NEOs as Outstanding Equity Awards Table Option Awards Stock Awards Award Grant and Commence ment of Vesting Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Name Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) (3) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) — — — — — — — — — — — — — — — — 26,576 (4) $3,501,654 — $0 5 0,979 (5 ) $ 6,716,993 — — — — — — — — 6,075 (4) $800,442 — — — — — — 5,771 8,635 15,424 2 1,506 — — — 2,430 3,720 7,309 — — — — — — $760,387 $1,137,748 $2,032,266 $2,833,631 — — — $320,177 $490,147 $963,034 10,264 $1,352,385 — — — — — — — — — 3,037 3,720 8,780 10,264 — 8,852 713 — — — — — — — $400,155 $490,147 $1,156,853 $1,352,385 7,974 (5) $1,050,654 — — — — — — — — — — — — — — — — 6,075 (4) $800,442 — — — 7,974 (5) $1,050,654 $1,166,340 $93,945 — — 9,112 (4) $1,200,597 Kevin C. Gorman, Ph.D. .......... 1/16/2014 2/3/2015 2/5/2016 2/6/2017 2/5/2018 2/7/2019 2/6/2020 2/8/2021 1/31/2022 2/13/2023 5/19/2023 12/1/2017 2/7/2019 2/6/2020 2/8/2021 1/31/2022 2/13/2023 5/19/2023 1/16/2014 2/3/2015 2/5/2016 2/6/2017 2/5/2018 2/7/2019 2/6/2020 2/8/2021 1/31/2022 2/13/2023 5/19/2023 44529 1/31/2022 2/13/2023 5/19/2023 1/8/2018 2/7/2019 2/6/2020 2/8/2021 1/31/2022 2/13/2023 5/19/2023 Matthew C. Abernerr thy ............. Kyle W. Gano, Ph.D................. Jude Onyia, Ph.D...................... Eiry W. Roberts, M.D .............. 167,858 146,105 109,100 207,400 104,200 133,345 139,627 80,653 67,107 27,845 — 45,000 83,341 58,791 34,743 31,798 13,289 — 75,000 65,000 36,400 60,000 30,400 66,673 73,488 34,743 38,199 13,289 — 62,588 3,097 14,071 — 5,140 40,673 51,441 34,743 21,994 10,944 — — — — — — — 6,071 33,210 72,942 105,811 — — — 2,556 14,306 34,564 50,500 — — — — — — — 3,195 14,306 41,521 50,500 — 57,581 3,367 53,470 — — — 2,237 14,306 39,277 41,588 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — $19.59 $32.99 $35.99 $43.24 $81.49 $81.05 $102.90 $117.63 $79.02 $ 103.52 — $73.60 $81.05 $102.90 $117.63 $79.02 $103.52 — $19.59 $32.99 $35.99 $43.24 $81.49 $81.05 $102.90 $117.63 $79.02 $103.52 — $84.74 $79.02 1/16/2024 (2) 2/3/2025 (2) 2/5/2026 (2) 2/6/2027 (2) 2/5/2028 (2) 2/7/2029 (2) 2/6/2030 (2) 2/8/2031 (2) 1/31/2032 (2) 2/13/2033 (2 ) 12/1/2027 (1) 2/7/2029 (2) 2/6/2030 (2) 2/8/2031 (2) 1/31/2032 (2) 2/13/2033 (2) 1/16/2024 (2) 2/3/2025 (2) 2/5/2026 (2) 2/6/2027 (2) 2/5/2028 (2) 2/7/2029 (2) 2/6/2030 (2) 2/8/2031 (2) 1/31/2032 (2) 2/13/2033 (2) 11/29/2031 (1) 1/31/2032 (2) $103.52 2/13/2033 (2) 10,868 $1,431,968 — — — $77.81 $81.05 $102.90 $117.63 $79.02 $103.52 — 1/8/2028 (1) 2/7/2029 (2) 2/6/2030 (2) 2/8/2031 (2) 1/31/2032 (2) 2/13/2033 (2 ) — — — 2,126 3,720 8,306 8 ,453 — — — — $280,122 $490,147 $1,094,399 $1,113,767 15,948 (5) $2,101,308 — — — — — — — — 9,112 (4) $1,200,597 — — — 13,290 (5) $1,751,090 (1) (2) (3) (4) (5) ff ff ff years, subju ect to an initial one-year “cliff.ff ” years. years. Vests monthly over four Vests monthly over four Vests annually over four Consists of PRSUs. Represents the target number of shares that may be earned under the PRSUs granted to NEOs in 2022 under the Company’s 2020 Plan. The PRSUs will vest on the date, or dates, that the Committee determines achievement of two underlying performance metrics, each of which must occur by December 31, 2024. Such metrics relate to the advancement of certain clinical programs which we believe will drive stockholder value within the 36-month l number of units subju ect to the PRSUs will be determined performance period commencing on January 1, 2022 and ending on December 31, 2024. The actuat based on the level of achievement of such metrics, with minimum, target and maximum levels specified. Consists of PRSUs. Represents the target number of shares that may be earned under the PRSUs granted to NEOs in 2023 under the Company’s 2020 Plan. The PRSUs will vest on the date, or dates, that the Committee determines achievement of two underlying performance metrics, each of which must occur by December 31, 2025. Such metrics relate to regulatory mrr value within the 36-month performance period commencing on January 1, 2023 and ending on December 31, 2025. The actuat PRSUs will be determined based on the level of achievement of such metrics, with minimum, target and maximum levels specified. ilestones and the advancement of certain clinical programs which we believe will drive stockholder l number of units subju ect to the 59 Option Exercises and Stock Vested During the Year. The folff vested during 2023 along with their respective values at December 31, 2023 for the NEOs: lowing tabla e sets forff th the options exercised and stock awards that Option Exercises and Stock Vested Table Name Kevin C. Gorman, Ph.D............................................................................. Matthew C. Abernethy............................................................................... Kyle W. Gano, Ph.D. ................................................................................. Jude Onyia, Ph.D. ...................................................................................... Eiry W. Roberts, M.D. ............................................................................... Option Awards (1) Stock Awards (2) Number of Shares Acquired on Exercise (#) — — — — 100,000 Value Realized on Exercise ($) (3) — — — — 4,151,021 Number of Shares Acquired on Vesting (#) 77,989 38,930 39,256 19,293 40,212 Value Realized on Vesting ($) (4) $8,222,913 $4,081,420 $4,119,477 $2,075,033 $4,225,625 (1) (2) (3) (4) Inforff mation relates to stock option exercises during 2023. Inforff mation relates to RSUs and PRSUs that vested during 2023. Calculated by multiplying the number of shares acquired upon the Company’s common stock at the time of exercise. Calculated by multiplying the number of shares acquired upon federal and state income tax liabia lities. u u exercise of stock options by the diffeff rence between the exercise price and the market price of vesting of RSUs and PRSUs by the average price of shares sold for purpos rr es of satisfying Potential Payments Upon Termination or Change-in-Control. The folff payabla e to the NEOs in the event of a termination prior to or following a change in control, assuming such event occurred on December 31, 2023: th the potential severance benefits lowing tabla es set forff Potential Payment Upon Termination Table* Name Kevin C. Gorman, Ph.D........................ Matthew C. Abernethy ......................... Kyle W. Gano, Ph.D............................. Jude Onyia, Ph.D. ................................. Eiry W. Roberts, M.D........................... Salary (1) $1,182,500 $646,061 $602,912 $638,250 $660,348 Bonus (2) $1,182,500 $323,031 $301,456 $319,125 $330,174 Accrued Compensation (3) $136,443 $93,183 $86,958 $76,713 $79,395 Stock Awards (4) $8,801,736 $2,796,723 $3,135,805 $2,947,024 $2,771,321 Medical (5) $55,305 $34,992 $33,156 $37,380 $42,456 Total $11,358,484 $3,893,990 $4,160,287 $4,018,492 $3,883,694 * (1) (2) (3) (4) (5) tive termination, or deemed termination, prior to a change in control. Refleff cts a termination without cause or due to a construcrr Based on salary as of December 31, 2023. Based on bonus targets established by the Board of Directors forff Accruerr d compensation is comprised of vacation pay earned and unpaid as of December 31, 2023. The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2023 that would vest in accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on December 29, 2023 of $131.76. Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract. 2023. 60 Potential Payment Upon Change-in-Control Table* Name Kevin C. Gorman, Ph.D........................ Matthew C. Abernethy ......................... Kyle W. Gano, Ph.D............................. Jude Onyia, Ph.D. ................................. Eiry W. Roberts, M.D........................... Salary (1) $1,892,000 $969,092 $904,368 $957,375 $990,522 Bonus (2) $1,892,000 $484,546 $452,184 $478,688 $495,261 Accrued Compensation (3) $136,443 $93,183 $86,958 $76,713 $79,395 Stock Awards (4) $24,462,209 $8,501,775 $9,160,926 $10,389,185 $9,442,741 Medical (5) $88,488 $52,488 $49,734 $56,070 $63,684 Total (6) $28,471,140 $10,101,084 $10,654,170 $11,958,031 $11,071,603 * (1) (2) (3) (4) (5) (6) u to a construcrr to be provided upon a termination without cause, or dued tive termination, within a specified time following a change-in-control. Refleff cts benefitsff Based on salary as of December 31, 2023. Based on bonus targets established by the Board of Directors forff Accruerr d compensation is comprised of vacation pay earned and unpaid as of December 31, 2023. The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options, PRSUs, and RSUs as of December 31, 2023 that would vest in accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on December 29, 2023 of $131.76. See the discussion that follows these tables forff presented assuming they are paid out at target. Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract. The totals shown here do not take into account the appl ication of any “best-afteff otherwise be subject to the excise tax provisions of Section 280G of the Internal Revenue Code. a description of the applicable vesting provisions. Unvested PRSUs are y if an executive officer’s payments would r-tax” provision that may appl 2023. a a Potential Payment Upon Termination by Disability Table* Name Kevin C. Gorman, Ph.D. ...................... Matthew C. Abernethy ......................... Kyle W. Gano, Ph.D............................. Jude Onyia, Ph.D.................................. Eiry W. Roberts, M.D. ......................... Salary (1) $1,182,500 $646,061 $602,912 $638,250 $660,348 Bonus (2) $1,182,500 $323,031 $301,456 $319,125 $330,174 Accrued Compensation (3) $136,443 $93,183 $86,958 $76,713 $79,395 Stock Awards (4) $8,801,736 $2,796,723 $3,135,805 $2,947,024 $2,771,321 Medical (5) $55,305 $34,992 $33,156 $37,380 $42,456 Total $11,358,484 $3,893,990 $4,160,287 $4,018,492 $3,883,694 * (1) (2) (3) (4) (5) to disabia lity. Refleff cts a termination dued Based on salary as of December 31, 2023. Based on bonus targets established by the Board of Directors forff Accruerr d compensation is comprised of vacation pay earned and unpaid as of December 31, 2023. The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2023 that would vest in accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on December 29, 2023 of $131.76. Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract. 2023. Potential Payment Upon Termination by Death Table* Name Kevin C. Gorman, Ph.D................................................................................ Matthew C. Abernethy ................................................................................. Kyle W. Gano, Ph.D..................................................................................... Jude Onyia, Ph.D. ......................................................................................... Eiry W. Roberts, M.D................................................................................... Bonus (1) $946,000 $323,031 $301,456 $319,125 $330,174 Accrued Compensation (2) $136,443 $93,183 $86,958 $76,713 $79,395 Stock Awards (3) $8,801,736 $2,796,723 $3,135,805 $2,947,024 $2,771,321 Total $9,884,179 $3,212,937 $3,524,219 $3,342,862 $3,180,890 * (1) (2) (3) to death. Refleff cts a termination dued Based on bonus targets established by the Board of Directors forff Accruerr d compensation is comprised of vacation pay earned and unpaid as of December 31, 2023. The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2023 that would vest in accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on December 29, 2023 of $131.76. 2023. 61 The folff lowing is a description of the arrangements under which the NEOs may be entitled to potential payments uponu a termination without cause or resignation dued lowing one or more of the folff or death. Resignation dued material adverse changes in the nature of such executive’s employment, as specified in the agreement, which is not cured folff notificff ation: tive termination may include an executive’s resignation folff tive termination (including following a change-in-control) or upon disabia lity lowing lowing to a construcrr to construcrr a significant reduction in the executive or the executive supervisor’s duties or responsibilities, a material reduction in base salary, • • • material relocation, or • material breach of the executive’s employment agreement. Dr. Grr orG marr n is entitled to 1.25 times the amount of his annual base salary arr nd target annual bonus to be paid equally over r the date of termination, and 15 months, an acceleration of unvested shares that would have vested over the 15 continuous months afteff payment of COBRA benefits to continue then-current coverage for a period of 15 months following termination in the event that the Company terminates his employment without cause, or he resigns due to a construcr tive termination. In the event of such termination within six months afteff r the consummation of a change in control, Dr. Gorman is entitled to 2 times the amount of his annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a period of 24 months following termination. In addition, the Company has agreed to reimburse Dr. Gorman forff taxes payable by him by reason of the benefits provided in connection with such a termination in connection with a change in control if the total payment exceeds 2.99 times his base amount by more than 15%. In the event of termination dued entitled to 15 months of base salary paid semi-monthly over 15 months, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of fulff denominator of which is 12, an acceleration of unvested shares that would have vested over the 15 continuous months afteff termination, and payment of COBRA bRR the event of a termination dued unvested shares that would have vested over the 15 continuous months afteff target annual bonus multiplied by a fraff ction the numerator of which is the number of fulff fiscal year and the denominator of which is 12 and any accrued and unpaid compensation on the date of termination. l months of employment by Dr. Gorman in the fisff cal year and the r the date of to continue then-current coverage for a period of 15 months following termination. In r the date of termination, a lump sum amount equal to his iaries or estate, would be entitled to an acceleration of l months of employment by Dr. Gorman in the to Dr. Gorman’s death, his beneficff eral and state income to disabia lity, Dr. Gorman is the increase in fedff enefitsff Mr. Abernethyh is entitled to 1.0 times the amount of his annual base salary arr nd target annual bonus to be paid equally over r the date of termination, and r-tax” provision. The best-afteff r the consummation of a change in control, Mr. Abernethy is entitled to 1.5 times the amount of his annual base 12 months, an acceleration of unvested shares that would have vested over the 12 continuous months afteff payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event that the Company terminates his employment without cause, or he resigns due to a construcr tive termination. In the event of such termination within six months afteff salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a period of 18 months following termination; provided, however, in the event such payment to Mr. Abernethy afteff afteff subju ect to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce the change in control icable taxes, the finff al payments would be larger than if the change in control payments payments to Mr. Abernethy if, aff were not reduced and therefor subject to an excise tax. In the event of termination dued 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of fulff of which is 12, an acceleration of unvested shares that would have vested over the 12 continuous months afteff and payment of COBRA bRR termination dued to Mr. Abernethy’s death, his beneficff would have vested over the 12 continuous months afteff multiplied by a fraction the numerator of which is the number of fulff the denominator of which is 12 and any accruer d and unpaid compensation on the date of termination. l months of employment by Mr. Abernethy in the fiscal year and the denominator r the date of termination, enefitff s to continue then-current coverage for a period of 12 months following termination. In the event of a iaries or estate, would be entitled to an acceleration of unvested shares that r the date of termination, a lump sum amount equal to his target annual bonus l months of employment by Mr. Abernethy in the fiscal year and r-tax provision provides that if the change in control payment due to Mr. Abernethy would be r a change in control is subject to a “best- to disabia lity, Mr. Abernethy is entitled to fter all appl a 62 Dr. Grr anGG o is entitled to 1.0 times the amount of his annual base salary arr nd target annual bonus to be paid equally over r the date of termination, and r the consummation of a change in control, Dr. Gano is entitled to 1.5 times the amount of his annual base salaryrr 12 months, an acceleration of unvested shares that would have vested over the 12 continuous months afteff payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event that the Company terminates his employment without cause, or he resigns due to a construcr tive termination. In the event of such termination within six months afteff and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a period of 18 months following termination; provided, however, in the event such payment to Dr. Gano after a change in control is subject to a “best-after-tax” provision. The best-afteff r-tax provision provides that if the change in control payment due to Dr. Gano would be subject to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce the change in control payments to Dr. Gano if, aff icable taxes, the finff al payments would be larger than if the change in control payments were not reduced and therefor subju ect to an excise tax. In the event of termination dued monthly over 12 months, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of fulff unvested shares that would have vested over the 12 continuous months afteff to continue then-current coverage for a period of 12 months following termination. In the event of a termination dued death, his beneficff months afteff which is the number of fulff and unpaid compensation on the date of termination. r the date of termination, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of l months of employment by Dr. Gano in the fisff cal year and the denominator of which is 12, an acceleration of l months of employment by Dr. Gano in the fisff cal year and the denominator of which is 12 and any accruerr d iaries or estate, would be entitled to an acceleration of unvested shares that would have vested over the 12 continuous to disabia lity, Dr. Gano is entitled to 12 months of base salary paid semi- r the date of termination, and payment of COBRA benefits to Dr. Gano’s fter all appl a Dr. Orr nyia is entitled to 1.0 times the amount of his annual base salary arr nd target annual bonus to be paid equally over 12 r-tax provision provides that if the change in control payment due to Dr. Onyia would be subject to the r the date of termination, and months, an acceleration of unvested shares that would have vested over the 12 continuous months afteff payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event that the Company terminates his employment without cause, or he resigns due to a construcr tive termination. In the event of such termination within six months afteff r the consummation of a change in control, Dr. Onyia is entitled to 1.5 times the amount of his annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a period of 18 months following termination; provided, however, in the event such payment to Dr. Onyia after a change in control is subject to a “best-after- tax” provision. The best-afteff excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce the change in control payments to Dr. Onyia if, afteff thereforff semi-monthly over 12 months, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of fulff unvested shares that would have vested over the 12 continuous months afteff to continue then-current coverage for a period of 12 months following termination. In the event of a termination dued death, his beneficff months afteff which is the number of fulff and unpaid compensation on the date of termination. r all applicable taxes, the finff al payments would be larger than if the change in control payments were not reduced and to disabia lity, Dr. Onyia is entitled to 12 months of base salary paid r the date of termination, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of l months of employment by Dr. Onyia in the fiscal year and the denominator of which is 12, an acceleration of iaries or estate, would be entitled to an acceleration of unvested shares that would have vested over the 12 continuous l months of employment by Dr. Onyia in the fiscal year and the denominator of which is 12 and any accruer d r the date of termination, and payment of COBRA benefits subju ect to an excise tax. In the event of termination dued to Dr. Onyia’s Dr. Rrr obertstt is entitled to 1.0 times the amount of her annual base salary arr nd target annual bonus to be paid equally over r the date of termination, and r-tax” provision. The best-afteff tive termination. In the event of such termination r the consummation of a change in control, Dr. Roberts is entitled to 1.5 times the amount of her annual base 12 months, an acceleration of unvested shares that would have vested over the 12 continuous months afteff payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event that the Company terminates her employment without cause, or she resigns due to a construcr within six months afteff salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a period of 18 months following termination; provided, however, in the event such payment to Dr. Roberts after a change in control is subject to a “best- afteff the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce the change in control payments to r all applicable taxes, the finff al payments would be larger than if the change in control payments were not reduced Dr. Roberts if, afteff and therefor subject to an excise tax. In the event of termination dued to disabia lity, Dr. Roberts is entitled to 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to her target annual bonus multiplied by a fraction the numerator of which is the number of fulff acceleration of unvested shares that would have vested over the 12 continuous months afteff COBRA benefits to continue then-current coverage for a period of 12 months following termination. In the event of a termination due to Dr. Roberts’s death, her beneficff iaries or estate, would be entitled to an acceleration of unvested shares that would have vested over the 12 continuous months afteff the numerator of which is the number of fulff 12 and any accruerr d and unpaid compensation on the date of termination. r the date of termination, a lump sum amount equal to her target annual bonus multiplied by a fraction l months of employment by Dr. Roberts in the fiscal year and the denominator of which is 12, an l months of employment by Dr. Roberts in the fiscal year and the denominator of which is r-tax provision provides that if the change in control payment due to Dr. Roberts would be subju ect to r the date of termination, and payment of 63 Under SEC rules, we are required to calculate and disclose the annual total compensation of our median employee, as well as the ratio of the annual total compensation of our median employee as compared to the annual total compensation of our CEO, Kevin C. Gorman, Ph.D. (the “CEO Pay Ratio”). To identify off ur median employee, we used the folff lowing methodology: CEO PAY RATIO • • • To determine our total population of employees, we included all full-time and part-time employees as of December 31, 2023. To identify our median employee froff m our employee population, we calculated the aggregate amount of each employee’s 2023 base salary (using a reasonabla e estimate of the hours worked and overtime actuat for hourly employees and actuat and the grant date faiff the value of the equity awards granted to our named executive officers and reported in our Summary Compensation Tabla e. r value of equity awards granted in fisff cal 2023 using the same methodology we use forff our remaining employees) and bonuses attributable to 2023 performance lly paid durd ing 2023 estimating l salary prr aid forff In making this determination, we annualized the base salary arr employed by us forff less than the entire fisff cal year. nd target bonus compensation of employees who were Afteff r identifyiff ng our median employee, we then calculated compensation forff such median employee using the same methodology used to calculate compensation forff median of the annual total compensation of our employees (other than our CEO) was $269,081 and the annual total compensation of our CEO, as reported in the Summary Crr information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees a was appr ompensation Table included in this Proxy Statement, was $15,750,812. Based on this our NEOs as reported in the 2023 Summary Compensation Table. For 2023, the oximately 58 to 1. The CEO Pay Ratio above represents our reasonabla e estimate calculated in a manner consistent with SEC rulr es and appl icable he median employee, and each company guidance. SEC rulr es and guidance provide significant fleff xibility in how companies identify t may use a diffeff rent assumptions particular to that company. As a result, and as explained by the SEC when it adopted these rulr es, in considering the pay ratio disclosure, stockholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry,rr stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures. Neither the Compensation Committee nor our management used our CEO Pay Ratio measure in making compensation decisions. rent methodology and make diffeff but rather to allow a ff In addition to the information above a , in order to reflect our employee compensation practices, we have also calculated the f our median employee while taking only annual base salary i annual base salary orr our CEO as compared to the annual base salary orr employee, we used the appl a (other than our CEO) was $161,926, and the annual base salary orr included in this Proxy Statement, was $946,000. Based on this inforff mation, the ratio of the annual base salary orr median of the annual base salary of all employees (other than the CEO) was approximately 6 to 1. Neither the Compensation Committee nor our management used this ratio to make compensation decisions. f such median employee. In calculating the annual base salary orr . For fiscal 2023, the median of the annual base salary orr f our CEO, as reported in the Summary Compensation Table icable methodology listed above f our median a nto account, as well as the ratio of the base salary orr f our CEO to the f our employees rr f 64 ITEM 402(v) PAY VERSUS PERFORMANCE The disclosure included in this section is prescribed by SEC rulr es and does not necessarily align with how the Company or the Compensation Committee view the link between the Company’s performance and NEO pay and the Compensation Committee does not utilize CAP (as defined below) as the basis forff making compensation decisions. For additional inforff mation about our pay-for- performance philosophy and how we align executive compensation with Company performance, refer to the Compensation Discussion and Analysis. Required Tabular Disclosure of Pay Versus Perforff mance The folff lowing tabla e reports the compensation of our Principal Executive Officer ("PEO") or CEO and the average compensation of the other non-PEO named executive officff ers ("Non-PEO NEOs") as reported in the Summary Compensation Tabla e for the past four fiscal years, as well as Compensation Actuat lly Paid ("CAP") as calculated under new SEC Pay-Versus-Performance ("PVP") disclosure requirements and certain performance measures required by the rules. The disclosure covers our four most-recent fiscal years, which will expand incrementally over the next year to a rolling fivff e years. Value of Initial Fixed $100 Investment Based On: Summary Compensation Table Total for PEO ($)(1) Compensation Actually Paid to PEO ($)(2) (b) (c) $15,750,812 $11,902,527 $14,081,412 $13,880,632 $12,335,515 $21,886,517 $4,496,176 $8,176,596 Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) (d) $6,286,290 $5,200,614 $6,429,791 $6,522,476 Average Compensation Actually Paid to Non-PEO NEOs ($)(4) (e) $5,262,182 $11,398,982 $3,012,565 $4,030,852 Total Shareholder Return ($)(5) Peer Group Total Shareholder Return ($)(5) GAAP Net Income (millions) ($)(6) Net Product Sales (millions) ($)(7) (f) $122.58 $111.46 $79.48 $89.45 (g) $118.87 $111.66 $125.33 $126.13 (h) $249.7 $154.5 $89.6 $407.3 (i) $1,860.6 $1,440.9 $1,090.1 $994.1 The dollar amounts reported in column (b) are the amounts of total compensation reported forff Kevin C. Gorman, Ph.D. (PEO) for each corresponding year in the “Total” column of the Summary Compensation Table. The dollar amounts reported in column (c) represent the amount of CAP forff Dr. Gorman, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actuat requirements of Item 402(v) of Regulation S-K, the following adjud stments were made to Dr. Gorman’s total reported compensation forff CAP: l amount of compensation earned by or paid to Dr. Gorman during the applicable year. In accordance with the 2023 to determine the 2023 Total Compensation forff Covered Fiscal Year ("FY") from Summary Compensation Table $ 15,750,812 Deduct: Amounts Reported in "Stock Awards" & "Option Awards" Columns 13,700,176 Add: Year End Fair Value of Equity Awards Granted During the Covered FY that Remain Outstanding and Unvested as of Last Day of the Covered FY Add: Change in Fair Value froff m the end of the Prior FY to the end of the Covered FY 9,092,870 (101,013) Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Covered FY 1,334,539 Add: Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior FY that Vested in the Covered FY Add: Fair Value at the End of the Prior FY of Equity Awards that Failed to Meet Vesting Conditions in the Covered FY Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation Compensation Actuat lly Paid (as definff ed by SEC rulrr e) (41,517) — — $ 12,335,515 The dollar amounts reported in column (d) represent the average of the amounts reported forff of the Summary Compensation Table in each applicable year. The names of each of the Non-PEO NEOs included forff amounts in each applicable year are as folff . Roberts, M.D.; (ii) for 2022, Matthew C. Abernethy, Kyle W. Gano, Ph.D., Darin M. Lippoldt, and Eiry W. Roberts, M.D.; (iii) for 2021, Matthew C. Abernethy, Eric Benevich, Jude Onyia, Ph.D., and Eiry Wrr lows: (i) for 2023, Matthew C. Abernethy, Kyle W. Gano, Ph.D., Jude Onyia, Ph.D., and Eiry Wrr 2020, Matthew C. Abernethy, Eric Benevich, KylKK e W. Gano, Ph.D., and Eiry Wrr the Company’s Non-PEO NEOs as a group in the “Total” column es of calculating the average . Roberts, M.D.; (iv) forff . Roberts, M.D. rr purpos Year (a) 2023 2022 2021 2020 (1) (2) (3) 65 (4) (5) (6) (7) The dollar amounts reported in column (e) represent the average amount of CAP to the Non-PEO NEOs, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actuat l average amount of compensation earned by or paid to the NEOs as a group (excluding Dr. Gorman) durd ing the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjud stments were made to average total reported compensation forff each year to determine the CAP, using the same methodology described above the Non-PEO NEOs forff in Note 2: a Total Compensation forff Covered FY froff m Summary Compensation Table Deduct: Amounts Reported in "Stock Awards" & "Option Awards" Columns Add: Year End Fair Value of Equity Awards Granted During the Covered FY that Remain Outstanding and Unvested as of Last Day of the Covered FY Add: Change in Fair Value froff m the end of the Prior FY to the end of the Covered FY Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Covered FY Add: Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior FY that Vested in the Covered FY Add: Fair Value at the End of the Prior FY of Equity Awards that Failed to Meet Vesting Conditions in the Covered FY Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation Compensation Actuat lly Paid (as definff ed by SEC rulrr e) 2023 $ 6,286,290 5,187,621 4,212,074 (68,838) 618,180 (597,903) — — $ 5,262,182 rr The dollar amounts refleff ct the cumulative Total Shareholder Returt n (TSR) of our common stock (column (f)) and the Peer Group (column (g)) forff the measurement periods beginning on December 31, 2019 and ending on December 31 of each of 2023, 2022, 2021 and 2020, respectively, calculated in accordance with Item 201(e) of Regulation S-K. “Peer Group” represents the NASDAQ Biotechnology Index, which the Company has identifieff d as its peer group for purpos rr The dollar amounts reported in column (h) represent net income reflected in the Company’s audited finff ancial statements for the applicable fiscal year. As required by Item 402(v) of Regulation S-K, we have determined that Net Product Sales is the Company-Selected Measure. Dollar amounts reported forff INGREZZA net product sales, which represent nearly all of the Company's total net product sales, are reflected in the Company's audited finff ancial statements for the applicable fiscal year. es of Item 402(v) and which is used by the Company for purpos es of compliance with Item 201(e) of Regulation S-K. The assumptions used in calculating the fair value of the equity awards did not differ in any material respect from the r value of the awards as reported in the Summary Compensation Table, except that the assumptions used to calculate the grant date faiff fair value calculations of (i) the options granted on or between Februarr 3, 2023 used an estimated term between 1.37 years and 7.04 years in FY 2023, as compared to an estimated term of 6.0 to 6.5 years used to calculate the grant date fair value of such awards, and (ii) the PRSUs assumed payout multipliers at current expectations, which range from 0% to 158% r value calculations which assumed a payout at across diffeff target. rent grant years and metrics, in each case as compared to the grant date faiff ry 7, 2019 and February 1rr Required Tabular Disclosure of Most Important Perforff mance Measures The most important financial performance measures used by the company to link CAP to the company’s NEOs forff the most recently completed fisff cal year to the company’s performance are set forth below. For further inforff mation regarding these performance metrics and their func tion in our executive compensation program, please see “Compensation Discussion and Analysis”. ff • • • • • • Net Product Sales Non-GAAP Operating Expense Non-GAAP Operating Income Pipeline Progression Regulatory Arr dvancement Total Prescriptions (TRx) Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Perforff mance Measures As required by Item 402(v) of Regulation S-K, we are providing the folff a pay and performance figures that are included in the pay versus performance tabul below furff for purpos represent the actual final amount of compensation earned by or actuat rr ther illustrates the relationship between Company total shareholder returt n and that of the Peer Group. As noted above, CAP es of the tabular disclosure and the following graphs were calculated in accordance with SEC rulrr es and do not fully lowing graphs to illustrate the relationship between the ar disclosure above. In addition, the firff st graph lly paid to our NEOs during the applicable fiscal years. 66 PEO and Average Non-PEO NEOs Compensation Actually Paid versus TSR Performance $25,000 $20,000 ) 0 0 0 $ ( P A C $15,000 $10,000 $5,000 $— $200 $160 $120 $80 $40 $— T S R V a l u e $126 $125 $89 $8,177 $79 $4,031 $4,496 $3,013 $21,887 $111 $112 $123 $119 $11,399 $12,336 $5,262 2020 2021 2022 2023 PEO Compensation Actually Paid Average Non-PEO NEOs Compensation Actually Paid Total Shareholder Return Peer Group Total Shareholder Return PEO and Average Non-PEO NEOs Compensation Actually Paid versus Net Income $25,000 $407,300 $20,000 $15,000 $10,000 ) 0 0 0 $ ( P A C $5,000 $— $21,887 $450,000 $360,000 $249,700 $270,000 $11,399 $12,336 $180,000 N e t I n c o m e ( $ 0 0 0 ) $8,177 $89,600 $154,500 $4,031 $4,496 $3,013 $90,000 $5,262 $— 2020 2021 2022 2023 PEO Compensation Actually Paid Average Non-PEO NEOs Compensation Actually Paid Net Income 67 PEO and Average Non-PEO NEOs Compensation Actually Paid versus Net Product Sales ) 0 0 0 $ ( P A C $25,000 $20,000 $15,000 $10,000 $5,000 $— $2,500,000 $21,887 $1,860,600 $2,000,000 $1,440,900 $11,399 $12,336 $1,500,000 $1,000,000 $500,000 $5,262 $— N e t P r o d u c t S a l e s ( $ 0 0 0 ) $994,100 $1,090,100 $8,177 $4,031 $4,496 $3,013 2020 2021 2022 2023 PEO Compensation Actually Paid Average Non-PEO NEOs Compensation Actually Paid Net Product Sales All inforff mation provided above under thett refee rence into any filing of to hett Company under thett amended, whethett except to thett r made befoe re or afteff r thett “IteII m 402(v)(( Pay Va erVV surr s Perfor rmance” heading will not be deemed to be incorporated by Securities Act of 1o 933, as amended, or the SecuSS date hereof ao nd irrespective of ao rities ExchEE 934, as ation language in any such filing, ange Act of 1o ny general incorpor eferff ence. r extent thett Company specifici ally incorporates such infon rmation by rb 68 Non-Employee Director Compensation Philosophy DIRECTORS COMPENSATION SUMMARY Our non-employee director compensation philosophy is based on the following guiding principles: • • Aligning the long-term interests of stockholders and directors; and Compensating directors appropriately and adequately for their time, effort and experience. The elements of director compensation consist of annual cash retainers and equity awards, as well as customary and usual expense reimbursement in attending Board or committee meetings. In an effort to align the long-term interests of our stockholders and non-employee directors, the mix of cash and equity compensation has historically been, and is currently, weighted more heavily to equity. The Board and the Company’s stockholders have approved certain annual limits on compensation to be paid to the Company’s non-employee directors. Our 2020 Plan provides that the aggregate value of all compensation granted or paid by us to any individual for service as a non-employee director with respect to any period commencing on the date of the annual stockholders meeting forff particular year and ending on the date of the annual stockholders meeting forff period”), including awards granted under our 2020 Plan and cash fees in total value. In addition, the aggregate value of any equity award(s) granted by us to any individual forff service as a non-employee director upon or in connection with his or her initial election or appoi ntment to the Board of Directors will not exceed $2,000,000 in service as a non-employee director with total value (such that the aggregate compensation granted or paid by us to any individual forff respect to an annual period in which such individual is firff st appointed or elected to the Board of Directors will not exceed $3,250,000 es of these limitations, the value of any equity awards is calculated based on the grant date fair value of such in total value). For purpos awards for finff ancial reporting purpos a contains the same annual limits on non-employee director compensation as the 2020 Plan. the next subsequent year (such period, the “annual paid to such non-employee director, will not exceed $1,250,000 oval in Proposal Three of this Proxy Statement es. The Amended 2020 Plan proposed for appr a a r rr ff Our Compensation Committee regularly assesses, on at least an annual basis, our non-employee director compensation program in consultation with its independent compensation consultant, who provides analysis and input on recent developments, prevailing market practices, and recommends any changes to the program to our Board, who ultimately approves non-employee director compensation. The fisff cal 2023 compensation for the Company’s non-employee directors was recommended by the Compensation Committee to the Board following the review of a report froff m FW Cook, its independent compensation consultant, which contained an analysis of prevailing market practices regarding levels and types of non-employee director compensation, including the non-employee director compensation practices of our peer group, which is described in the “Compensation Discussion and Analysis” section of this Proxy Statement, and a comparative assessment of our non-employee director compensation to such peers and market practices. In fisff cal 2023, the Compensation Committee also received a presentation froff m FW Cook about recent developments and best practices related to non-employee directors to inforff m its analysis of, aff nd recommendations regarding, non-employee director compensation. In formulating its recommendations to the Board for fisff cal 2023, the Compensation Committee did not engage in benchmarking or targeting compensation to a specific level of the peer group data provided by FW Cook, but rather used the peer data as a referff ence point in making non-employee director compensation recommendations. For 2023, the Compensation Committee determined that each non-employee director may elect to receive the full value of his or her annual award in the forff m of (i) restricted stock units, (ii) nonstatutory stock options, or (iii) 50% restricted stock units and 50% nonstatutory stock options. It is the Compensation Committee’s view that offeff enables us to retain and attract highly skilled and qualifieff d non-employee directors. Ultimately, the Board set fiscal 2023 non- employee director compensation in the forff ms and amounts it determined to be appropriate using its profesff judgment, afteff compensation forff review of the FW Cook analysis and the Compensation Committee’s recommendations. Our director ring both stock options and restricted stock units provides a total compensation package that fiscal 2023 is described below. sional experience and r carefulff Non-Employee Director Compensation for 2023 For fisff cal 2023, directors who are not employees of the Company earned a $60,000 annual cash retainer. The Company provided the Chair of the Board, William H. Rastetter, an additional $35,000, making his total annual cash retainer $95,000. In addition to the cash compensation set forth above , the Chair of the Audit Committee earned an additional $25,000 annual cash retainer, the Chair of the Compensation Committee earned an additional $20,000 annual cash retainer, and the Chair of the Nominating / Corporate Governance Committee earned an additional $15,000 annual cash retainer. Each other director who was a member of the Audit Committee, the Compensation Committee, the Nominating / Corporate Governance Committee earned an additional annual cash retainer of $12,000, $12,000, and $7,500, respectively, for each Committee on which she or he served. Non- employee directors are also reimbursed forff expenses incurred in connection with performing their duties as directors of the Company. a 69 For fisff cal 2023, on the date of the 2023 Annual Meeting of Stockholders, each continuing non-employee director received an annual equity award with an approximate grant date value of $400,000. Each non-employee director had the ability to elect to receive l value of his or her annual award in the forff m of (i) restricted stock units, (ii) nonstatutory stock options, or (iii) 50% restricted the fulff stock units and 50% nonstatutory stock options. The restricted stock units granted to non-employee directors vest in fulff l on the one- year anniversary orr the Company’s common stock on the date of the grant, are subject to a ten-year term, and vest in full on the one-year anniversary orr the date of grant. Additionally, newly-appointed members of our Board of Directors received an initial equity award with an approximate grant value of $800,000 on their date of appoi options, vests monthly over three years, and has a ten-year term. f the date of grant. The options granted to non-employee directors have exercise prices equal to the closing price of ntment. This initial equity award is comprised 100% of nonstatutory stock a f The folff Company named below: lowing tabla e sets forff th the compensation earned forff the fisff cal year ended December 31, 2023 by the directors of the Director Compensation Table Name Kevin C. Gorman, Ph.D. (4) William H. Rastetter, Ph.D. (5) Gary A. Lyons (6) Johanna Mercier (7) George J. Morrow (8) Leslie V. Norwalk (9) Christine A. Poon (10) Richard F. Pops (11) Shalini Sharp (12) Stephen A. Sherwin, M.D. (13) ................................................................................. ................................................................. ................................................................................................. ................................................................................. ................................................................................. ................................................................................. ................................................................................. ................................................................................. ................................................................................................. ................................................................. Fees Earned or Paid in Cash (1) — $95,000 $60,000 $67,500 $79,500 $75,000 $13,370 $92,000 $97,000 $79,500 Option Awards (2) — $400,039 $200,043 $200,043 — $200,043 $800,083 — $200,043 — Stock Awards (3) — — $200,067 $200,067 $400,039 $200,067 — $400,039 $200,067 $400,039 Total — $495,039 $460,110 $467,610 $479,539 $475,110 $813,453 $492,039 $497,110 $479,539 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) l grant date fair value of RSU awards granted in 2023 as determined pursuant to ASC 718. l grant date fair value of option awards granted in 2023 as determined pursuant to ASC 718. The assumptions used to the year ended December 31, 2023. All option awards were granted on the date of our 2023 annual meeting of stockholders; thett Amounts in this column refleff ct compensation earned in 2023. The amounts shown represent the fulff calculate the value of such awards are set forth under Note 9 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K forff grant date fair values of all option awards are based on a per share Black-Scholes value of $46.63 (other than Ms. Poon's initial equity award of nonstaturory stock options, which was granted on July 11, 2023 and forff which the Black-Scholes value was $48.86). The amounts shown represent the fulff During 2023, Dr. Gorman was an employee of the Company, and as such, did not receive any compensation forff December 31, 2023, Dr. Gorman had outstanding options to purchase 1,401,274 shares of common stock, and 128,891 outstanding RSUs and PRSUs. As of December 31, 2023, Dr. Rastetter had outstanding options to purchase 147,154 shares of common stock. As of December 31, 2023, Mr. Lyons had outstanding options to purchase 106,365 shares of common stock and 2,100 outstanding RSUs. As of December 31, 2023, Ms. Mercier had outstanding options to purchase 40,027 shares of common stock and 2,100 outstanding RSUs. As of December 31, 2023, Mr. Morrow had outstanding options to purchase 117,075 shares of common stock and 4,199 outstanding RSUs. As of December 31, 2023, Ms. Norwalk had outstanding options to purchase 43,865 shares of common stock and 2,100 outstanding RSUs. As of December 31, 2023, Ms. Poon had outstanding options to purchase 16,375 shares of common stock. As of December 31, 2023, Mr. Pops had outstanding options to purchase 117,075 shares of common stock and 4,199 outstanding RSUs. As of December 31, 2023, Ms. Sharp hrr ad outstanding options to purchase 37,847 shares of common stock and 2,100 outstanding RSUs. As of December 31, 2023, Dr. Sherwin had outstanding options to purchase 102,075 shares of common stock and 4,199 outstanding RSUs. service on the Board of Directors. As of Non-Employee Director Compensation for 2024 In 2024, on the recommendation of the Compensation Committee and based on a review of our peer group companies and the Chair of the Nominating / Corporate Governance other members of the Nominating / Corporate analysis performed by FW Cook, the Board increased the annual retainer forff Committee by $3,000 to a total of $18,000 annually and the annual retainer forff Governance Committee by $1,500 to a total of $9,000 annually. Additionally, in connection with the forff mation of the Science and Medical Technology Committee in January 2024, the Board approved annual retainers for the Chair and non-chair members of $20,000 and $10,000, respectively. The Board maintained all equity compensation and all other annual cash retainers for non- employee directors at the 2023 levels. 70 Non-Employee Director Equity Ownership Guidelines The Board of Directors has adopted equity ownership guidelines forff our non-employee directors, which are designed to furff align the interests of the non-employee directors with those of our stockholders by ensuring that our non-employee directors have a significant finff ancial stake in the Company’s long-term success. The equity ownership guidelines establa ish a minimum equity ownership equal to three times the cash retainer paid to the non-employee director, with such values determined based on the value of our common stock owned by such persons as of certain measurement dates. All shares directly or beneficially owned by the non- employee director, including the net exercisabla e value of outstanding vested stock options (where the market price of our common stock exceeds the strike price of such option) are included in determining the value of equity owned under our equity ownership guidelines. New non-employee directors are granted a five-year period to reach the equity ownership requirements set forth in the guidelines and are expected to make annual progress toward the equity ownership requirements durd ing this fivff e-year period. When a non-employee director does not meet the equity ownership requirements set forth in the guidelines, he/she is restricted fromff any held shares until such requirements are met. Additionally, should non-employee director who does not meet the equity ownership requirements choose to exercise a stock option or vest in any RSUs, he or she is required to retain all shares acquired through those transactions, aside from any shares necessary to fulfilff l such transaction related tax obligations, until full compliance with the equity ownership guidelines is attained. selling ther Annual compliance with the equity ownership guidelines is assessed durd ing the first quarter of each year. As of March 25, 2024, each of our non-employee directors was in compliance with the equity ownership guidelines. Additional Information Executive officers of the Company serve at the discretion of the Board of Directors. There are no family relationships among any of the directors, executive officers or key employees of the Company. None of our directors or executive officers has been involved in any of the legal proceedings specified in Item 401(f) of Regulation S-K in the past 10 years. Review, Approval or Ratification of Related Person Transactions RELATED PERSON TRANSACTIONS In accordance with the Company’s Audit Committee Charter, the Company’s Audit Committee is responsible for reviewing oving the terms and conditions of all related person transactions. In connection with its review, appr and appr a a related person transactions, the Company’s Audit Committee takes into account all relevant availabla e fact determining whether such transaction is in the best interests of the Company and its stockholders. Any transaction that would disqualify aff director from meeting the “independent director” standard as defined under the Nasdaq Stock Market rulrr es requires review by the Company’s Audit Committee prior to entering into such transaction. For all other related person transactions, the Company reviews all agreements and payments for related person transactions and based on this review, a report is made to the Company’s Audit Committee quarterly disclosing all related person transactions during that quarter, if any. All related person transactions shall be disclosed in the Company’s appl icable filings with the SEC as required under SEC rules. s and circumstances in oval or ratificff ation of a ff There were no related person transactions during fisff cal 2023. OTHER MATTERS As of the date of this Proxy Statement, the Company knows of no other matters to be submu itted to the stockholders at the Annual Meeting. If any other matters properly come beforff e the Annual Meeting, it is the intention of the persons named in the proxy to vote the shares they represent as the Board of Directors may recommend. ADDITIONAL INFORMATION rr equirements forff “HouHH seholdindd g” of Proxy Materials.ll The SEC has adopted rules that permit companies and intermediaries such as brokers to proxy statements with respect to two or more stockholders sharing the same address by delivering a satisfy delivery r single set of proxy materials addressed to those stockholders. This process, which is commonly referff potentially provides extra convenience for stockholders and cost savings for companies. The Company, as well as certain brokers, household proxy materials, unless contrary instructions have been received froff m the affeff cted stockholders. Once you have received notice froff m your broker or us that they or we will be householding materials to your address, householding will continue until you are notifieff d otherwise or until you revoke your consent. If, aff preferff hold registered shares. If you hold registered shares, you may direct your written request to the Company’s Corpor 12780 El Camino Real, San Diego, Califorff nia 92130 or contact the Company’s Corpor t any time, you no longer wish to participate in householding and would our broker if your shares are held in a brokerage account or us if you to receive a separate set of proxy materials, please notify yff r t 858-617-7600. red to as “householding,” t ate Secretary arr ate Secretary arr rr 71 Advadd nce NotNN ictt e ProPP cedures. To be considered for inclusion in next year’s proxy materials, a stockholder must submit his, her or its proposal or director nomination in writing by December 11, 2024 which is the date that is 120 days prior to the first anniversaryrr r of the mailing date of this Proxy Statement, to the Company’s Corpor 92130. Any proposal must comply with the requirements as to forff m and subsu tance established by the SEC forff included in our Proxy Statement. Stockholders are also advised to review our bylaws, which contain additional requirements forff advance notice of stockholder proposals and director nominations. t 12780 El Camino Real, San Diego, Califorff nia such proposal to be ate Secretary arr In addition, our bylaws contain “proxy access” provisions that permit a stockholder or group of stockholders to include director candidates that they intend to nominate in our annual meeting proxy statement and on our proxy card, provided that the stockholder ownership, notice and other requirements set forth in our bylaws are satisfied. To be timely for our 2025 Annual Meeting rate of Stockholders, the required notice under the proxy access provisions of our bylaws must be received by the Company’s Corporr Secretary arr t 12780 El Camino Real, San Diego, Califorff nia 92130 not earlier than November 11, 2024 and not later than the close of business on December 11, 2024. However, if our 2025 Annual Meeting of Stockholders is held more than 30 days prior to or more than 60 days afteff f the Annual Meeting, then notice under the proxy access provisions must be received no earlier than the close of business on the 150th day prior to the 2025 Annual Meeting of Stockholders and not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is firff st made. r the anniversary orr On or around April 7, 2024, the Company intends to relocate its principal executive offices to 6027 Edgewood Bend Ct., San Diego, Califorff nia, 92130. However, the Company's mailing address will remain 12780 El Camino Real, San Diego, California 92130, through March 2025. Accordingly, written requests, notices and proposals should be sent to the Company's Corpor 12780 El Camino Real, San Diego, Califorff nia 92130. t ate Secretary arr r SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Proxy Statement and other materials we are sending you or that are availabla e on our website in connection with the eral securities laws. Many of these statements can be Annual Meeting contain “forward-looking statements” as definff ed under fedff identifieff d by the use of terminology such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” or the negative versions of these terms and other similar expressions. These forward-looking statements may be found in the sections of this Proxy Statement titled “Proxy Summary,” “Compensation Discussion and Analysis,” and other sections of this Proxy Statement. These forff ward-looking statements are based on our current expectations and assumptions, and are subject to risks and uncertainties that could cause our actuat differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Company’s Annual Report on Form 10-K forff Februar and elsewhere in the Annual Report. You should carefulff ry 9, 2024 under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” the year ended December 31, 2023, as filed with the SEC on l results or experience and the timing of events to ly consider that information beforff e voting. ff You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forff ward-looking statements that we may make in the futff urt e. We do not undertake any obligation to release publicly any revisions to these forff ward-looking statements to reflect later events or circumstances or to refleff ct the occurrence of unanticipated events. 72 Appendix A NEUROCRINE BIOSCIENCES, INC. 2020 EQUITY INCENTIVE PLAN ADOPTED BY THE COMPENSATION COMMITTEE: MARCH 16, 2020 APPROVED BY THE STOCKHOLDERS: MAY 19, 2020 AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 14, 2022 APPROVED BY THE STOCKHOLDERS: MAY 18, 2022 AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 24, 2023 APPROVED BY THE STOCKHOLDERS: MAY 17, 2023 AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 18, 2024 APPROVED BY THE STOCKHOLDERS: , 2024 TERMINATION DATE: MARCH 15, 2030 A-73 1. GENERALRR . (a) Successor to and Continuation of Prior Plan. The Plan is the successor to and continuation of the Prior Plan. As of the lowing the Effective Date: (i) no additional awards may be granted under the Prior Plan; (ii) the Prior Plan’s day immediately folff Availabla e Reserve, plus any Prior Plan’s Returt ning Shares (as such shares become availabla e froff m time to time), will become availabla e for issuance pursuant to Awards granted under this Plan; and (iii) all Prior Plan Awards will remain subju ect to the terms of the Prior Plan (except that any Prior Plan’s Returt ning Shares will become availabla e forff issuance pursuant to Awards granted under this Plan). All Awards granted under this Plan will be subju ect to the terms of this Plan. (b) Plan Purpose. The Company, by means of the Plan, seeks to secure and retain the services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts forff the success of the Company and any Affiliate, and to provide a means by which such persons may be given an opportunity to benefit froff m increases in value of the Common Stock through the granting of Awards. the grant of the folff Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. lowing Awards: (i) Incentive Stock Options; (ii) Nonstatutory (c) Available Awards. The Plan provides forff (d) Adoption Date. The Plan will come into existence on the Adoption Date. No Award may be granted under the Plan prior oval to the to the Adoption Date. Any Award granted prior to the Effective Date is contingent upon timely receipt of stockholder appr ulr es, and satisfaction of any other compliance requirements. rr extent required under appl icable tax, securities and regulatory r a a 2. SHARES SUBJECT TO THE PLAN. (a) Share Reserve. (i) Subju ect to Section 2(a)(iii), any adjud stment in accordance with Section 2(b), and any adjud stment as necessary to implement any Capitalization Adjustment, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will not exceed the sum of: (i) the Prior Plan’s Availabla e Reserve; (ii) an additional 3,300,000 shares that were approved at the Annual Meeting in 2020; (iii) an additional 5,900,000 shares that were approved at the Annual Meeting in 2022; (iv) an additional 6,600,000 shares that were approved at the Annual Meeting in 2023; (v) an additional 3,635,000 shares that were approved at the Annual Meeting in 2024; and (vi) the number of Prior Plan’s Returning Shares, if any, as such shares become availabla e froff m time to time. (ii) Subju ect to Section 2(b), the number of shares of Common Stock availabla e forff issuance under the Plan will be reduced by: (A) one share forff share forff 2.13 shares for each share of Common Stock issued pursuant to a Full Value Award granted under the Plan on or afteff each share of Common Stock issued pursuant to a Full Value Award granted under the Plan prior to May 18, 2022; and (C) r May 18, 2022. each share of Common Stock issued pursuant to an Appreciation Award granted under the Plan; (B) one (iii) Subju ect to Section 2(b), the number of shares of Common Stock availabla e forff issuance under the Plan will be increased by: (A) one share forff subju ect to an Appreciation Award; (B) one share forff Value Award that returns to the Plan prior to May 18, 2022; and (C) 2.13 shares for each Prior Plan’s Returt ning Share or 2020 Plan Returning Share subju ect to a Full Value Award that returns to the Plan on or afteff each Prior Plan’s Returt ning Share or 2020 Plan Returning Share (as definff ed in Section 2(b)(iii)(1)) each Prior Plan’s Returning Share or 2020 Plan Returning Share subju ect to a Full r May 18, 2022. (b) Share Reserve Operation. (i) Limit Applies to Shares Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep availabla e at all times the number of shares of Common Stock reasonabla y required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing RulRR e 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares availabla e forff issuance under the Plan. (ii) Actions that Will Not Constitute Issuance of Shares and Will Not Reduce Share Reserve. The folff lowing actions will not result in an issuance of shares of Common Stock under the Plan and accordingly will not reduce the number of shares of Common Stock subju ect to the Share Reserve and availabla e forff portion of an Award without the shares covered by such portion of the Award having been issued; and (2) the settlement of any portion of an Award in cash (i.e., the Participant receives cash rather than shares of Common Stock). issuance under the Plan: (1) the expiration or termination of any (iii) Reversion of Shares to the Share Reserve. Subsequent Issuance. If any shares of Common Stock issued pursuant to an Award are forff the vesting of such shares, then such shares will revert to the Share Reserve and become availabla e again for issuance under the Plan (such shares, the “2020 Planll Returning ShaSS res”). feited back to or repurchased by the Company because of the faiff lure to meet a contingency or condition required forff (1) Shares Available forff A-74 (2) Shares Not Available forff lowing shares of Common Stock will not become availabla e again for issuance under the Plan: (i) any shares that are reacquired or withheld (or not issued) by the Company to satisfy the exercise, strike or purchase price of an Award or a Prior Plan Award (including any shares subject to such award that are not delivered because such award is exercised through a reducd tion of shares subju ect to such award (i.e., “net exercised”)); (ii) any shares that are reacquired or withheld (or not issued) by the Company to satisfy a tax withholding obligation in connection with an Award or a Prior Plan Award; (iii) any shares repurchased by the Company on the open market with the proceeds of the exercise, strike or purchase price of an Award or a Prior Plan Award; and (iv) in the event that a Stock Appreciation Right granted under the Plan or a stock appreciation right granted under the Prior Plan is settled in shares of Common Stock, the gross number of shares of Common Stock subju ect to such award. Subsequent Issuance. The folff 3. ELIGIBILITY AND LIMITATIONS. (a) Eligible Award Recipients. Subju ect to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards. (b) Specific Award Limitations. (i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). (ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) with respect to which Incentive Stock Options are exercisable for the first time by any Participant durd ing any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit establa ished in the Code) or otherwise does not comply with the rulr es governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the appl icable Option Agreement(s). a (iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option and (2) such Option is not exercisabla e after the expiration of fivff e years froff m the date of grant of such Option. (iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company (as such term is defined in RulRR e 405) unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A because such Awards are granted pursuant to a corporate transaction (such as a spin off transaction) or unless such Awards otherwise comply with the distribution requirements of Section 409A. (c) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subju ect to any adjud stment as necessary to implement any Capia talization Adjustment, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is 34,135,000 shares. (d) Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid, as appl a icable, by a particular year and ending on the date of the Annual Meeting forff service as a Non-Employee Director with respect to any period commencing on the date of the service as a Non-Employee Director upon or in connection with his or her initial election or appoi the Company to any individual forff Annual Meeting forff Period”)dd , including Awards granted and cash fees in total value. In addition, the aggregate value of any equity award(s) granted under the Plan or otherwise by the Company to any individual forff will not exceed $2,000,000 in total value; forff Company to any individual forff appointed or elected to the Board will not exceed the sum of the two preceding limitations in this Section 3(d). The value of any equity awards, forff equity awards for finff ancial reporting purpos which the Annual Meeting in 2020 occurs. es of the limitations described in this Section 3(d), will be calculated based on the grant date fair value of such es. The limitations in this Section 3(d) will apply beginning with the Annual Period in the avoidance of doubt, the aggregate compensation granted or paid, as appl service as a Non-Employee Director with respect to an Annual Period in which such individual is firff st paid by the Company to such Non-Employee Director, will not exceed $1,250,000 the next subsequent year (the “An“ ntment to the Board icable, by the rr purpos nual a a r ff A-75 4. OPTIONS AND STOCK APPRECIATION RIGHTS. Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provideddd , hdd owever, that if an Option is not so designated, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical; provideddd , hdd (through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the subsu tance of each of the following provisions: owever, that each Option Agreement and SAR Agreement will conforff m (a) Term. Subju ect to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisabla e after the expiration of ten years froff m the date of grant of such Award or such shorter period specified in the Award Agreement. (b) Exercise or Strike Price. Subju ect to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant to an assumption of or substitution forff right pursuant to a Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code. another option or stock appreciation (c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedurd es specified in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board, by one or more of the folff lowing methods of payment to the extent set forff th in the Option Agreement: (i) by cash or check, bank draft or money order payabla e to the Company; (ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subju ect to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to the Company froff m the sales proceeds; (iii) by delivery to the Company (either by actuat r attestation) of shares of Common Stock that are already owned by the Participant freff e and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) the Common Stock is publicly traded at the time of exercise, (2) any remaining balance of the exercise price not satisfieff d by such delivery i of payment, (3) such delivery wrr (4) any certificff ated shares are endorsed or accompanied by an executed assignment separate froff m certificff ate, and (5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery;rr ould not violate any Applicable Law or agreement restricting the redemption of the Common Stock, s paid by the Participant in cash or other permitted form l delivery orr rr (iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will not be exercisabla e thereafteff cash or other permitted forff m of payment; or r and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in (v) in any other form of consideration that may be acceptabla e to the Board and permissible under Applicable Law. (d) Exercise Procedure and Payment of Appreciation Distribution forff SARs. In order to exercise a SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedurd es specified in the SAR Agreement or the exercise of a SAR will not be otherwise provided by the Company. The appr greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of such SAR. Such appr eciation distribution may be paid to the Participant in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board and specified in the SAR Agreement. eciation distribution payable to a Participant upon u a a (e) Transferability. Options and SARs may not be transferff red to third party finff ancial institutions for value. The Board may impose such additional limitations on the transferabia lity of an Option or SAR as it determines. In the absence of any such determination by the Board, the folff explicitly provided herein, neither an Option nor a SAR may be transferred forff : an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transferff lowing restrictions on the transferabia lity of Options and SARs will apply, provided that except as consideration and provideddd , fdd urff ther, that if an Option is A-76 (i) Restrictions on Transfer. An Option or SAR will not be transferff able, except by will or by the laws of descent and distribution, and will be exercisabla e durd ing the lifetff ime of the Participant only by the Participant; provideddd , hdd a may permit transferff request, including to a trust if the Participant is considered to be the sole beneficff Section 671 of the Code and appl trusrr tee enter into a transfer and other agreements required by the Company. icable state law) while such Option or SAR is held in such trusr of an Option or SAR in a manner that is not prohibited by appl ial owner of such trusr a icable tax and securities laws upon the Participant’s u t (as determined under t, provided that the Participant and the owever, that the Board a forff mat acceptabla e to the Company and subju ect to the appr red pursuant to a domestic relations order. transferff a (ii) Domestic Relations Orders. Notwithstanding the forff egoing, subju ect to the execution of transferff documentation in oval of the Board or a duly authorized Offiff cer, an Option or SAR may be (f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisabia lity of an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service. u (g) Termination of Continuous Service forff Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated forff Cause, the Participant’s Options and SARs will terminate and be forfeited immediately upon the Participant will be prohibited froff m exercising any portion (including any vested portion) of such Awards on and afteff such termination of Continuous Service, and the Participant will have no furff shares of Common Stock subju ect to the forff ther right, title or interest in the forff feited Award. feited Award, or any consideration in respect of the forff feited Award, the such termination of Continuous Service, r the date of u (h) Post-Termination Exercise Period Following Termination of Continuous Service forff Reasons Other than for Cause. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiff liate, subject to Section 4(i), if a Participant’s Continuous Service terminates for any reason other than forff Cause, the Participant may exercise his or her Option or SAR to the extent vested, but only within the folff icable, such other period of time provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiff liate; provideddd , hdd owever, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)): lowing period of time or, if appl a any termination dued to the Participant’s Disabia lity or death); (i) three months following the date of such termination if such termination is a termination without Cause (other than (ii) 12 months following the date of such termination if such termination is dued to the Participant’s Disability; (iii) 18 months following the date of such termination if such termination is due to the Participant’s death; or but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above). (iv) 18 months following the date of the Participant’s death if such death occurs following the date of such termination Following the date of such termination or death, as applicable, to the extent the Participant does not exercise such Award a icable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), within the appl such unexercised portion of the Award will terminate, and the Participant will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the terminated Award, or any consideration in respect of the terminated Award. (i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that u such exercise would violate Applicable Law. Except as otherwise provided in the the issuance of shares of Common Stock upon Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than forff Cause and, at any time during the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law; or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the Company’s Trading Policy, then the appl icable Post-Termination Exercise Period will be extended to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise y if any of the forff egoing restrictions apply at any time during such extended period to the last day of the next calendar month to appl exercise period, generally without limitation as to the maximum permitted number of extensions; provideddd , hdd owever, that in no event may such Award be exercised after the expiration of its maximum term (as set forff th in Section 4(a)). a a (j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt r purpos es of the Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock employee forff until at least six months following the date of grant of such Award. Notwithstanding the forff egoing, in accordance with the provisions of the Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such Award in the event of (i) such Participant’s death or Disability, (ii) a Transaction in which such Award is not assumed, continued or substituted, (iii) a Change in Control, or (iv) such Participant’s retirement (as such term may be definff ed in the Award Agreement or another appl ition, in accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. icable agreement or, in the absa ence of any such definff a A-77 (k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents. 5. AWARDS OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS. (a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by the Board. The terms and conditions of separate Restricted Stock Awards and RSU Awards need not be identical; provideddd , hdd incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the subsu tance of each of the folff provisions: owever, that each Restricted Stock Award Agreement and RSU Award Agreement will conforff m (through lowing (i) Form of Award. (1) Restricted Stock Awards. To the extent consistent with the Company’s Bylaws, at the Board’s orff m subject to the Company’s election, shares of Common Stock subject to a Restricted Stock Award may be (i) held in book entry f instructions until such shares become vested or any other restrictions lapsa e, or (ii) evidenced by a certificff ate, which certificate will be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award. rr (2) RSU Awards. A RSU Award represents a Participant’s right to be issued on a futff urt e date the number of shares of Common Stock that is equal to the number of restricted stock units subju ect to the RSU Award. As a holder of a RSU Award, a Participant is an unsecured creditor of the Company with respect to the Company’s unfunde issue shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU Award Agreement, and no action taken pursuant to its provisions, will create or be construer d to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiff liate or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to a RSU Award (unless and until shares are actuat lly issued in settlement of a vested RSU Award). d obligation, if any, to ff (ii) Consideration. (A) cash or check, bank draft or money order payabla e to the Company, (B) past services to the Company or an Affiff liate, or (C) any other form of consideration (including future services) as the Board may determine and permissible under Applicable Law. (1) Restricted Stock Awards. A Restricted Stock Award may be granted in consideration forff (2) RSU Awards. Unless otherwise determined by the Board at the time of grant, a RSU Award will be granted in consideration forff the Participant’s services to the Company or an Affiff liate, such that the Participant will not be required to make any payment to the Company (other than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a forff m other than the Participant’s services to the Company or an Affiff liate) upon shares of Common Stock in settlement of the RSU Award, such consideration may be paid in any forff m of consideration as the Board may determine and permissible under Applicable Law. the issuance of any u (iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiff liate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service. u (iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a forff the Participant under his or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement, and (2) any portion of the Participant’s RSU Award that has not vested will be forfeiff such termination and the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award. feiture condition or a repurchase right any or all of the shares of Common Stock held by ted uponu (v) Settlement of RSU Awards. A RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) off At the time of grant, the Board may determine to impose such restrictions or conditions that delay such delivery t vesting of the RSU Award. r in any other forff m of payment, as determined by the Board and specified in the RSU Award Agreement. o a date following the rr (b) Perforff mance Awards. With respect to any Perforff mance Award, the length of any Perforff mance Period, the Performance Goals to be achieved durd ing the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such Perforff mance Goals have been attained will be determined by the Board. In addition, to the extent permitted by Applicable Law and set forff icable Award Agreement, the Board may determine that cash or other property may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or in part by referff ence to, or otherwise based on, the Common Stock. th in the appl a A-78 (c) Other Awards. Other forff ms of Awards valued in whole or in part by referff ence to, or otherwise based on, Common Stock may be granted either alone or in addition to Awards provided forff Subju ect to the provisions of the Plan, the Board will have sole and complete discretion to determine the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Awards, and all other terms and conditions of such Other Awards. under Section 4 and the preceding provisions of this Section 5. 6. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS. (a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjud st: (i) the class(es) and maximum number of shares of Common Stock subju ect to the Plan pursuant to Section 2(a); (ii) the class(es) and maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c); and (iii) the class(es) and number of shares of Common Stock and the exercise, strike or purchase price of Common Stock subju ect to outstanding Awards. The Board will make such adjud stments, and its determination will be final, binding and conclusive. Notwithstanding the forff egoing, no fractional shares or rights forff order to implement any Capitalization Adjustment. The Board will determine an appr fractional shares or rights to fraff ctional shares that may be created by the adjud stments referff Section 6(a). fractional shares of Common Stock will be created in opriate equivalent benefit, if any, for any red to in the preceding provisions of this a (b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiff liate, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subju ect to a forff right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to a forfeiturt e condition or the Company’s right of repurchase may be reacquired or repurchased by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service. feiture condition or the Company’s ff (c) Transaction. In the event of a Transaction, the provisions of this Section 6(c) will apply to each outstanding Award unless otherwise provided in the instrument evidencing the Award, in any other written agreement between a Participant and the Company or an Affiff liate, or in any director compensation policy of the Company. (i) Awards May Be Assumed. In the event of a Transaction, the Acquiring Entity may assume or continue any or all outstanding Awards or may subsu titute similar awards forff any or all outstanding Awards (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to outstanding Awards may be assigned by the Company to the Acquiring Entity. For clarity, in the event of a Transaction, the Acquiring Entity may choose to assume or continue only a portion of an outstanding Award, to substitute a similar award forff continue, or substitute similar awards for, the outstanding Awards held by some, but not all, Participants. The terms of any assumption, continuation or substitution will be set by the Board. only a portion of an outstanding Award, or to assume or (ii) Awards Held by Current Employee and Director Participants. In the event of a Transaction in which the ee and Director ParPP ticipants”), the vesting (and exercisability, if applicable) of such Awards will be Acquiring Entity does not assume or continue outstanding Awards or substitute similar awards forff respect to any such Awards that have not been assumed, continued or substituted and that are held by Participants who are Employees or Directors and, in each case, whose Continuous Service has not terminated prior to the effeff ctive time of the Transaction (referred to as the “Current Emplm oyll accelerated in full (and with respect to any such Awards that are subju ect to performance-based vesting conditions or requirements, vesting will be deemed to be satisfieff d at the greater of (x) the target level of performance or (y) the actuat measured in accordance with the appl such Transaction (contingent upon the effectiveness of the Transaction) as the Board determines (or, if the Board does not determine such a date, to the date that is 15 days prior to the effective time of the Transaction), and such Awards will terminate if not exercised (if appl a respect to such Awards will lapse (contingent upon the effectiveness of the Transaction). With respect to the vesting of Awards that will accelerate upon such cash payment will be made no later than 30 days folff icable) at or prior to the effective time of the Transaction, and any reacquisition or repurchase rights held by the Company with the occurrence of a Transaction pursuant to this Section 6(c)(ii) and are settled in the form of a cash payment, icable performance goals as of the date of the Transaction) to a date prior to the effective time of lowing the occurrence of the Transaction. outstanding Awards, then with l level of performance u a (iii) Awards Held by Persons other than Current Participants. In the event of a Transaction in which the Acquiring Entity does not assume or continue outstanding Awards or substitute similar awards forff Awards that have not been assumed, continued or substitutt ed and that are held by persons other than Current Employee and Director Participants, such Awards will terminate if not exercised (if applicable) at or prior to the effective time of the Transaction; provideddd ,dd however, that any reacquisition or repurchase rights held by the Company with respect to such Awards will not terminate and may continue to be exercised notwithstanding the Transaction. outstanding Awards, then with respect to (iv) Payment forff Awards in Lieu of Exercise. Notwithstanding the forff egoing, in the event an Award will terminate if not exercised at or prior to the effective time of a Transaction, the Board may provide that the holder of such Award may not exercise such Award but will receive a payment, in such forff m as may be determined by the Board, equal in value, at the effeff ctive time, to the excess, if any, of (1) the value of the property the Participant would have received upon exercise price payable by such holder in connection with such exercise. the exercise of the Award, over (2) any u A-79 (d) Involuntary Termination Upon or Following a Transaction. Except as otherwise provided in the Award Agreement, in to such Employee or Director’s death or Disability) upon any other written agreement between a Participant and the Company or an Affiff liate, or in any director compensation policy of the Company, in the event that an Employee or Director’s Continuous Service is involuntarily terminated without Cause (including any such termination dued or within 12 months following the effective time of a Transaction, the vesting (and exercisability, if appl icable) of any Assumed Awards (as defined in this Section 6(d)) held by such Employee or Director as of the date of such termination will be accelerated in full (and with respect to any such Awards that are subju ect to performance-based vesting conditions or requirements, vesting will be deemed to be satisfied at the greater of (x) the target l level of performance measured in accordance with the appl level of performance or (y) the actuat date of such termination), effective as of the date of such termination. For purpos any outstanding Award that was assumed or continued, or any outstanding similar award that was granted in subsu titution forff Award, in each case by the Acquiring Entity in connection with the applicable Transaction. icable performance goals as of the es of this Section 6(d), an “As“ sumed Award” mdd eans an u a a r (e) Appointment of Stockholder Representative. As a condition to the receipt of an Award, a Participant will be deemed to have agreed that the Award will be subju ect to the terms of any agreement governing a Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration. (f) No Restriction on Right to Undertake Transactions. The grant of any Award and the issuance of shares of Common Stock pursuant to any Award does not affeff ct or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjud stment, recapitalization, reorganization or other change in the Company’s capital strucr its business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures, preferff or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transferff of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. red or prior preferff ence stocks whose rights are supeu rior to or affeff ct the Common Stock or the rights thereof ture or 7. ADMINISTRATRR ION. (a) Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 7(c). (b) Powers of Board. The Board will have the power, subject to, and within the limitations of, tff he express provisions of the Plan: (i) To determine froff m time to time: (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award (which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each such person; and (6) the Fair Market Value applicable to an Award. (ii) To construerr and interprrr et the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect Plan or in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Awards fully effeff ctive. , omission or inconsistency in the ff (iii) To settle all controversies regarding the Plan and Awards granted under it. (iv) To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest. (v) To prohibit the exercise of any Option, SAR or other exercisabla e Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affeff cting the shares of Common Stock or the share price of the Common Stock, including any Transaction, for reasons of administrative convenience. (vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair a Participant’s rights under any Award granted while the Plan is in effect unless (1) the Company requests the consent of the affeff cted Participant, and (2) such Participant consents in writing. (vii) To amend the Plan in any respect the Board deems necessary or advisabla e; provideddd , hdd owever,r that stockholder approval will be required forff rights under any Award granted beforff e any amendment of the Plan will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affeff cted Participant, and (2) such Participant consents in writing. any such amendment to the extent required by Applicable Law. Except as provided above , a Participant’s a (viii) To submu it any amendment to the Plan for stockholder appr a oval. A-80 (ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favff orable to the Participant than previously provided in the Award Agreement, subju ect to any specified limits in the Plan that are not subju ect to Board discretion; provideddd , hdd Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affeff cted Participant, and (2) such Participant consents in writing. owever, that a the best interests of the Company and that are not in conflicff t with the provisions of the Plan or Awards. (x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote (xi) To adopt such procedurd es and sub-plans as are necessary or appropriate to permit and faci ff litate participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are forff eign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or faci litate compliance with the laws of the relevant foreign jurisdiction). ff (c) Delegation to Committee. (i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee or a subcu ommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafteff resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to concurrently administer the Plan with any Committee or subcommittee to which it has delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated. r be to the Committee or subcommittee, as applicable), subju ect, however, to such (ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify f orff ff the exemption froff m Section 16(b) of the Exchange Act that is availabla e under RulRR e 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined under RulRR e 16b-3(b)(3) of the Exchange Act, and thereafteff r any action establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption to remain available. (d) Effect of Board’s Decision. All determinations, interprr etations and construcrr tions made by the Board or any Committee in good faith will not be subju ect to review by any person and will be final, binding and conclusive on all persons. (e) Cancellation and Re-Grant of Awards. Except in connection with a Transaction, as provided in Section 6(a) relating to Capia talization Adjustments, or unless the stockholders of the Company have approved such an action within 12 months prior to such an event, neither the Board nor any Committee will have the authority to: (i) reduce the exercise or strike price of any outstanding Option or SAR; or (ii) cancel any outstanding Option or SAR that has an exercise or strike price greater than the then-current Fair Market Value in exchange for cash or other Awards under the Plan. (f) Delegation to an Officer. The Board or any Committee may delegate to one or more Offiff cers the authority to do one or both of the following: (i) designate Employees who are not Offiff cers to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof; and (ii) determine the number of shares of Common Stock to be subju ect to such Awards granted to such Employees; provideddd , hdd owever, that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common Stock that may be subju ect to the Awards granted by such Offiff cer and that such Offiff cer may not grant an Award to himself or herself.ff Any such Awards will be granted on the appl Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an Offiff cer who is acting solely in the capacity of an Offiff cer (and not also as a Director) the authority to determine the Fair Market Value. icable form of Award Agreement most recently approved forff use by the Board or the a 8. TAX WITHHOLDING. (a) Withholding Authorization. As a condition to acceptance of any Award, a Participant authorizes withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy any U.S. fedff eral, state, local and/or foreign tax or social insurance contribution withholding obligations of the Company or an Affiff liate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as appl Participant may not be able to exercise an Award even though the Award is vested, and the Company will have no obligation to issue shares of Common Stock subju ect to an Award, unless and until such withholding obligations are satisfied. icable. Accordingly, a a A-81 (b) Satisfaction of Withholding Obligations. To the extent permitted by the terms of an Award Agreement, the Company ny U.S. federal, state, local and/or foreign tax or social insurance contribution withholding may, in its sole discretion, satisfy aff obligations relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock froff m the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash froff m an Award settled in cash; (iv) withholding payment froff m any amounts otherwise payabla e to the Participant; (v) by allowing a Participant to effectuat te a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award Agreement. (c) No Obligation to Notify off r Minimize Taxes; No Liability to Claims. Except as required by Applicable Law, the Company has no duty or obligation to any Participant to advise such Participant as to the time or manner of exercising an Award. Furthermore, the Company has no dutd y or obligation to warn or otherwise advise such Participant of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no dutd y or obligation to minimize the tax consequences of an Award to any Participant and will not be liabla e to any Participant forff consequences to such Participant in connection with an Award. As a condition to accepting an Award, each Participant (i) agrees to not make any claim against the Company, or any of its Offiff cers, Directors, Employees or Affiff liates related to tax liabia lities arising from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, finff ancial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges that any Option or SAR is exempt from Section 409A only if the exercise or strike price of such Option or SAR is at least equal to the “faiff r market value” of the Common Stock on the date of grant of such Option or SAR as determined by the Internal Revenue Service and there is no other impermissible deferff compensation associated with the Award. Additionally, as a condition to accepting an Option or SAR, each Participant agrees to not make any claim against the Company, or any of its Offiff cers, Directors, Employees or Affiff liates in the event that the Internal Revenue Service asserts that the exercise or strike price of such Option or SAR is less than the “fair market value” of the Common Stock on the date of grant of such Option or SAR as subsu equently determined by the Internal Revenue Service. any adverse tax ral of (d) Withholding Indemnificff ation. As a condition to accepting an Award, in the event that the amount of the Company’s and/ or its Affiff liate’s withholding obligations in connection with such Award was greater than the amount actuat Company and/or its Affiff liates, each Participant agrees to indemnify aff failure by the Company and/or its Affiliates to withhold the proper amount. nd hold the Company and/or its Affiff liates harmless from any lly withheld by the 9. MISCELLANEOUS. (a) Dividends and Dividend Equivalents. Dividends or dividend equivalents may not be paid or credited to any Awards. (b) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. (c) Use of Proceeds from Sales of Common Stock. Proceeds froff m the sale of shares of Common Stock pursuant to Awards will constitutt e general funds of the Company. (d) Corporate Action Constituting Grant of Awards. Corporate action constitutt ing a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corpor regardless of when the instrumrr the Participant. In the event that the corpor approving the grant contain terms (e.g., exercise price, vesting scheduld e or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents. ate records (e.g., Board consents, resolutions or minutes) documenting the corpor ent, certificff ate, or letter evidencing the Award is communicated to, or actuat ate action, unless otherwise determined by the Board, lly received or accepted by, ate action r r r (e) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect exercise of to, any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements forff the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subju ect to such Award is reflected in the records of the Company. (f) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrumrr thereunder or in connection with any Award granted pursuant thereto will conferff the Company or an Affiff liate in the capacity in effeff ct at the time the Award was granted or affeff ct the right of the Company or an Affiff liate to terminate at will and without regard to any futff urt e vesting opportunity that a Participant may have with respect to any Award (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiff liate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiff liate, and any applicable provisions of the corpor Company or the Affiff liate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company or an Affiff liate regarding the fact or nature of future positions, futff urt e work assignments, futff urt e compensation or any other term or condition of employment or service or conferff accruer d under the terms of the Award Agreement and/or Plan. any right or benefit under the Award or the Plan unless such right or benefit has specificff ally ate law of the state or foreign jurisdiction in which the r ent executed upon any Participant any right to continue to serve A-82 (g) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company or any Affiff liate is reduced (forff from a full-time Employee to a part-time Employee or takes an extended leave of absa has a change in statust of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subju ect to any portion of such Award that is scheduled to vest or become payabla e afteff r the date of such change in time commitment, and (ii) in lieu of or in combination with such a reducd tion, extend the vesting or payment scheduld e appl portion of the Award that is so reduced or extended. icable to such Award. In the event of any such reduction, the Participant will have no right with respect to any example, and without limitation, if the Participant is an Employee and ence) afteff r the date of grant a (h) Execution of Additional Documents. As a condition to accepting an Award, the Participant agrees to execute any additional documents or instruments necessary or desirabla e, as determined in the Plan Administrator’s sole discretion, to carry out the purpos equirements, in each case at the Plan rr Administrator’s request. litate compliance with securities and/or other regulatory r es or intent of the Award, or faci ff rr (i) Electronic Delivery and Participation. Any referff ence herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, fileff d publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award, the Participant consents to receive documents by electronic delivery arr Plan through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery orr will be determined by the Company. f any Common Stock (e.g., a stock certificate or electronic entry evidencing such shares) nd to participate in the (j) Clawback/Rkk ecovery. All Awards granted under the Plan will be subju ect to recoupment in accordance with the folff as applicable: (i) the Neurocrine Biosciences, Inc. Policy forff Recoupment of Incentive Compensation; (ii) the Neurocrine Biosciences, Inc. Incentive Compensation Recoupment Policy; (iii) any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law; and (iv) any other clawback policy that the Company adopts. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon under such a clawback policy will be an event giving rise to a Participant’s right to voluntary t “resignation forff Company. tive termination” or any similar term under any plan of or agreement with the the occurrence of Cause. No recovery of compensation good reason,” or for a “construcr erminate employment uponu lowing, u a rr (k) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares are registered under the Securities Act or (ii) the Company has determined that such issuance would be exempt froff m the registration requirements of the Securities Act. Each Award also must comply with other Applicable Law governing the Award, and a Participant will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law. (l) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or an Award Agreement, Awards may not be transferff case of Restricted Stock and similar awards, afteff hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law. r the issued shares have vested, the holder of such shares is freff e to assign, r the vested shares subju ect to an Award have been issued, or in the red or assigned by the Participant. Afteff (m) Effeff ct on Other Employee Benefitff Plans. The value of any Award, as determined upon u not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefitsff employee benefitff plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiff liate’s employee benefitff plans. grant, vesting or settlement, will under any ff (n) Deferra Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferff may also establish programs and procedurd es for deferff with the requirements of Section 409A. ls. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of red and rals by will be made in accordance ral elections to be made by Participants. Deferff (o) Section 409A. Unless otherwise expressly provided forff in an Award Agreement, the Plan and each Award Agreement will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt fromff Section 409A, and, to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and is thereforff e subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified employee” for purpos that is due because of a “separation from service” (as definff ed in Section 409A without regard to alternative definff be issued or paid before the date that is six months and one day folff earlier, the date of the Participant’s death, unless such distribution or payment may be made in a manner that complies with es of Section 409A, no distribution or payment of any amount itions thereunder) will lowing the date of such Participant’s “separation froff m service” or, if rr A-83 Section 409A, and any amounts so deferff balance paid thereafteff r on the original schedule. red will be paid in a lump sum on the day afteff r such six month period elapsa es, with the (p) Choice of Law. This Plan and any controversy arising out of or relating to this Plan will be governed by, and construerr d in accordance with, the internal laws of the State of California, without regard to conflicff application of any law other than the law of the State of Califorff nia. t of law principles that would result in any 10. COVENANTS OF THE COMPANY. (a) Compliance with Law. The Company will seek to obtain froff m each regulatory crr ommission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provideddd , hdd owever, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, aff reasonabla e efforff ommission or agency the authority that counsel for the Company deems necessary or advisabla e forff Plan, the Company will be relieved froff m any liabia lity for faiff Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law. the lawful issuance and sale of Common Stock under the lure to issue and sell Common Stock upon exercise or vesting of such ts and at a reasonabla e cost, the Company is unabla e to obtain froff m any such regulatory crr fter 11. ADDITIONAL RULES FOR AWARDS SUBJECT TO SECTION 409A. (a) Application. Unless the provisions of this Section 11 are expressly superseded by the provisions in an Award Agreement, a Non- the provisions of this Section 11 will apply and will supeu rsede anything to the contrary set forff Exempt Award. th in the Award Agreement forff (b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subju ect to Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions of this Section 11(b) will apply. (i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the vesting scheduld e set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of:ff (i) December 31st of the calendar year that includes the applicable vesting date; (ii) the 60th day that folff date; or (iii) any date that is permitted without incurring adverse tax consequences under Section 409A. lows the appl icable vesting a (ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s Separation froff m Service, and such vesting acceleration provisions were in effeff ct as of the date of grant of the Non-Exempt Award and, thereforff e, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation froff m Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that folff Participant’s Separation froff m Service. However, if at the time the shares would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares will not be issued before the date that is six months following the date of such Participant’s Separation fromff Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. lows the date of the (iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s Separation froff m Service, and such vesting acceleration provisions were not in effeff ct as of the date of grant of the Non-Exempt Award and, thereforff e, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of the Non-Exempt Award will not accelerate the issuance date of the shares, but the shares will instead be issued on the same scheduld e as set forth in the Grant Notice as if they had vested in the ordinary crr Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed scheduld e, as provided under Treasury Rrr Section 1.409A-3(a)(4). ourse during the Participant’s egulations (c) Treatment of Non-Exempt Awards Upon a Transaction forff Employees and Consultants. The provisions of this Section 11(c) will apply and will supeu rsede anything to the contrary set forff Non-Exempt Award in connection with a Transaction if the Participant was either an Employee or Consultant upon the appl of grant of the Non-Exempt Award. th in the Plan with respect to the permitted treatment of any icable date a connection with a Transaction: (i) Vested Non-Exempt Awards. The folff lowing provisions will apply to any Vested Non-Exempt Award in assume, continue or subsu titute the Vested Non-Exempt Award. Upon the Section 409A Change in Control, the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non- (1) If the Transaction is also a Section 409A Change in Control, then the Acquiring Entity may not A-84 Exempt Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control. u (2) If the Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or subsu titute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award will be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead subsu titute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the date of the Transaction. (ii) Unvested Non-Exempt Awards. The folff otherwise determined by the Board pursuant to Section 11(e). lowing provisions will apply to any Unvested Non-Exempt Award unless (1) In the event of a Transaction, the Acquiring Entity will assume, continue or subsu titute any Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subju ect to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award will be issued to the Participant by the Acquiring Entity on the same scheduld e that the shares would have been issued to the Participant if the Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead subsu titute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value of the shares made on the date of the Transaction. (2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Transaction, then such Award will automatically terminate and be forfeited upon consideration payable to any Participant in respect of such forfeiff the extent permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award upon the Transaction, or instead subsu titute a cash payment equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in Section 11(e)(ii). In the absence of such discretionary election by the Board, any Unvested Non-Exempt Award will be forfeiff without payment of any consideration to the affeff cted Participants if the Acquiring Entity will not assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Transaction. ted Unvested Non-Exempt Award. Notwithstanding the forff egoing, to the Transaction with no ted u Transaction, and regardless of whether or not such Transaction is also a Section 409A Change in Control. (3) The forff egoing treatment will apply with respect to all Unvested Non-Exempt Awards upon any (d) Treatment of Non-Exempt Awards Upon a Transaction forff Non-Employee Directors. The folff lowing provisions of this Section 11(d) will apply and will supeu rsede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a Transaction. (i) If the Transaction is also a Section 409A Change in Control, then the Acquiring Entity may not assume, continue or subsu titute the Non-Exempt Director Award. Upon the Section 409A Change in Control, the vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the Non- Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon pursuant to the preceding provision. the Section 409A Change in Control u (ii) If the Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or subsu titute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subju ect to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Transaction. The shares to be issued in respect of the Non-Exempt Director Award will be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead subsu titute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value made on the date of the Transaction. (e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) will apply and supeu rsede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award: (i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award will not result in any acceleration of the scheduled issuance dates forff upon the appl a icable vesting dates would be in compliance with the requirements of Section 409A. the shares in respect of the Non-Exempt Award unless earlier issuance of the shares A-85 (ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions availabla e in Treasury Rrr Section 1.409A-3(j)(4)(ix). egulations (iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Transaction, to the extent compliance with the requirements of Section 409A, the Transaction event triggering settlement must also constitute a a termination of compliance with the requirements of Section 409A, it is required forff Section 409A Change in Control. To the extent the terms of a Non-Exempt Award provide that it will be settled upon employment or termination of Continuous Service, to the extent it is required forff the termination event triggering settlement must also constitutt e a Separation froff m Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation froff m service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares will not be issued before the date that is six months following the date of the Participant’s Separation froff m Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. u u (iv) The provisions in this Section 11(e) for delivery orr f the shares in respect of the settlement of a RSU Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the delivery orr f the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted. 12. SEVERABRR ILITY. If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be construer d in a manner which will give effeff ct to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 13. TERMINATION OF THE PLAN. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically f the earlier of: (i) the Adoption Date; or (ii) the Effective Date. No Awards may be terminate on the day beforff e the tenth anniversary orr granted under the Plan while the Plan is suspended or after it is terminated. 14. DEFINITIONS. As used in the Plan, the folff lowing definitions apply to the capia talized terms indicated below: (a) “Ac“ quiring EntEE ittt ytt ” means the surviving or acquiring corporation (or the surviving or acquiring corporation’s parent company) in connection with a Transaction. dd (b) “Ad“ opt iott n Datett ” means the date the Plan is first appr a oved by the Compensation Committee. fiff liaii (c) “Af“ te” means, at the time of determination, any “parent” or “subsu idiary” of the Company as such terms are definff ed in Rule 405 promulgated under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” statust determined within the forff egoing definition. is (d) “An“ nual MeeMM tingii ” means the firff st meeting of the Company’s stockholders held each calendar year at which Directors are selected. plpp icll able Lll aw” means any appl (e) “Ap“ eral, state, forff eign, material local or municipal or other law, statutt e, ion, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rulr e, regulation, judicial decision, ruling constitutt or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effeff ct by or under the authority of any Governmental Body (including under the authority of any appl New York Stock Exchange, or the Financial Industry Rrr gulating organization such as the Nasdaq Stock Market, icable self-reff uthority). icable securities, fedff egulatory Arr a a (f)ff “Ap“ prpp eciation Award” mdd eans (i) a stock option or stock appreciation right granted under the Prior Plan or (ii) an Option or SAR, in each case with respect to which the exercise or strike price is at least 100% of the Fair Market Value of the Common Stock subju ect to the stock option or stock appreciation right, or Option or SAR, as appl icable, on the date of grant. a “ (g) “Awa rd” mdd eans any right to receive Common Stock, cash or other property granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a SAR, a Restricted Stock Award, a RSU Award, a Performance Award or any Other Award). “ (h) “Awa rd Agreement” mt eans a written agreement between the Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the written A-86 summary of the general terms and conditions applicable to the Award and which is provided to a Participant along with the Grant Notice. (i) “Board” mdd eans the Board of Directors of the Company (or its designee). Any decision or determination made by the Board will be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision or determination will be final and binding on all Participants. (j) “Capia taii lizatiott n Adjustment” mt eans any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subju ect to any Award afteff through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate strucrr Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the forff egoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment. r the Adoption Date without the receipt of consideration by the Company ing transaction, as that term is used in Statement of Financial Accounting ture or any similar equity restructurt r participation in, a fraff ud or act of dishonesty against the Company or an Affiff liate that results utd y such Participant owes to the Company or an Affiff liate; or (iv) such Participant’s conduct that constitutes gross dination, incompetence or habia tual neglect of duties and that results in (or might have reasonabla y resulted in) material harm to (k) “Cause” has the meaning ascribed to such term in any written agreement between the Participant and the Company or an ence of such agreement, such term means, with respect to a Participant, the occurrence of Affiff liate defining such term and, in the absa any of the following events: (i) such Participant’s commission of any crime involving fraud, dishonesty or moral turpitude; (ii) such Participant’s attempted commission of, off in (or might have reasonabla y resulted in) material harm to the business of the Company or an Affiliate; (iii) such Participant’s intentional, material violation of any contract or agreement between such Participant and the Company or an Affiff liate, or of any statutt ory drr insubor u the business of the Company or an Affiliate; provideddd , hdd owever, that the action or conduct described in clauses (iii) and (iv) above will constitutt e “Cause” only if such action or conduct continues after the Company has provided such Participant with written notice thereof and not less than five business days to cure the same. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants who are Offiff cers and by the Chief Executive Officer of the Company with respect to Participants who are not Offiff cers. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause forff Participant will have no effeff ct upon any determination of the rights or obligations of the Company or such Participant forff rr purpos es of outstanding Awards held by such the purpos any other e. rr (l) “Change in Contrott l” oll r “Change of Contrott l” mll eans the occurrence, in a single transaction or in a series of related transactions, of any one or more of the folff owever, to the extent necessary to avoid adverse personal income tax consequences to the Participant in connection with an Award, such transaction also constitutes a Section 409A Change in Control: lowing events; provideddd , hdd (i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtuet consolidation or similar transaction. Notwithstanding the forff egoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiff liate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpos of equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subjeb ct Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducd ing the number of shares outstanding, provided that if a Change in Control would occur (but forff operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subju ect Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur; e of which is to obtain finff ancing for the Company through the issuance of a merger, the r (ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in subsu tantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; (iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur, except forff corporation; a liquidation into a parent (iv) there is consummated a sale, lease, exclusive license or other disposition of all or subsu tantially all of the consolidated assets of the Company and its Subsu idiaries, other than a sale, lease, license or other disposition of all or subsu tantially all of the consolidated assets of the Company and its Subsu idiaries to an Entity, more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the Company in subsu tantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or A-87 (v) individuals who, on the date the Plan is adopted by the Compensation Committee, are members of the Board (the cumbent Board”)dd cease for any reason to constitute at least a majoa rity of the members of the Board; provideddd , hdd “In“ appointment or election (or nomination forff the members of the Incumbent Board then still in offiff ce, such new member will, for purpos of the Incumbent Board. owever, that if the election) of any new Board member was approved or recommended by a majoa rity vote of es of this Plan, be considered as a member r Notwithstanding the forff egoing or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively forff definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supeu rsede the foregoing definition with respect to Awards subject to such agreement; provideddd , hdd owever, that (1) if no definition of Change in Control (or any analogous term) is set forth in such an individual written agreement, the forff egoing definition will apply; and (2) no Change in Control (or any analogous term) will be deemed to occur with respect to Awards subject to such an individual written agreement without a requirement that the Change in Control (or any analogous term) actuat e of changing the domicile of the Company, and (B) the the purpos lly occur. rr (m) “Code” means the Internal Revenue Code of 1986, as amended, including any appl a icable regulations and guidance thereunder. (n) “Committett e” means the Compensation Committee and any other committee of Directors to whom authority has been delegated by the Board or Compensation Committee in accordance with the Plan. (o) “Common StoSS ck” means the common stock of the Company. (p) “Companyn ” means Neurocrine Biosciences, Inc., a Delaware corpor ration. (q) “Compensation ComCC mittii eett ” means the Compensation Committee of the Board. (r) “Consultall nt” mt eans any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiff liate and is compensated for such services. However, service solely as a Director, or payment of a feeff cause a Director to be considered a “Consultant” forff Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is availabla e to register either the offer or the sale of the Company’s securities to such person. es of the Plan. Notwithstanding the forff egoing, a person is treated as a for such service, will not rr purpos (s) “Contintt uous Service” means that the Participant’s service with the Company or an Affiff liate, whether as an Employee, owever, that if the Entity for which a Participant is rendering services ceases s an Affiliate, as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on Director or Consultant, is not interruptu ed or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruptu ion or termination of the Participant’s service with the Company or an Affiff liate, will not terminate a Participant’s Continuous Service; provideddd , hdd to qualify aff the date such Entity ceases to qualify aff Consultant of an Affiff liate or to a Director will not constitute an interruptu ion of Continuous Service. To the extent permitted by law, the Board or the Chief Executive Officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interruptu ed in the case of (i) any leave of absa ence approved by the Board or Chief Executive Officer, including sick leave, military l Notwithstanding the forff egoing, a leave of absa such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absa policy appl compliance with Section 409A, the determination of whether there has been a termination of Continuous Service will be made, and such term will be construer d, in a manner that is consistent with the definff Regulation Section 1.409A-1(h) (without regard to any alternative definff eave or any other personal leave, or (ii) transferff s between the Company, an Affiff liate, or their successors. ence will be treated as Continuous Service forff ition of “separation froff m service” as defined under Treasuryrr ition thereunder). es of vesting in an Award only to ence agreement or or icable to the Participant, or as otherwise required by law. In addition, to the extent required forff s an Affiliate. For example, a change in statust from an Employee of the Company to a exemption fromff r purpos a rr (t) “Corporate Ttt raTT nsaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the folff lowing events: Company and its Subsu idiaries; (i) a sale or other disposition of all or subsu tantially all, as determined by the Board, of the consolidated assets of the (ii) a sale or other disposition of at least 90% of the outstanding securities of the Company; (iii) a merger, consolidation or similar transaction folff lowing which the Company is not the surviving corporation; or (iv) a merger, consolidation or similar transaction folff lowing which the Company is the surviving corpor r ation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise. A-88 (u) “determine” or “determined” mdd eans as determined by the Board or the Committee (or its designee) in its sole discretion. (v) “Di“ reii ctortt ” means a member of the Board of Directors of the Company. (w) “Di“ saii bilityii ” means, with respect to a Participant, such Participant is unabla e to engage in any substantial gainfulff activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances. (x) “Ef“ feff ctivtt e Datett ” means the date of the Annual Meeting in 2020, provided this Plan is appr a oved by the Company’s stockholders at such meeting. plm oyll payment of a fee forff (y) “Em“ ee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or such services, will not cause a Director to be considered an “Employee” for purpos es of the Plan. r (z) “Em“ plm oyll er” means the Company or the Affilff iate of the Company that employs the Participant. (aa) “En“ tity” means a corpor r ation, partnership, limited liabia lity company or other entity. (bb) “Ex“ change Act” mt eans the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (cc) “Ex“ change Act PerPP sorr n” means any naturt al person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsu idiary, (ii) any employee benefitff plan of the Company or any Subsidiary or any trustee or other fidff ucd iary holding securities under an employee benefitff plan of the Company ring of such securities, (iv) an or any Subsidiary, (iii) an underwriter temporarily holding securities pursuant to a registered public offeff Entity Owned, directly or indirectly, by the stockholders of the Company in subsu tantially the same proportions as their Ownership of stock of the Company, or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effeff ctive Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. (as determined on a per share or aggregate basis, as appl (dd) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the Common Stock icable) determined as follows: a (i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliabla e. will be the closing sales price on the last preceding date forff which such quotation exists. (ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value ence of such exchange or market for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code. (iii) In the absa (ee) “Full Value Award” mdd eans (i) a stock award granted under the Prior Plan or (ii) an Award, in each case that is not an Appreciation Award. (ff) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory,rr county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or regulatory brr or quasi-governmental body of any naturt e (including any governmental division, department, administrative agency or bureau, commission, authority, instrumrr other tribunal, and forff regulatory orr Authority). the avoidance of doubt, any tax authority) or other body exercising similar powers or authority; or (iv) self- rganization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Rrr fund, foundation, center, organization, unit, body or Entity and any court or entality, official, ministry,rr egulatoryrr ody, (gg) “Grant NotNN ictt e” means the notice provided to a Participant that he or she has been granted an Award and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of Common Stock subju ect to the Award or potential cash payment right, (if any), the vesting scheduld e forff the Award (if any) and other key terms applicable to the Award. (hh) “In“ centive StoSS ck Option” means an option granted pursuant to Section 4 that is intended to be, and qualifieff s as, an “incentive stock option” within the meaning of Section 422 of the Code. A-89 (ii) “Ma“ teriallyll Impaim rii ” means that a Participant’s rights under an Award will be materially adversely affected by a suspension or termination of the Plan, an amendment of the Plan, or an amendment to the terms of the Award, as appl Plan, a Participant’s rights under an Award will not be deemed to have been Materially Impaired by any of the foregoing actions if the Board, in its sole discretion, determines that such action, taken as a whole, does not materially impair the Participant’s rights under the Award. For example, an amendment to the terms of an Award in order to do any of the folff following, will not be deemed to Materially Impair the Participant’s rights under the Award: (i) an imposition of reasonabla e restrictions on the minimum number of shares subject to an Option that may be exercised; (ii) to maintain the qualifieff d status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) a change in the terms of an Incentive Stock Option in a manner that disqualifieff s, impairs or otherwise affeff cts the qualified statust of the Code; (iv) to clarify the manner of exemption froff m, or to bring the Award into compliance with or qualify i from, Section 409A; or (v) to comply with other Applicable Laws. of the Award as an Incentive Stock Option under Section 422 lowing, or that results in any of the icable. For purpos an exemption es of the t forff a ff rr n-Em- plm oyll (jj) “No“ ee Direii ctortt ” means a Director who either (i) is not a current employee or officff er of the Company or an Affiff liate, does not receive compensation, either directly or indirectly, froff m the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except forff 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Re“ transaction forff which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K, or (ii) is otherwise considered a “non-employee director” forff an amount as to which disclosure would not be required under Item lation S-KSS ”)KK ), does not possess an interest in any other es of Rule 16b-3. r purpos gue (kk) “No“ n-Ex- emptm Award” mdd eans any Award that is subju ect to, and not exempt from, Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement. (ll) “No“ n-Ex- emptm Direii ctortt Award” mdd eans a Non-Exempt Award granted to a Participant who was a Director but not an Employee on the applicable grant date. (mm) “No“ n-Ex- emptm Severance Arrangement” mt and the Company or an Affiliate that provides forff Award upon the Participant’s termination of employment or separation froff m service (as such term is definff ed in Section 409A(a)(2)(A)(i) of the Code (and without regard to any alternative definff a such severance benefitff does not satisfy the requirements forff Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise. ition thereunder) (“Separ an exemption froff m appl ee ication of Section 409A provided under Treasuryrr atiott n froff m SerSS vice”) and eans a severance arrangement or other agreement between the Participant acceleration of vesting of an Award and issuance of the shares in respect of such (nn) “No“ nstatutory Stoctt k OptOO iott n” means any option granted pursuant to Section 4 that does not qualify aff s an Incentive Stock Option. (oo) “Offiff cer” means a person who is an offiff cer of the Company within the meaning of Section 16 of the Exchange Act. (pp) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock which is granted pursuant to the terms and conditions of Section 4. (qq) “Option Agreement” mt conditions of an Option grant. The Option Agreement includes the Grant Notice forff written summary of the general terms and conditions applicable to the Option and which is provided to a Participant along with the Grant Notice. Each Option Agreement will be subju ect to the terms and conditions of the Plan. eans a written agreement between the Company and a Participant evidencing the terms and the Option and the agreement containing the (rr) “Othett r Award” mdd eans an award based in whole or in part by referff ence to the Common Stock which is granted pursuant to the terms and conditions of Section 5(c). (ss) “Othett r Award Agreement” mt eans a written agreement between the Company and a Participant evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subju ect to the terms and conditions of the Plan. (tt) “Own,” “Owned,” “Owner,” or “Ownership” means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. (uu) “Pa“ rtictt ipant” mt eans an Employee, Director or Consultant to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. (vv) “Pe“ rforff marr nce Award” mdd eans an Award that may vest or may be exercised, or that may become earned and paid, contingent upon the attainment during a Performance Period of certain Performance Goals and which is granted pursuant to the terms and conditions of Section 5(b) and such terms as appr oved by the Board. a A-90 r rforff marr es of establa ishing the nce CriCC teii ria” means the one or more criteria that the Board will select for purpos a Performance Period. The Performance Criteria that will be used to establa ish such Performance Goals may be lowing, as determined by the Board: (1) earnings (including earnings per share and net r combination of, the folff (ww) “Pe“ Performance Goals forff based on any one of, off earnings, in either case beforff e or after any or all of: iff nterest, taxes, depreciation and amortization, legal settlements or other income (expense), or stock-based compensation, other non-cash expenses and changes in deferff (3) returt n on equity or average stockholder’s equity; (4) return on assets, investment, or capital employed; (5) stock price; (6) margin (including gross margin); (7) income (beforff e or after taxes); (8) operating income; (9) operating income after taxes; (10) pre-tax profit; (11) operating cash floff w; (12) sales, prescriptions, or revenue targets; (13) increases in revenue or product revenue; (14) expenses and cost reduction goals; (15) improvement in or attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share; (18) cash floff w; (19) cash floff w per share; (20) cash burn; (21) share price performance; (22) debt reduction; (23) implementation or completion of projeo cts or processes (including, without limitation, discovery of a pre-clinical drugr recommendation of a drugr results, regulatory f approvals, presentation of studies and launch of commercial plans, compliance programs or education campaigns); (24) customer satisfaction; (25) stockholders’ equity; (26) capital expenditures; (27) debt levels; (28) financings; (29) operating profit or net operating profit; (30) workforce diversity; (31) growth of net income or operating income; (32) billings; (33) employee hiring; (34) funds from operations; (35) budget management; (36) strategic partnerships or transactions (including acquisitions, joint venturt es l property or licensing transactions); (37) engagement of thought leaders and patient advocacy groups; (38) enhancement of intellectuat portfolff ications and granting of patents; (39) litigation preparation and management; and (40) any other measure of performance selected by the Board. candidate to enter a clinical trial, clinical trial initiation, clinical trial enrollment and dates, clinical trial r advisory committee interactions, regulatoryrr red revenue); (2) total stockholder returt n; g acceptances, regulatory orr g submissions, regulatory f g of patent appl candidate, io, filinff ilinff ilinff a rr rr u the rforff marr (xx) “Pe“ nce GoalG sll ” means, forff a Performance Period as follows: (1) to exclude restructurt a Performance Period, the one or more goals establa ished by the Board forff the Performance Criteria. Perforff mance Goals may be based on a Company-wide basis, with respect to non-U.S. dollar denominated Performance Goals; (3) to exclude the effects of changes Performance Period based upon one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forff th the Performance Goals at the time the Performance Goals are establa ished, the Board will appropriately make adjud stments in the method of calculating the attainment of the Performance Goals forff exclude exchange rate effeff cts, as applicable, forff to generally accepted accounting principles; (4) to exclude the effects of any statutt ory arr exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corpor stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; and (12) to exclude the effects of the timing of acceptance forff Drugr Administration or any other regulatory brr Performance Criteria it selects to use for a Performance Period and to reducd e or eliminate the compensation or economic benefit dued upon the attainment of any Performance Goal. Partial attainment of any Performance Goal may result in payment or vesting corresponding to the degree of attainment as specified in the appl a Award. review and/or approval of submissions to the U.S. Food and ody. In addition, the Board retains the discretion to definff e the manner of calculating the ate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of icable Award Agreement or the written terms of a Performance ing and/or other nonrecurring charges; (2) to djustments to corpor ate tax rates; (5) to r r (yy) “Pe“ rforff marr Performance Goals will be measured forff under, an Award. Performance Periods may be of varyirr ng and overlapping duration, at the sole discretion of the Board. eans the period of time selected by the Board over which the attainment of one or more e of determining a Participant’s right to vesting or exercise of, or any payment nce PerPP iod” mdd the purpos rr (zz) “Pl“ anll ” means this Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan. (aaa) “Pl“ anll Admindd istratortt ” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs. (bbb) “Po“ st-Ttt erTT minrr atiott n ExeEE rcise PerPP iod” mdd eans the period folff lowing termination of a Participant’s Continuous Service within which an Option or SAR is exercisabla e, as specifieff d in Section 4(h). (ccc) “Pr“ ior PlaPP n” means the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan. (ddd) “Pr“ ior PlaPP n Award” mdd eans an award granted under the Prior Plan that is outstanding as of the Effective Date. as of immediately folff (eee) “Pr“ ior PlaPP n’s A’ vailable Rll lowing the Effective Date. eserve” means the number of shares availabla e forff the grant of new awards under the Prior Plan A-91 (fff) “Pr“ ior PlaPP n’s R’ eturningii Shares” means shares of Common Stock subju ect to a Prior Plan Award that following the Effeff ctive Date: (i) are not issued because such Prior Plan Award or any portion thereof expires or otherwise terminates without all of the shares covered by such Prior Plan Award having been issued; (ii) are not issued because such Prior Plan Award or any portion thereof is settled in cash; or (iii) are forfeited back to or repurchased by the Company because of the faiff condition required forff lure to meet a contingency or the vesting of such shares. (ggg) “Pr“ ospes ctus” means the document containing the Plan inforff mation specified in Section 10(a) of the Securities Act. stritt ctedtt (hhh) “Re“ conditions of Section 5(a). Stoctt k Award” mdd eans an Award of shares of Common Stock which is granted pursuant to the terms and (iii) “Re“ stritt ctedtt Stoctt k Award Agreement” mt eans a written agreement between the Company and a Participant evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice forff Restricted Stock Award and the agreement containing the written summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subju ect to the terms and conditions of the Plan. the (jjj) “RS“ U Award” mdd eans an Award of restricted stock units representing the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (kkk) “RS“ U Award Agreement” mt eans a written agreement between the Company and a Participant evidencing the terms and conditions of a RSU Award grant. The RSU Award Agreement includes the Grant Notice forff containing the written summary of the general terms and conditions applicable to the RSU Award and which is provided to a Participant along with the Grant Notice. Each RSU Award Agreement will be subju ect to the terms and conditions of the Plan. the RSU Award and the agreement (lll) “Ru“ le 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to RulRR e 16b-3, as in effeff ct from time to time. (mmm) “Ru“ le 405” means Rule 405 promulgated under the Securities Act. (nnn) “Sectiott n 409A” means Section 409A of the Code and the regulations and other guidance thereunder. (ooo) “Sectiott n 409A Change in Contrott l” mll eans a change in the ownership or effeff ctive control of the Company, or in the ownership of a subsu tantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasuryrr Regulations Section 1.409A-3(i)(5) (without regard to any alternative definff ition thereunder). (ppp) “Securitiii es Act” mt eans the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. (qqq) “Share Reserve” means the number of shares of Common Stock availabla e forff Section 2(a)(i). issuance under the Plan as set fort ff h in eciation Righi pursuant to the terms and conditions of Section 4. (rrr) “SAR” or “Stoctt k ApprA t” mt eans a right to receive the appr a eciation on Common Stock which is granted (sss) “SAR Agreement” mt eans a written agreement between the Company and a Participant evidencing the terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice forff summary of the general terms and conditions applicable to the SAR and which is provided to a Participant along with the Grant Notice. Each SAR Agreement will be subju ect to the terms and conditions of the Plan. the SAR and the agreement containing the written (ttt) “Subsidiaryr ” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capia tal oting power to elect a majority of the board of directors of such corpor stock having ordinary vrr time, stock of any other class or classes of such corpor ation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liabia lity company or other entity in which the Company has a direct or indirect interest (whether in the forff m of voting or participation in profits or capia tal contribution) of more than 50%. ation (irrespective of whether, at the r rr (uuu) “Ten PerPP cent Stoctt kholdell r” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate. (vvv) “Tradingii Policyc ” means the Company’s policy permitting certain individuals to sell Company shares only durd ing certain “window” periods and/or otherwise restricts the abia lity of certain individuals to transferff from time to time. or encumber Company shares, as in effeff ct (www) “Transactiott n” means a Corpor rr ate Transaction or a Change in Control. A-92 u terms upon (xxx) “Unvested NonNN -ExeEE mpt Award” mdd or prior to the date of any Transaction. eans the portion of any Non-Exempt Award that had not vested in accordance with its (yyy) “Vestedtt Non-Ex- emptm Award” mdd eans the portion of any Non-Exempt Award that had vested in accordance with its terms upon or prior to the date of a Transaction. A-93 [THIS PAGE INTENTIONALLY LEFT BLANK] UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 TRANS RR ITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission file number 0-22705 NEUROCRINE BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 12780 El Camino Real, San Diego, California (Address of principal executive offices) 33-0525145 (I.R.S. Employer Identificff ation No.) 92130 (Zip Code) (858) 617-7600 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.001 par value (Title of each class) NBIX (Trading Symbol) Nasdaq Global Select Market (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as definff ed in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to fileff reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant: (1) has fileff preceding 12 months (or forff 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every I (§ 232.405 of this chapter) during the preceding 12 months (or forff such shorter period that the registrant was required to fileff d all reports required to be fileff rr d by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the the past such reports), and (2) has been subju ect to such filing requirements forff nteractive Data File required to be submitted pursuant to RulRR e 405 of Regulation S-T such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ d a report on and attestation to its management’s assessment of the effeff ctiveness of its internal control over finff ancial If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forff financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has fileff reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firff m that prepared or issued its audit report. Yes ☑ No ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing refleff ct the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in RulRR e 12b-2 of the Act). Yes ☐ No ☑ The aggregate market value of registrant’s common stock held by non-affiff liates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2023, was $7.9 billion. complying with any new or revised As of Februarr ry 5, 2024, 99,507,490 shares of the registrant’s common stock were outstanding. DOCUMENTS INCORPORATR ED BY REFERENCE Portions of the registrant’s definff following the end of the registrant’s fisff cal year ended December 31, 2023 are incorpor rr itive proxy statement relating to the registrant’s annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days ated by reference into Part III of this Form 10-K. TABLE OF CONTENTS PART I Business Item 1. Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 1C. Cybersecurity Item 2. Properties Item 3. Item 4. Legal Proceedings Mine Safety Disclosures PART II Item 5. Item 7. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Management’s Discussion and Analysis of Financial Condition and Results of Operations em 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9. Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Item 12. Item 13. Item 14. PART IV Item 15. Exhibits, Financial Statement Schedules Page 4 21 49 49 50 51 51 52 53 61 62 92 92 95 95 96 96 96 96 96 97 NEUROCRINE, the Neurocrine logo, INGREZZA, the INGREZZA logo, and other Neurocrine Biosciences trademarks are the property of Neurocrine Biosciences, Inc. ALKINDI, EFMODY, and other Diurnal trademarks are the property of Diurnal Limited, a Neurocrine Biosciences company. Any other brand names or trademarks appearing in this Annual Report that are not the property of Neurocrine Biosciences, Inc. are the property of their respective holders. 2 PART I Forward-Looking Statements This Annual Report on Form 10-K and the inforff mation incorpor ated herein by reference contain forff ward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can only be based on facts and factors currently known by us. Consequently, these forward-looking statements are inherently subju ect to risks and uncertainties, and actuat l results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements. r Forward-looking statements can be identifieff d by the use of forff ward-looking words such as “believes,” “expects,” “hopes,” “may,” “will,” “plan,” “intends,” “estimates,” “could,” “should,” “would,” “continue,” “seeks,” “pro forma,” or “anticipates,” or other similar words (including their use in the negative), or by discussions of future matters such as the development of new products, technology enhancements, possible changes in legislation and other statements that are not historical. These statements include but are not limited to statements under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as other sections in this report. You should be aware that the occurrence of any of the events discussed under the heading in Part I titled “Item 1A. Risk Factors” and elsewhere in this report could substantially harm our business, results of operations and finff ancial condition and that if any of these events occurs, the trading price of our common stock could decline and you could lose all or a part of the value of your shares of our common stock. The cautionary statements made in this report are intended to be appl wherever they may appe statements, which speak only as of the date of this report. Except as required by law, we assume no obligation to update our forward-looking statements, even if new information becomes availabla e in the future. a ar in this report. We urge you not to place undue reliance on these forward-looking icable to all related forward-looking statements a 3 Item 1. Business Overview Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company with a simple purpose: to relieve ied our unique insight into suffeff neuroscience and the interconnections between brain and body systems to advance medicines for the treatment of under-addressed neurological, neuroendocrine and neuropsychiatric disorders and we will continue to relentlessly pursue medicines to ease the burden of debilitating diseases and disorders. ring for people with great needs, but few options. For three decades, we have appl a We launched INGREZZA in the U.S. in May 2017 as the firff st U.S. Food and Drugr Administration (FDA)-approved drug for the treatment of tardive dyskinesia and in August 2023 for the treatment of chorea associated with Huntington's disease. INGREZZA provides a once-daily dosing treatment option with a recommended dose of 40 mg taken for the first seven days of treatment forff chorea associated with , depending on the patient’s dosing Huntington’s disease, and an option to take 40 mg, 60 mg, or 80 mg thereafter needs. tardive dyskinesia and fourteen days forff ff In 2023, INGREZZA helped more people affected by tardive dyskinesia than ever beforeff prescription demand driven by increased commercial activities, including the continued investment in our branded direct-to-consumer INGREZZA advertising campaign and benefit froff m the expansion of our sales force completed in April 2022. Going forff ward, key elements of our commercial strategy include maximizing the opportunt INGREZZA through consistent and effeff ctive commercial execution, continued development of valbenazine as the new patient populations and to lead the evolving understanding of VMAT2 biology and best-in-class treatment forff its role in disease. INGREZZA net product sales totaled $1.8 billion forff 2022 and $1.1 billion for 2021 and accounted for approxi mately 99% of our total net product sales for 2023. 2023, $1.4 billion forff , refleff cting higher ity in a rts are focused on innovative therapies with clear and defined clinical Our internal research and development effoff and regulatory paths to appa s ement our internal research and development effort by in-licensing the rights to certain clinical development programs or by acquiring businesses that synergize with and allow us to capia talize on our existing development and commercial capabilities. roval. From time to time, we supplu ff Commercial Products Product Indication Tardive Dyskinesia Chorea Associated with Huntington’s Disease Adrenal Insufficff iency Classic Congenital Adrenal Hyperplrr asia Endometriosis Uterine Fibroids Majora Markets U.S., Japaa n, Select Asian Markets (1) U.S., United Kingdom, EU4 (2) (3) United Kingdom, EU4 (3) U.S. (4) U.S. (4) (1) INGREZZA is marketed as DYSVAL® (valbenazine) in Japaa n and REMLEAS® (valbenazine) in other select Asian markets, where Mitsubiu shi Tanabea (2) ALKINDI is marketed as ALKINDI SPRINKLE® (hydrocortisone) in the U.S., where Eton Pharmaceuticals, Inc. retains commercialization rights. Pharma Corporation retains commercialization rights. (3) The EU4 market is made up of the folff lowing countries: Germany, France, Italy and Spain. (4) AbbVie Inc. retains global commercialization rights to elagolix. 4 Marketing and Distribution Our specialty sales forff ce consists of approximately 400 experienced sales professionals located in the U.S. and is divided into three dedicated sales teams focff used on psychiatry, neurology and long-term care. For INGREZZA, our customers in the U.S. consist of a limited network of specialty pharmacy providers that deliver INGREZZA to patients by mail, wholesale distributors that distribute INGREZZA primarily to certain specialty pharmacies, and specialty distributors that distribute INGREZZA primarily to closed-door pharmacies and government facilities. We rely on third-party service providers to perform a variety of functions related to the packaging, storage and distribution of INGREZZA. turing and Supply iers in quantities adequate to meet our needs. Continuing adequate suppl Manufacff We currently rely on, and intend to continue to rely on, third-party manufact and our product candidates. Raw materials, active pharmaceutical ingredients (API) and other suppl the production of INGREZZA and our product candidates are sourced froff m various third-party manufact suppl u assured through our long-term commercial supply and manufact our continued focff us on the expansion and diversificff ation of our third-party manufact ing strategy enabla es us to direct our financial resources to the maximization We believe our outsourced manufacturt of our opportunity with INGREZZA, investment in our internal research and development programs and expansion of our clinical pipeline through business development opportunities. the production of INGREZZA ies required forff urt ers and ff ing agreements with multiple manufact urt y of such raw materials and API is ing relationships. urt ers and urt ers forff urt u u ff ff ff ff ff urt turers, suppliers and service providers may be subject to routine current Good ing Practice (cGMP) inspections by the FDA or comparable agencies in other jurisdictions. We depend Our third-party manufacff Manufact on our third-party partners and our quality system oversight of them for continued compliance with cGMP requirements and applicable foreign standards. 5 Clinical Development Programs The folff such programs. lowing table highlights our current clinical development programs and the current phase of development forff _________________________ * Mitsubiu shi Tanabea Pharma Corporation retains commercialization rights in Japan and other select Asian markets. † Heptares Therapeutics Limited retains commercialization rights in Japan, where Neurocrine Biosciences retains u the right to opt in to a 50:50 profit sharing arrangement upon certain development events. (1) This program was in-licensed froff m Heptares Therapeutics Limited. (2) This program was in-licensed froff m Idorsia Pharmaceuticals Ltd. (3) This program was in-licensed froff m Xenon Pharmaceuticals Inc. (4) This program was in-licensed froff m Sanofi S.A. (5) This program was in-licensed froff m Takeda Pharmaceutical Company Limited Neurocrine Biosciences retains global rights unless otherwise noted. 6 ll gy Neurology Program Valbenazine. Valbenazine is a highly selective VMAT2 inhibitor. VMAT2 is a protein concentrated in the human brain that is essential forff nerve impulses between neurons. VMAT2 is primarily responsible for packaging and transporting monoamines (dopamine, norepinephrine, serotonin and histamine) in neurons. Specifically, dopamine enables neurotransmission among nerve cells that are involved in voluntary arr the transmission of nd involuntary mrr otor control. NBI-BB 921352. NBI-921352 is a potent, highly selective Nav1.6 sodium channel inhibitor being developed to treat pediatric patients with SCN8A-DEE and other potential indications. We acquired the global rights to NBI-921352 in December 2019. ovements are compromised, resulting in nd abnormal movements. It affeff cts Indication Dyskinetictt Cerebral Palsy.s Dyskinetic cerebral palsy is a non-progressive, permanent disorder marked by ovement and is a result of damage to the involuntary mrr fetal or infanff t brain’s basal ganglia. The basal ganglia are responsible for submitting messages to the body to help coordinate and control movements. When damaged, voluntary mrr involuntary arr development and movement and has long term effeff cts on patients’ quality of life.ff The long-term outlook for patients with dyskinetic cerebral palsy will depend upon the severity of the brain damage and how well the o treatment works. Dyskinetic cerebral palsy affects up tu 15% of the estimated 500,000 to 1 million people affeff cted by cerebral palsy in the U.S. SCN8CC A D88 Syndrodd me, oe extremely severe, single-gene epilepsy caused by mutations in the SCN8A gene that activates Nav1.6, the most highly expressed sodium channel in the excitatory pathways of the central nervous system. Children born with SCN8A-DEE typically start experiencing seizures between birth and 18 months of age, and most have multiple seizures per day. Other symptoms include learning difficulties, muscle spasms, low or high muscle tone, poor coordination, developmental delay and featurt es similar to autism. As SCN8a mutations were discovered only recently, prevalence estimates will be determined in the futff urt e as awareness of and access to genetic surveillance increases. NBI-921352 has been granted orphan drug and rare pediatric disease designations for the treatment of SCN8A-DEE in the U.S. ll alopat r SCN8ANN -DEEDD .EE SCN8A-DEE is a rare, ental and Epilepll tic Encephee evelopmll hytt edPP iadd trics and Adultsll withii Dyskinetictt Cerebral Palsy.s We have an ongoing Phase 3 randomized, Valbenazine in Pii double-blind, placebo-controlled clinical studt y to evaluate the effiff cacy, safetff y and tolerabia lity of valbenazine for the treatment of dyskinetic cerebral palsy in pediatrics and adults (aged 6 to 70 years). NBI-BB 921352 in Pediatritt cs and Adolesll cents withii SCN8CC A-88 DE- randomized, double-blind, placebo-controlled clinical studyt NBI-921352 as adjud nctive therapya 2022, the study protocol was amended to include pediatrics (aged 2 to 11 years) with SCN8A-DEE. E.EE We have ongoing the KAYAK KK to evaluate the efficacy, safetff y and pharmacokinetics of for seizures in adolescents (aged 12 to 21 years) with SCN8A-DEE. In January a Phase 2 TM study, t 7 Neuroendocdd rinoii logyogy Program Crinecerfor nt.tt Crinecerfont is an investigational, oral, selective corticotropin-releasing facff tor type 1 (CRF1) receptor antagonist being developed to reducd e and control excess adrenal androgens through a steroid- independent mechanism forff the treatment of classic congenital adrenal hyperplasia (CAH) due to 21- hydroxylase deficff iency (21-OHD). Crinecerfont has received orphan drug designation in the U.S. from the FDA and in the European Union (EU) from the European Medicines Agency (EMA). Crinecerfont has also received Breakthrough Therapy designation in the U.S. from the FDA forff of CAH dued EFMODYMM of hydrocortisone that mimics the physiological circadian rhythm of cortisol and has been specifically designed forff such as CAH and adrenal insuffiff ciency. .YY EFMODY is a modified-release preparation patients with diseases of cortisol deficff to 21-OHD in aduld ts and pediatrics. the treatment iency, sic ConCC genitaii l Adrenal Hypeyy rplasia. CAH is a Indication Clasll genetic disorder that causes little to no cortisol production and increased secretion of adrenocorticotropic hormone (ACTH) and androgens. In approximately 75% of cases, the adrenal glands cannot produce aldosterone, which can result in salt wasting adrenal crisis, causing extreme weakness, low blood pressure, shock, and even death. There are currently no non-steroidal FDA-approved treatments forff CAH. CAH affeff cts up tu o an estimated 30,000 people in the U.S. and 50,000 people in Europe. rplasia. sic ConCC genitaii Clasll l Adrenal Hypeyy Adredd nal InsII uffiff ciency.yy Adrenal insuffiff ciency is a rare condition caused by inadequate production of steroid hormones in the cortex of the adrenal glands. Adrenal insufficiency can result in severe fatff untreated, adrenal crisis that may be life t igue and, if left ff hreatening. of crinecerfont in aduld ts with CAH dued Crinecerfor nt in Adultsll withii CAH. In September 2023, we announced positive top-line data from the Phase 3 CAHtalyst™ clinical studyt primary endpoint at Week 24, demonstrating that treatment with crinecerfont resulted in a statistically significant percent reducd tion in daily glucocorticoid (GC) dose versus placebo while maintaining androgen control (p-value <0.0001). The studyt androstenedione at Week 4 versus placebo (p-value <0.0001). At Week 24, approximately 63% of patients on crinecerfont achieved a reducd tion to a physiologic GC dose versus appr <0.0001). The data from the Phase 3 aduld t study, including data from the open-labea New Drug Application (NDA) submu also met important key secondary endpoints, with a statistically significant decrease in ission to the FDA in the second quarter of 2024. to 21-OHD. The Phase 3 adult study met its oximately 18% on placebo (p-value l treatment period, will suppor u a t androstenedione from baseline at Week 4 versus placebo folff of crinecerfont in pediatrics (aged 2 to 17 years) with CAH dued ndpoint, demonstrating that treatment with crinecerfont resulted in a statistically Crinecerfor nt in Pediatritt cs withii CAH.HH In October 2023, we announced positive top-line data from the Phase 3 CAHtalyst™ clinical studyt pediatric study met its primary err significant decrease in serumrr (p = 0.0002). Consistent with the results from the Phase 3 aduld t study, crinecerfont treatment led to a statistically significant percent reduction from baseline in daily GC dose while maintaining androgen control at Week 28 versus placebo (p < 0.0001). Approximately 30% of participants receiving crinecerfont achieved a reduction to a physiologic GC dose while maintaining androgen control compared to 0% of participants receiving placebo. The studyt 17- also met the other key secondary endpoint demonstrating a statistically significant decrease in serumr hydroxyprogesterone from baseline at Week 4 versus placebo (p < 0.0001). The data from the Phase 3 pediatric study, l treatment period, will suppor t quarter of 2024. including data from the open-labea ission to the FDA in the second lowing a GC stabla e period to 21-OHD. The Phase 3 t NDA submu u in Adoldd esll cents att EFMODYMM controlled clinical study to evaluate the efficacy, safety and tolerability of twice-daily EFMODY compared with twice-daily Cortef®ff with CAH. We anticipate having top-line data forff (immediate-release hydrocortisone tabla ets) in adolescents and adults (aged 16 years and older) nd Adultsll withii CAH. We have an ongoing Phase 2 randomized, double-blind, active- in the firff st half of 2024. this clinical studyt in Adultsll withii Adredd nal InsII uffiff ciency.yy We have ongoing the CHAMPAIN study, EFMODYMM double-blind, double-dummy, two-way crossover clinical studyt twice-daily EFMODY compared with once-daily Plenadren® (modified-release hydrocortisone tabla ets) in aduld ts with primary adrenal insuffiff ciency. We anticipate having top-line data forff t to evaluate the efficacy, safetff y and tolerabia lity of in the firff st half of 2024. a Phase 2 randomized, this clinical studyt 8 Neuropsychs p y y iatryr otor control. nd involuntary mrr the transmission of Program Valbenazine. Valbenazine is a highly selective VMAT2 inhibitor. VMAT2 is a protein concentrated in the human brain that is essential forff nerve impulses between neurons. VMAT2 is primarily responsible for packaging and transporting monoamines (dopamine, norepinephrine, serotonin and histamine) in neurons. Specifically, dopamine enables neurotransmission among nerve cells that are involved in voluntary arr NBI-BB 1117568. NBI-1117568 is a potential first-in-class muscarinic M4 receptor agonist with the potential to be developed forff selective M4 orthosteric agonist, NBI-1117568 offeff the potential forff need for combination therapy to ameliorate off-target effeff cts or forff cooperativity with acetylcholine. Muscarinic receptors are central to brain func validated as drugrr disorders. We acquired the global rights to NBI-1117568 in December 2021. Luvadaxistii attt D-Amino Acid Oxidase (DAAO) inhibitor with the the treatment of cognitive potential to be developed forff impairment associated with schizophrenia. We acquired the global rights to luvadaxistat in June 2020. .tt Luvadaxistat is a potential firff st-in-class an improved safetff y profile without the the treatment of schizophrenia. As a targets in psychosis and cognitive tion and rs ff NBI-BB 1065845. NBI-1065845 is a potential first-in-class Alpha-Amino-3-Hydroxy-5-Methyl-4-Isoxazole Propionic Acid (AMPA) potentiator with the potential to be developed forff the treatment of inadequate response to treatment in majoa r depressive disorder. We acquired the global rights to NBI-1065845 in June 2020. NBI-1065845 is currently designated as a 50:50 profitff - share product with Takeda Pharmaceutical Company Limited, which retains a one-time opt-out right to convert the designation to a royalty-bearing product. mally. Schizophrenia may result in some renia. Schizophrenia is a spectrum of serious Indication Schizoii pho neuropsychiatric brain diseases in which people interprr et a reality abnor combination of hallucinations, delusions and extremely disordered thinking and behavior that impairs daily life.ff People with schizophrenia typically require lifelong treatment. Early treatment may help improve long-term prognosis and get symptoms under control beforff e serious complications develop. Schizophrenia affeff cts an estimated 3.5 million people in the U.S. All currently approved antipsychotic medications are believed to work through direct action on monoaminergic receptors, with approximately 40% of patients reporting negative side effeff cts and approximately 30% not benefiting adequately from these medications. ff airmii oved to itivtt e ImpII nd ability to func ent Associated with Stt chSS izophrenia,a Cogno .SS CIAS, which may include deficits in attention, or CIASII nd executive function, has a negative working memory arr impact on patients’ quality of life aff tion. Although cognitive symptoms in schizophrenia are well characterized, no forff mal diagnostic criteria exist. a Furthermore, no pharmacological agents are appr tested to treat the condition, and no marketed therapya date has established clear, meaningfulff effiff cacy, which underscores the difficulty of drug development in this arena and accentuates the unmet need for proven treatment options. Approximately 80% of the estimated 3.5 million people affected by schizophrenia in the U.S. experience clinically relevant cognitive impairment. Majoa r Depressive Disorder. Majoa r depressive disorder is one of the leading causes of disability and is characterized by a persistently depressed mood or loss of interest in daily activities that is present most of the day in addition to other symptoms that can impact normal daily func tioning, relationships and overall quality of ff life. Treatments range from selective serotonin reuptu ake inhibitors, serotonin norepinephrine reuptu ake inhibitors, atypical antipsychotics, tricyclic antidepressants and psychotherapia es, among others. Approximately 30% of the more than 16 million people affect ed by the disorder in the U.S. do not adequately respond to treatment. ff dolesll cents att Valbenazine in Aii blind, placebo-controlled clinical studyt administered orally once daily as adjud nctive treatment in adolescents and aduld ts (aged 13 years and older) with schizophrenia who have had an inadequate response to antipsychotics. to evaluate the efficff acy, safety and tolerability of valbenazine when renia. We have an ongoing Phase 3 randomized, double- nd Adultsll withii Schizoii pho NBI-BB 1117568 in Adultsll withii Schizoii pho placebo-controlled, multi-arm, multi-stage clinical studyt NBI-1117568 in adults with schizophrenia who are experiencing an acute exacerbar anticipate having top-line data for this clinical studyt in the second half of 2024. renia. We have an ongoing Phase 2 multi-center, randomized, double-blind, to evaluate the efficacy, safetff y and tolerabia lity of tion or relapse of symptoms. We 9 in Adultsll withii CIASII Luvadaxistii attt parallel, placebo-controlled clinical studyt luvadaxistat when administered orally once daily as adjud nctive treatment in aduld ts with CIAS. We anticipate having top-line data forff .SS We have ongoing the ERUDITE™ study, a Phase 2 randomized, double-blind, to evaluate the efficff acy, safetff y, tolerabia lity and pharmacokinetics of in the second half of 2024. this clinical studyt NBI-BB 1065845 in Adultsll withii the SAVITRI™ study, and safetff y of NBI-1065845 as adjud nctive treatment in aduld ts with inadequate response to treatment in majoa r depressive disorder. We anticipate having top-line data for this clinical studyt essive Disoii a Phase 2 randomized, double-blind, placebo-controlled clinical studyt in the firff st half of 2024. se to Treatment in Mii Inadequate Rtt ajMM or Depree espons t rderdd .rr We have ongoing to evaluate the efficacy Intellectual Property We actively seek to protect our products, product candidates, and related inventions and improvements that we consider important to our business. We own a portfolff io of U.S. and ex-U.S. patents and patent applications, and have also licensed rights to a number of U.S. and ex-U.S. patents and patent applications. Our owned and licensed patents and patent appl to treat particular conditions, methods of administration, drugrr methods of manufacff ications cover or relate to our products and product candidates, including certain formulations, uses echnologies and delivery prr rofiles, and delivery t turing. a rr Below is a description of the U.S. and ex-U.S. patents to INGREZZA and crinecerfont: • • a oval delay of 552 days has been received forff U.S. Patent No. 8,039,627, INGREZZA, our highly selective VMAT2 inhibitor appr oved in the U.S. for the treatment of tardive dyskinesia and of chorea associated with Huntington’s disease, is covered by 22 issued, FDA Orange Book-listed U.S. patents which are set to expire between 2027 and 2040. Patent term extension a corresponding to regulatory arr ppr which now expires in 2031 and covers valbenazine, the active pharmaceutical ingredient contained in INGREZZA. In Japan and in certain other East Asian markets, we are actively pursuing most of the patents corresponding to those listed in the FDA’s Orange Book entry f settlement agreements resolving all patent litigation brought by us against the companies that fileff d ANDAs seeking appr oval to market generic versions of INGREZZA, and all cases have been dismissed. Pursuant to the terms of the respective settlement agreements, such companies have the right to sell generic versions of INGREZZA in the U.S. beginning March 1, 2038, or earlier under certain circumstances. Referff to Note 13 to the consolidated financial statements forff a more detailed description of these matters. INGREZZA. In 2023, we entered into orff AA a rr Crinecerfont, a CRF1 receptor antagonist under clinical development forff and children, is covered by U.S. Patent Nos. 10,905,690, 11,311,544, and 11,730,739, among other patents and pending patent applications, set to expire between 2035 and 2044 (not including any potential patent term extensions). the treatment of CAH in adults We also own, or have licensed rights to, patents covering our other products and earlier stage product candidates. In addition to the potential patent term extensions referff enced above, the products and product candidates in our pipeline may be subju ect to additional terms of exclusivity that we may obtain by futff urt e patent issuances. Separately, the U.S., the EU, and Japaa n each provide data and marketing exclusivity for new medicinal compounds. If this protection is availabla e, no competitor may use the original applicant’s data as the basis of a generic marketing application durd ing the period of data and marketing exclusivity, which is measured from the date of marketing approval by the FDA or corresponding foreign regulatory arr in the U.S., six years in Japaa n and 10 years in the EU, except that forff is 12 years under the Biologics Price Competition and Innovation Act. In addition, if granted orphan drug designation, certain of our product candidates, including, for example, crinecerfont, may also be eligible for seven years and EU for 10 years. marketing exclusivity in the U.S. forff uthority. This period of exclusivity is generally five years biologics, the period of exclusivity in the U.S. a discussion of the challenges we may face in obtaining or maintaining Refer to Part I, Item 1A. Risk Factors forff patent and/or trade secret protection and Note 13 to the consolidated financial statements for da descriip ition of our lleggall pro ll propertyy matters. dceediinggs rellatedd t io int lelllectuat 10 Competition The biotechnology and pharmaceutical industries are subju ect to rapia d and intense technological change. We face, will continue to face, competition in the development and marketing of our products and product candidates fromff academic institutions, government agencies, research institutt Many of our competitors have significantly greater financial resources and expertise in research and development, manufact oval and marketing than we do. a ing, preclinical testing, conducting clinical trials, obtaining regulatory arr ppr ions and biotechnology and pharmaceutical companies. urt ff ff and Competition may also arise froff m, among other things, other drugrr or reducing the incidence of disease, including vaccines, and new small molecule or other classes of therapea utic agents. Such developments by others (including the development of generic equivalents) may render our product candidates or technologies obsolete or noncompetitive. development technologies, methods of preventing • • • • • • INGREZZA competes with AUSTEDO® (deutetrabenazine), marketed by Teva Pharmaceuticals Indusd tries, for the treatment of tardive dyskinesia in adults and chorea associated with Huntington's disease. A once- daily dosing of AUSTEDO (AUSTEDO XR) was introduced in Februar ry 2023. Additionally, there are a number of commercially availabla e medicines used to treat tardive dyskinesia off-label, such as XENAZINE® (tetrabea nazine) and generic equivalents, and various antipsychotic medications (e.g., clozapine), anticholinergics, benzodiazepines (off-lff abel), and botult programs in clinical development by other companies targeting Huntington's disease. inum toxin. In addition, there are several ORILISSA and ORIAHNN each compete with several FDA-approved products for the treatment of endometriosis, uterine fibroids, inferff tility and central precocious puberty. Additionally, there is also competition froff m surgical intervention, including hysterectomies and ablations. Separate froff m these options, there are many programs in clinical development which serve as potential futff urt e competition. Lastly, there are numerous medicines used to treat the symptoms of disease (vs. endometriosis or uterine fibroids directly) which may also serve as competition: oral contraceptives, NSAIDs and other pain medications, including opioids. For CAH, high doses of corticosteroids are the current standard of care to both correct the endogenous cortisol deficiency as well as reduce the excessive ACTH levels. In the U.S. alone, there are more than two turing steroid-based products. In addition, there are several programs in clinical dozen companies manufacff a development by other companies targeting CAH with a variety of appr oaches including gene therapy. potential use in epilepsy may in the futff urt e compete with numerous Our investigational treatments forff approved anti-seizure medications and development-stage programs being pursued by several other companies. Commonly used anti-seizure medications include phenytoin, levetiracetam, brivaracetam, cenobamate, carbar mazepine, clobazam, lamotrigine, valproate, oxcarbar perampanel and cannabia diol, among others. There are currently no FDA-approved treatments specifically indicated forff anti-seizure medications are currently used in these patient populations. Our investigational treatments forff future compete with several development-stage programs being pursued by other companies. Currently, there are no FDA-approved treatments specifically indicated for anhedonia or CIAS; however, there are a rent anti-psychotic medications currently used in these patient populations. number of diffeff the early infantile epileptic encephalopathy SCN8A-DEE; however, a number of diffeff potential use in schizophrenia, anhedonia and depression may in the zepine, topiramate, lacosamide, rent potential use in neurology, neuroendocrinology and neuropsychiatry may Our investigational treatments forff in the futff urt e compete with numerous approved products and development-stage programs being pursued by several other companies. Collaboration and License Agreements Refer to Note 2 to the consolidated financial statements forff more information on our significant collabor license agreements. a ation and 11 Government Regulation Our business activities are subju ect to extensive regulation by the U.S. and other countries. Regulation by government authorities in the U.S. and forff eign countries is a significant facff tracking, marketing and sale of our proposed products and in our ongoing research and product development a activities. All of our products in development will require regulatory arr ppr commercialization. The process of obtaining these appr federal and state statutes and regulations require the expenditure of subsu tantial time and finff ancial resources. ovals and the subsu equent compliance with appropriate oval by government agencies prior to tor in the development, manufact urt e, distribution, a ff In addition, federal and state healthcare laws, and equivalent supru anational and foreign laws, restrict business practices in the pharmaceutical industry.rr These laws include, without limitation, federal, state and foreign fraff ud and abuse laws, false claims laws, data privacy and security laws, as well as transparency laws and industry crr odes of conduct regarding payments or other items of value provided to healthcare providers. We have a comprehensive compliance program designed to ensure our business practices remain compliant. eral Anti-Kickbak ck Statutt e and equivalent foreign laws makes it illegal forff The U.S. fedff knowingly and willfulff induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under programs such as a federal healthcare program, such as Medicare or Medicaid in the U.S. ly, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to any person or entity to Federal and equivalent foreign civil and criminal falff se claims laws and the federal civil monetary penalties law and equivalent foreign laws, which prohibit among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or appr for items or services, including drugs or causing to be made, a false record or to avoid or decrease an obligation to pay money to the federal government. oval by, federal programs, including Medicare and Medicaid, claims , that are false or fraff udulent or not provided as claimed and knowingly making, a rr The Health Insurance Portabia lity and Accountability Act of 1996 (HIPAA) created additional fedff statutt es that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to ly falsifyiff ng, defraud any healthcare benefitff program, including private third-party payors and knowingly and willfulff concealing or covering up a material fact connection with the delivery of or payment forff or making any materially false, fictitious or fraudulent statement in , items or services and equivalent foreign laws. healthcare benefitsff eral criminal ff We may be subject to HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH) and their privacy and security regulations, which impose certain obligations, including the adoption of administrative, physical and technical safegff uards to protect individually identifiaff bla e health information on covered entities subject to HIPAA (i.e., health plans, healthcare clearinghouses and certain healthcare providers) and their business associates that perform certain services for or on their behalf involving the use or disclosure of individually identifiaff bla e health information as well as their covered subcontractors. eral Physician Payments Sunshine Act requires certain manufact ies to report annually to the Centers for Medicare & Medicaid Services (CMS) inforff mation related to The fedff medical supplu payments or other transfers of value made to physicians (definff ed to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as inforff mation regarding ownership and investment interests held by physicians and their immediate famff urt ers of drugs, devices, biologics and ily members. ff Also, many states have similar healthcare statutes or regulations that may be broader in scope and may apply regardless of payor. Additionally, to the extent that our product is sold in a foreign country, we may be subju ect to similar forff eign laws. 12 The U.S. Foreign Corruptu Practices Act (FCPA) prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influff ence a person working in an offiff cial capacity. It is illegal to pay, offerff to pay or authorize the payment of anything of value to any foreign government offiff cial, government staff mff political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments. Similar laws exist in other countries, such as the United Kingdom (UK) or in EU member states, that restrict improper payments to public and private parties. Many countries have laws prohibiting these types of payments within the respective country. In addition to these anti-corruptu ion laws, we are subject to import and export control laws, tariffs,ff on our ability to operate in certain foreign markets. trade barriers, economic sanctions, and regulatory l imitations ember, ff rr Failure to comply with these laws, where appl significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal and equivalent foreign healthcare programs, and additional reporting requirements and regulatory orr ability to operate our business and our results of operations. icable, can result in significant penalties, including the imposition of versight, any of which could adversely affect our a ent and Marketintt g ApprA oval for ProPP ducts.tt Preclinical studies generally are conducted in laboratoryrr Developmll animals to evaluate the potential safetff y and effiff cacy of a product. Drugr studi t before clinical trials can begin in humans. Typically, clinical evaluation involves a time consuming and costly multi- phase process. it the results of preclinical application (IND) and to equivalent foreign authorities es to the FDA as a part of an investigational new drugrr developers submu Phase 1 Clinical trials are conducted with a small number of subjects to determine the early safety profileff , maximum tolerated dose and pharmacokinetic properties of the product in human volunteers or in patients with the target disease. Phase 2 Clinical trials are conducted with groups of patients afflff icted with a specific disease in order to determine preliminary err fficacy, optimal dosages and expanded evidence of safetff y. Phase 3 Larger, multi-center, comparative clinical trials are conducted with patients afflicted with a specific disease in order to determine safetff y and effiff cacy as primary srr oval by the FDA, the European Commission, or equivalent foreign authorities, to market a product candidate for a specific disease. a regulatory arr ppr upport forff The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted in the U.S. and may, at its discretion, re-evaluate, alter, suspend or terminate the testing based upon the data accumulated to that point and the FDA’s assessment of the risk/bkk enefitff Ethics Committees and Data Safetff y Monitoring Boards also closely monitor the conduct of our trials and may also place holds on our clinical trials or recommend that we voluntarily do so. Clinical trials conducted in forff eign countries are also subject to oversight by regulatory arr ratio to the patient. Institutional Review Boards, Institutional uthorities in those countries. Once Phase 3 trials are completed, drug developers submu FDA in the form of a new drugrr submu (PDUFA), the FDA has a goal of 10 months from the date of filing of a standard NDA for a new molecular entity to review and act on the submission. The FDA generally has a six-month review goal of priority NDAs. es and clinical trials to the oval to commence commercial sales. In most cases, the ission of an NDA is subju ect to a subsu tantial appl ff Under the Prescription Drug User Fee Act it the results of preclinical studi application (NDA) for appr ication user fee. a a t In addition, under the Pediatric Research Equity Act of 2003 as amended and reauthorized, certain applications or suppl ements to an application must contain data that are adequate to assess the safetff y and effeff ctiveness of the drugr u for the claimed indications in all relevant pediatric subpopul each pediatric subpopulation forff which the product is safe aff the request of the appl icant, grant deferff product forff ations, and to suppor nd effeff ctive. The FDA may, on its own initiative or at oval of the use in adults or full or partial waivers from the pediatric data requirements. rals for submission of some or all pediatric data until afteff t dosing and administration forff a r appr u u a The FDA also may require submu drugr outweigh its risks. The risk evaluation and mitigation strategy could include medication guides, physician communication plans, assessment plans and/or additional elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools. ission of a risk evaluation and mitigation strategy to ensure that the benefits of the 13 r submission, before accepting The FDA conducts a preliminary review of all NDAs within the firff st 60 days afteff them for filiff ng, to determine whether they are suffiff ciently complete to permit subsu tantive review. The FDA may request additional inforff mation rather than accept an appl filing. Once the submission is accepted forff the FDA begins an in-depth subsu tantive review. The FDA reviews an NDA to determine, among other things, urt ed, whether the drugr processed, packaged or held meets standards designed to assure the product’s continued safetff y, quality and purity. its intended use and whether the faci lity in which it is manufact is safe and effective forff ication forff a ff ff filing, The FDA may referff an application forff independent experts, including clinicians and other scientificff ication should be appr recommendation as to whether the appl bound by the recommendations of an advisory committee, but it considers such recommendations carefulff making decisions. experts, that reviews, evaluates and provides a oved and under what conditions. The FDA is not a novel drug to an advisory committee. An advisory committee is a panel of ly when a a ff Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is urt ed. The FDA will not approve an application unless it determines that the manufact manufact facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, beforff e appr trial sites to assure compliance with Good Clinical Practice (GCP) requirements. oving an NDA, the FDA may inspect one or more clinical ing processes and urt a ff ff urt ff ing faci After evaluating the NDA and all related inforff mation, including the advisory committee recommendation, if any, and inspection reports regarding the manufact letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final appr oval of the application and may require additional ission of this additional a clinical or preclinical testing in order for FDA to reconsider the appl approval. information, the FDA ultimately may decide that the appl riteria forff a If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an appr oval letter. An approval letter authorizes commercial marketing of the drugr with specific prescribing information forff specific indications. lities and clinical trial sites, the FDA may issue an appa ication does not satisfy the regulatory crr ication. Even with submu roval a a Even if the FDA approves a producd t, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to furff ther assess a drug’s safetff y after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a risk evaluation and mitigation strategy, which can materially affeff ct the potential market and profitaff bia lity of the product. The FDA may prevent or ther marketing of a producd t based on the results of post-marketing studies or surveillance programs. Afteff limit furff r approval, some types of changes to the approved product, such as adding new indications, manufact ing changes and additional labeling claims, are subju ect to further testing requirements and FDA review and approval. urt ff We will also have to complete an approval process similar to that in the U.S. in order to commercialize our product candidates in each foreign country. The approval procedure and the time required forff roff m country to country and may involve additional testing. Foreign appr a addition, regulatory arr ppr number of drugs sold to certain Medicare beneficff to generate an acceptabla e returt n to us or our corporate collabor oval of prices is required in most countries other than the U.S., except forff iaries beginning in 2023. The resulting prices may not be sufficff ovals may not be granted on a timely basis, or at all. In a certain limited approval vary f ators. a a rr ient rr an Drug Designi atiott n. Under the Orpha Orphrr intended to treat a rare disease or condition, which is a disease or condition that affects fewff individuals in the U.S., or if it affeff cts more than 200,000, there is no reasonabla e expectation that sales of the drug in the U.S. will be sufficient to offset the costs of developing and making the drugrr designation must be requested before submu in or shorten the duration of the regulatory r n Drug Act, the FDA may grant orphan drug designation to a drug itting an NDA. Orpha eview and approval process. n drug designation does not convey any advantage availabla e in the U.S. Orpha er than 200,000 n drug rr rr r 14 a a ication forff use in the rare disease or a designated orphan drug forff a drug with the same active the same use or indication as the approved orphan drug, except in limited circumstances, If the FDA approves a sponsor’s marketing appl condition forff which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing appl moiety and intended forff such as if a subsequent sponsor demonstrates its product is clinically supeu rior. During a sponsor’s orpha exclusivity period, competitors, however, may receive approval forff indication as the approved orphan drug, or for drugs with the same active moiety as the approved orphan drug, but oval of one of our products for seven years if for diffeff a competitor obtains approval forff the same indication beforff e we do, unless we are able to demonstrate that grounds for withdrawal of the orphan drug exclusivity exist, or that our product is clinically supeu rior. Further, if a designated orphan drug receives marketing appr an indication broader than the rare disease or condition forff which it received orphan drug designation, it may not be entitled to exclusivity. rent indications. Orphan drug exclusivity could block the appr a drug with the same active moiety intended forff with different active moieties forff ication forff oval forff n drug rr drugs the same a a rr rr manufacff oval Requirements. Drugs tured or distributed pursuant to FDA approvals are subject to Post-Att pprA pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. Afteff oval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual program user fee requirements forff applications with clinical data. any marketed products, as well as new application fees for supplemental a r appr ff The FDA may impose a number of post-approval requirements as a condition of appr the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to furff monitor the product’s safetff y and effeff ctiveness after commercialization. oval of an NDA. For example, ther assess and a In addition, drugr manufacff urt e and distribution of appr turers and other entities involved in the manufact are required to register their establa ishments with the FDA and state agencies and are subju ect to periodic unannounced inspections by the FDA and these state agencies forff the manufact ing process are strictly regulated and often require prior FDA approval beforff e being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon decide to use. Accordingly, manufact and quality control to maintain cGMP compliance. the sponsor and any third-party manufact urt ers must continue to expend time, money and effoff urt ers that the sponsor may rt in the area of production compliance with cGMP requirements. Changes to oved drugs urt u a ff ff ff ff Once an approval is granted, the FDA may withdraw the appr standards is not maintained or if problems occur afteff unknown problems with a product, including adverse events of unanticipated severity or frequency, or with equirements, may result in mandatory revisions to manufact the appr es or clinical trials to assess a new safetff y risks; or imposition of distribution or other restrictions. Other potential consequences include, among other things: urt oved labeling to add new safetff y inforff mation; imposition of post-market studi ing processes, or failure to comply with regulatory r r the product reaches the market. Later discovery of previously oval if compliance with regulatory r equirements and a ff rr rr t • • • • • restrictions on the marketing or manufact market or product recalls; ff urt ing of the product, complete withdrawal of the product fromff the finff es, warning letters or holds on post-approval clinical trials; refusff revocation of product appr al of the FDA to approve pending NDAs or suppl ovals; u a ements to approved NDAs, or suspension or product seizure or detention, or refusal to permit the import or export of products; or injunctions or the imposition of civil or criminal penalties. 15 a the appr may be promoted only forff oved indication(s) and in accordance with the provisions of the appr ling, advertising and promotion of products that are placed on the market. The FDA strictly regulates marketing, labea Drugs r labea l. However, companies may share truthful and not misleading inforff mation that is otherwise consistent with a product’s FDA approved labeling. The FDA and other agencies actively enforff ce the laws and regulations prohibiting pre-approval promotion of investigational drugs, as well as the promotion of off-label uses of approved drugs, and a company may be subju ect to significant liabia lity. Physicians may prescribe legally availabla e products for uses that are not described in the product’s labeling and that differ froff m those tested by us and approved by the FDA. The FDA does not regulate behavior of physicians in their choice of treatments. The FDA does, however, restrict ff manufact urt er’s communications on the subject of off-l abel use of their products. oved a ff Reimbursement Significant uncertainty exists as to the coverage and reimbursement statust obtain regulatory arr a ppr approval will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such drug products. of any product candidates forff which we oval. In the U.S. and other countries, sales of any products for which we receive regulatory In the U.S., third-party payors include federal and state healthcare programs, government authorities, private managed care providers, private health insurers and other organizations. No uniform policy forff coverage and reimbursement exists in the U.S., and coverage and reimbursement can diffeff Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and appr a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientificff that coverage and adequate reimbursement will be obtained in the first instance or appl r significantly from payor to payor. products to each payor separately, with no assurance and clinical suppor the use of our drugrr oval process apaa ied consistently. rt from Medicare determinations. As t forff u a a Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost- effeff ctiveness of drug products and medical services, in addition to questioning their safetff y, effiff cacy and clinical appropriateness. Such payors may limit coverage to specific drug products on an approved list, also known as a formulary,rr which might not include all of the FDA-approved drugs for a particular indication. We may need to conduct expensive pharmaco-economic studi of our products, in addition to the costs required to obtain the FDA appr candidates, including INGREZZA, may not be considered medically necessary or cost-effective. es in order to demonstrate the medical necessity and cost-effeff ctiveness ovals. Nonetheless, our products or product a t setting the price of a drugrr product may be Moreover, the process for determining whether a third-party payor will provide coverage for a drugrr establa ishing the reimbursement rate that such separate from the process forff a payor will pay forff product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a drugrr product does not assure that other payors will also provide coverage for the drugr payor reimbursement may not be availabla e to enabla e us to maintain price levels sufficient to realize an appr return on our investment in product development. the drug product. A payor’s decision to provide coverage for a drugr product. Adequate third-party product or forff opriate a commercial sale may suffeff The marketabia lity of any product or product candidates forff which we or our collabor approval forff In addition, emphasis on managed care in the U.S. has increased and we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement statust a regulatory arr ppr oval, less favorable coverage policies and reimbursement rates may be implemented in the futff urt e. is attained for one or more products for which we receive l to provide coverage and adequate reimbursement. r if third-party payors faiff ators receive regulatoryrr a Healthcare Reform Measures roposals to change the The U.S. and some foreign jurisdictions have enacted a number of legislative and regulatory prr healthcare system in ways that could affect our ability to sell our products profitaff bla y. In the U.S., the pharmaceutical industry arr affeff cted by majoa r legislative initiatives. nd the cost of prescription drugs has been a continuous focus of these effoff rts and has been significantly 16 rr ff tion Reducd tion Act of 2022 (IRA)RR , which, urt er liabia lity and (3) requires drug manufact tion. The IRA also extends enhanced subsu idies forff f the U.S. Department of Health and Human Services (HHS) to and biologics covered under Medicare, (2) Most recently, in August 2022, President Biden signed into law the Inflaff among other things, (1) directs the Secretary orr negotiate the price of certain high-expenditure, single-source drugs redesigns the Medicare Part D prescription drug benefitff manufact the rate of inflaff in the ACA marketplt aces through plan year 2025 and eliminates the “donut hole” under the Medicare Part D iary maximum out-of-pocket cost to $2,000 through program beginning in 2025 by significantly lowering the beneficff a newly establa ished manufacff turer discount program. These provisions take effeff ct progressively starting in 2023. On August 29, 2023, HHS announced the list of the first 10 drugs that will be subju ect to price negotiations, although the Medicare drugr price negotiation program is currently subju ect to legal challenges. It is currently unclear how the IRA will be implemented; however, it is likely to have a significant impact on the pharmaceutical industry arr prescription drug pricing. urt ers to pay rebates on drugs whose prices increase greater than individuals purchasing health insurance coverage to lower patient out-of-pocket costs and increase nd ff While the IRA targets high-expenditure drugs biosimilar competition, we expect to qualify f 2029. However, the qualificff ation forff we will continue to qualify f of this exemption, including as a result of a potential acquisition or strategic transaction, could have an adverse impact on our business. that have been on the market forff the small biotech manufact this exemption in the future. Further, the loss of this exemption or the potential loss this exemption is subject to various requirements and there is no assurance that urt er exemption that is set to expire in several years without generic or r ff orff orff ff ff The most significant prior revisions to federal law governing the pharmaceutical industry arr pricing were enacted through the March 2010 Patient Protection and Affoff Care and Educd ation Reconciliation Act (collectively, the ACA). This law was intended to broaden access to health insurance by reducd ing the number of uninsured persons, reducd ing or constraining the growth of healthcare spending, enhancing remedies against fraud and abus ff insurance indusd tries, imposing taxes and fees nd imposing additional health policy reforff ms. rdable Care Act, as amended by the Health e, adding transparency requirements forff the healthcare and health on the health industry arr nd prescription drug a We expect that these health reforff m measures may result in more rigorous coverage criteria and lower reimbursement for prescription drugs, as well as result in additional downward pressure on any price that we receive for any approved product. Any reducd tion in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments froff m private third-party payors. Other significant legislative changes impacting the pharmaceutical industry arr adopted since the ACA was enacted. These changes include, among others, aggregate reducd tions to Medicare payments to providers of up to 2% per fisff cal year pursuant to the Budget Control Act of 2011, which began in 2013 and, due to subsu equent legislative amendments, including the Investment and Jobs Act, will remain in effeff ct through 2032. nd prescription drug pricing have been At the state level, legislaturt es have increasingly passed legislation and implemented regulations designed to examine and/or control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, on January 5, 2024, the FDA approved Florida’s Section 804 Importation Program (SIP) proposal to import certain drugs from Canada for specific state healthcare programs. It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subju ect to legal challenges in the United States or Canada. Other states r have also submu implemented, may result in lower drug prices for products covered by those programs. Further, certain states through legislation have created a state prescription drugr for that state. The functions of the PDABs vary by state, and may include among others, negotiating the price the state pays forff reviews, and advising state lawmakers on additional ways to reducd e the state’s drug spending. It is possible that the actions taken by the PDABs may result in lower prices for certain drugrr itted SIP proposals that are pending review by the FDA. Any such appr certain drugs, recommending or setting upper limits on drugr rdability board (PDAB) to help control costs of drugs prices, performing drug affordability oved importation plans, when products sold in their states. affoff a r r 17 Proposed Healthcare Reform Measures The U.S. and some foreign jurisdictions are considering a number of legislative and regulatory prr roposals to change the healthcare system in ways that could affect our ability to sell our products profitaff bla y. Among policy makers and payors in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. In the U.S., the pharmaceutical industry hrr as been a particular focff us of these efforts and may be significantly affeff cted by majoa r legislative initiatives. We are currently unabla e to predict what other additional legislation or regulation, if any, relating to the healthcare industry mrr legislation or regulation would have on our business. t recently enacted federal legislation or any such additional ay be enacted in the futff urt e or what effecff Regulation and Procedures Governing Approval of Medicinal Products in the EU To market any product outside of the U.S., a company must also comply with numerous and varyirr ng regulatoryrr requirements of other countries and jurisdictions regarding quality, safetff y and effiff cacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products. Whether or not it obtains FDA appr a product, an applicant will need to obtain the necessary approvals by the comparabla e foreign regulatory arr uthorities beforff e it can initiate clinical trials or marketing of the product in those countries or jurisdictions. Specifically, the process governing appr requirements in the U.S. It entails satisfactory crr adequate and well-controlled clinical trials to establa ish the safety and efficacy of the medicinal product forff proposed indication. ompletion of pharmaceutical development, nonclinical studi oval of medicinal products in the EU generally aligns with the es and each oval forff a a t rr The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement may vary f roff m country to country. In all cases, the clinical trials must be conducted in accordance with GCP and the applicable regulatory r Medicines used in clinical trials must be manufact which can be subju ect to GMP inspections. equirements and the ethical principles that have their origin in the Declaration of Helsinki. lity, urt ed in accordance with cGMP and in a GMP licensed faci rr ff ff Clinll ical Trials in the EU. In the EU, the Clinical Trials Regulation (EU) No 536/2014 (CTR) entered into application on January 31, 2022 repealing and replacing the former Clinical Trials Directive 2001/20 (CTD). The regulation introduces a streamlined appl Trials Information System (CTIS); a single set of documents to be prepared and submitted forff as simplifieff d reporting procedurd es for clinical trial sponsors. A harmonized procedurd e forff applications for clinical trials has been introduced and is divided into two parts. ication procedurd e via a single entry point, the “EU portal”, the Clinical a the appl the assessment of a ication as well a ication forff The extent to which on-going clinical trials will be governed by the CTR will depend on the durd ation of the approval was made on the basis of individual clinical trial. For clinical trials in relation to which an appl the CTD before January 31, 2023, the CTD will continue to apply on a transitional basis until January 31, 2025. By that date, all ongoing trials will become subju ect to the provisions of the CTR. The CTR will apply to clinical trials from an earlier date if the related clinical trial appl ication was made on the basis of the CTR or if the clinical trial has already transitioned to the CTR fraff mework before January 31, 2025. Marketintt g Authott authorization (MA) has been granted. To obtain an MA forff marketing authorization appl the procedurd es administered by the competent authorities of EU Member States (decentralized procedurd e, national procedurd e or mutuat a product in the EU, an appl ication (MAA) either under a centralized procedurd e administered by the EMA or one of tions. In the EU, medicinal products can only be commercialized after a related marketing l recognition procedurd e). An MA may be granted only to an appl icant established in the EU. icant must submit a rizaii a a a a the grant of a single MA by the European Commission that is valid The centralized procedurd e provides forff throughout the European Economic Area (which is comprised of the 27 EU Member States plus Norway, Iceland and Liechtenstein). Pursuant to Regulation (EC) No 726/2004, the centralized procedurd e is compulsory for specific products, including for (i) medicinal products derived froff m biotechnological processes, (ii) products designated as n medicinal products, (iii) advanced therapy medicinal products (ATMPs), and (iv) products with a new active orpha r subsu tance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabea tes, auto-immune and other immune dysfunctions and viral diseases. For products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or forff which a centralized process is in the interest of patients, authorization through the centralized procedurd e is optional on related approval. 18 Accelerated assessment may be granted by the EMA’s Committee forff Medicinal Products for Human Use (CHMP) in exceptional cases, when a medicinal product targeting an unmet medical need is expected to be of majoa r interest from the point of view of public health and, in particular, froff m the viewpoint of therapeutic innovation. If the CHMP accepts a request for accelerated assessment, the time limit of 210 days will be reduced to 150 days (excluding clock stops). The CHMP can, however, revert to the standard time limit for the centralized procedurd e if it considers that it is no longer appropriate to conduct an accelerated assessment. An MA has, in principle, an initial validity of five years. The MA may be renewed after five years on the basis of a re-evaluation of the risk-benefitff balance by the EMA or by the competent authority of the EU Member State in which the original MA was granted. The European Commission or the competent authorities of the EU Member States may decide on justifieff d grounds relating to pharmacovigilance, to proceed with one further fivff e-year renewal period for the MA. Once subsequently definitively renewed, the MA shall be valid for an unlimited period. Any authorization which is not followed by the actuat centralized MA) or on the market of the authorizing EU Member State within three years after authorization ceases to be valid (the so-called sunset clause). l placing of the medicinal product on the EU market (for a Upon receiving an MA, innovative medicinal products are generally entitled to receive eight years of data exclusivity and 10 years of market exclusivity. Data exclusivity, if granted, prevents regulatory arr ication forff from referff encing the innovator’s data to assess a generic application or biosimilar appl the date of authorization of the innovative product, afteff the innovator’s data may be referff enced. The market exclusivity period prevents a successfulff applicant froff m commercializing its product in the EU until 10 years have elapsa referff ence produd ct in the EU. The overall ten-year period may, occasionally, be extended forff maximum of 11 years if, dff one or more new therapea utic indications which, during the scientificff to bring a significant clinical benefit in comparison with existing therapia es. r which a generic or biosimilar MAA can be submu a furff ed from the initial MA of the urd ing the first eight years of those ten years, the MA holder obtains an authorization forff uthorities in the EU eight years fromff itted, and evaluation prior to their authorization, are held generic or biosimilar ther year to a a an Designi atiott n and related ExcEE lusivityii in the EU.UU In the EU, Regulation (EC) No. 141 provides that a Orphrr medicinal product can be designated as an orphan medicinal product by the European Commission if its sponsor can establa ish that: (i) the product is intended forff threatening or chronically debilitating conditions; (ii) either (a) such conditions affeff ct not more than five in 10,000 persons in the EU when the application is made, or (b) the product without the benefitsff ient return in the EU to justify t satisfactory arr EU, or even if such method exists, the product will be of significant benefit to those affected by that condition. derived froff m orphan status, would not generate sufficff he necessary investment in developing the medicinal product; and (iii) there exists no uthorized method of diagnosis, prevention, or treatment of the condition that has been authorized in the the diagnosis, prevention or treatment of life-ff ff r a n medicinal products are entitled to a ten-year period of market Upon grant of a marketing authorization, orpha exclusivity for the approved therapea utic indication, which means that the EMA cannot accept another marketing a similar product and the European Commission authorization appl cannot grant a marketing authorization forff a period of ten years. The period of market exclusivity is extended by two years forff rr orpha period of market exclusivity may, however, be reducd ed to six years if, at the end of the fifff thff that the product no longer meets the criteria on the basis of which it received orphan medicinal product destination. n medicinal products that have also complied with an agreed PIP. The ication or accept an application to extend forff the same indication forff year, it is established i rizaii tion Obligat iott ns in the EU. Where an MA is granted in relation to a medicinal product in the EU, Post-Att uthott the holder of the MA is required to comply with a range of regulatory r marketing, promotion and sale of medicinal products. Similar to the U.S., both MA holders and manufact medicinal products are subject to comprehensive regulatory orr or the competent regulatory arr and maintain a pharmacovigilance system and appoint an individual qualifieff d person forff responsible for oversight of that system. Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safetff y upda uthorities of the individual EU Member States. The holder of an MA must establish versight by the EMA, the European Commission and/ pharmacovigilance who is icable to the manufacff te reports (PSURs). equirements appl urt ers of u a rr ff turing, 19 In the EU, the advertising and promotion of medicinal products are subject to both EU and EU Member States’ laws governing promotion of medicinal products, interactions with physicians and other healthcare professionals, misleading and comparative advertising and unfaiff promotion of medicinal products, such as direct-to-consumer advertising of prescription medicinal products are establa ished in EU law. However, the details are governed by regulations in individual EU Member States and can differ froff m one country to another. r commercial practices. General requirements forff advertising and y Fr red to as Brexit, has changed the regulatory r raFF mework in the UK.UU The UK’s withdrawal from the EU on January 31, 2020, Brexiee t aii nd the Regulatll ortt commonly referff and Healthcare products Regulatory Arr and medical devices. Great Britain (England, Scotland and Wales) is now a third country to the EU. Northern Ireland continues to folff gency (MHRA) is now the UK’s standalone regulator for medicinal products elationship between the UK and the EU. The Medicines low the EU regulatory r ulr es. rr rr rr raff mework in relation to clinical trials is governed by the Medicines for Human Use (Clinical The UK regulatory f Trials) Regulations 2004, as amended, which is derived from the CTD, as implemented into UK national law through secondary legislation. In October 2023, the MHRA aRR which enabla es a more streamlined and risk-proportionate approach to initial clinical trial appl and low-risk Phase 3 clinical trial appl nnounced a new Notificff ation Scheme forff ications for Phase 4 ications. a a clinical trials Marketing authorizations in the UK are governed by the Human Medicines Regulations (SI 2012/1916), as amended. This legislation includes procedurd es to prioritize access to new medicines that will benefit patients, including a 150-day assessment route, a rolling review procedure and the International Recognition Procedured s (IRP) which entered into application on January 1, 2024. Since January 1, 2024, the MHRA mRR when reviewing certain types of marketing authorization appl orpha r designation in parallel to the corresponding marketing authorization appl as those in the EU but have been tailored forff n designation forff medicinal products in the UK. Instead, the MHRA rRR eviews applications for orphan ications. There is no pre-marketing authorization the market. ay rely on the IRP ication. The criteria are essentially the same a a s. We have grown to a team of more than 1,400 employees as of December 31, 2023, primarily Human Capital Our EmpEE loyeeo employed in the U.S. Our highly qualified and experienced team, which includes scientists, physicians and profesff our success. We also leverage temporary wrr added appr orkers to provide flexibility for our business needs. During 2023, we oximately 200 new employees to our team. sionals across sales, marketing, manufacff finance and other essential func turing, regulatory,rr a ff tions are critical to We expect to add additional employees in 2024 with a focff us on expanding our research and development organization. We continually evaluate our business needs and opportunities and balance in-house with external expertise and capacity. Currently, we rely on third-party contract manufact urt ers. ff re.ee The success of our human capital management investments is evidenced by our low employee Our CulCC tull turnover, a number which is regularly reviewed by our Board of Directors as part of their oversight of our human capital strategy. In recognition of our effoff BiopharmaTM. rts, in 2023, we were ranked #8 in Fortune Best Workplk aces in alTT enll t Developmll ent & Benefie tsii ee Engagement, Ttt Emplm oyll our continued abia lity to attract and retain highly skilled employees. We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development programs that enabla e continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives, including healthcare, retirement planning and paid time off.ff As part of our promotion and retention efforts, we also invest in ongoing leadership development programs as well as offerff employee surveys to gauge employee engagement and identify aff . We believe that our future success largely depends upon tuition reimbursement. In addition, we regularly conduct reas of focus. lusion. Much of our success is rooted in the diversity of our teams and our commitment to inclusion. Diversirr tyii & IncII We value diversity at all levels and continue to focus on extending our diversity and inclusion initiatives across our entire workforff ce. We believe that our business benefitff s froff m the different perspectives a diverse workforce brings, and we pride ourselves on having a strong, inclusive and positive culture based on our shared mission and values. 20 Corporate Inforff mation We were originally incorporated in Califorff nia in January 1992 and reincorpor principal executive offices are located at 12780 El Camino Real, San Diego, California 92130. Our telephone number is (858) 617-7600. ated in Delaware in May 1996. Our rr Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at www.neurocrine.com, as soon as reasonabla y practicable afteff r such reports are availabla e on the Securities and Exchange Commission (SEC) website at www.sec.gov. Additionally, copies of our Annual Report will be made availabla e, free of charge, upon accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K. written request. Inforff mation found on, or u ff lowing information sets forff srr Item 1A. Riskii Factortt th risk factors that could cause our actuat The folff contained in forff ward-looking statements we have made in this Annual Report on Form 10-K and those we may make from time to time. If any of the following risks actuat financial condition could be harmed. Additional risks not presently known to us, or that we currently deem immaterial, may also affeff ct our business operations. lly occur, our business, operating results, prospects or l results to differ materially from those Summary Risk Factors We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with our business include: • We may not be able to continue to successfulff ly commercialize INGREZZA or any of our other products, or any of our product candidates if they are approved in the future. • • • If physicians and patients do not continue to accept INGREZZA or do not accept any of our other products, or our sales and marketing efforts are not effeff ctive, we may not generate sufficient revenue. Enacted healthcare reforff m, drugr Inflation Reducd tion Act of 2022, could adversely affect our business. pricing measures and other recent legislative initiatives, including the Our business could be adversely affected by the effects of health pandemics or epidemics, which could also cause significant disrupt (CROs), or other third parties upon whom we rely. ion in the operations of third-party manufact urt ers, contract research organizations r ff • We facff e intense competition, and if we are unabla e to compete effeff ctively, the demand forff our products may be reduced. • • Because the development of our product candidates is subject to a substantial degree of technological uncertainty, we may not succeed in developing any of our product candidates. l to demonstrate the safety and efficacy Our clinical trials may be delayed for safetff y or other reasons, or faiff a ppr of our product candidates, which could prevent or significantly delay their regulatory arr oval. • We depend on our current collaborators forff the development and commercialization of several of our products and product candidates and may need to enter into futff urt e collabor commercialize certain of our product candidates. a ations to develop and • Use of our approved products or those of our collabor events. a ators could be associated with side effeff cts or adverse • We have increased the size of our organization and will need to continue to increase the size of our organization. We may encounter difficulties with managing our growth, which could adversely affect our results of operations. • If we are unabla e to retain and recruir executives discontinues his or her employment with us, it may delay our development efforts or impact our commercialization of INGREZZA or any of our other products, or any product candidate approved by the FDA in the future. t qualified scientists and other employees or if any of our key senior 21 • We currently have no manufact urt ers of INGREZZA or any of our other products, or any of our producd t candidates faiff l to devote suffiff cient time and resources to our concerns, or if their performance is subsu tandard, our clinical trials and product introductions may be delayed, and our costs may rise. ing capabilities. If third-party manufact urt ff ff • We currently depend on a limited number of third-party suppl iers. The loss of these suppliers, or delays or y of INGREZZA or any of our other products, could materially and adversely affect u problems in the suppl our ability to successfulff u ly commercialize INGREZZA or any of our other products. • We license some of our core technologies and drug candidates froff m third parties. If we default on any of our obligations under those licenses, or violate the terms of these licenses, we could lose our rights to those technologies and drug candidates or be forff ced to pay damages. • • • If we are unabla e to protect our intellectuat based on our discoveries, which may reducd e demand forff our products. l property, our competitors could develop and market products Government and third-party payors may impose sales and pharmaceutical pricing controls on our products, or limit coverage and/or reimbursement for our products or impose policies and/or make decisions that regarding the statust of our products that could limit our product revenues and delay sustained profitaff bia lity. Our indebtedness could expose us to risks that could adversely affect our business, financial condition and results of operations. • We have a history of losses and expect to increase our expenses for the foreseeable future, and we may not be able to sustain profitabia lity. • Our customers are concentrated and therefore the loss of a significant customer may harm our business. • We may need additional capital in the futff urt e. If we cannot raise additional fundi ff ng, we may be unabla e to fund our business plan and our future research, development, commercial and manufact ff urt ing efforts. Risks Related to Our Company We may na ll o ctt our product candiddd atdd estt ot be able t ontinue to successfulff a if they are appr oved in the futff ure. lyll commercializll e INGR EZR ZAZZ II or any on f oo ur othett fo r products,tt or any on ly commercialize INGREZZA and secure adequate third-party reimbursement. Our experience Our abia lity to produce INGREZZA revenues consistent with expectations ultimately depends on our ability to continue to successfulff in marketing and selling pharmaceutical products began with INGREZZA’s approval in 2017, when we hired our sales forff ce and established our distribution and reimbursement capabilities, all of which are necessary to successfulff ly commercialize our current and futff urt e products. We have continued to invest in our commercial infrastructurt e and distribution capabilities, including the expansion of our specialty sales forff ce, which we announced in the third quarter of 2021 and completed in April 2022. While our team members and consultants have experience marketing and selling pharmaceutical products, we may face difficulties related to managing the rapid growth of our personnel and infrastructurt e, and there can be no guarantee that we will be able to maintain the personnel, systems, ly commercialize INGREZZA or any of our other arrangements and capaa bia lities necessary to continue to successfulff products, or any product candidate approved by the FDA, or equivalent foreign authorities, in the futff urt e. In addition, our business has been and may continue to be adversely affected by the effects of health pandemics or epidemics. In parts of the country, some hospitals, community mental health facilities, and other healthcare facff continue to have policies that limit access of our sales representatives, medical affaff facilities. In addition, many healthcare practitioners have adopted telehealth for patient interactions, which may impact the abia lity of the healthcare practitioner to screen forff with Huntington's disease. ilities irs personnel and patients to such and diagnose tardive dyskinesia or chorea associated 22 If phff our salesll ysh icians and patiett nts dtt and markerr tingii effoff o ndd ot contintt ue to accept INGII REGG ZZEE A oZZ r do ndd ot accept any of our other products,tt or rts att re not effee ctivtt e, we may na ot generate suffiu cient revenue.ee The commercial success of INGREZZA or any of our other products will depend upon the acceptance of those products as safe and effective by the medical community and patients. The market acceptance of INGREZZA or any of our other products could be affected by a number of fact including: ff ors, • • • • • • • the timing of receipt of marketing appr a ovals for additional indications; the safety and efficacy of the products; the pricing of our products; the availabia lity of healthcare payor coverage and adequate reimbursement for the products; public perception regarding any products we may develop; the success of existing competitor products addressing our target markets or the emergence of equivalent or supeu rior products; and the cost-effectiveness of the products. If the medical community, patients and payors do not continue to accept our products as being safe,ff supeu rior and/or cost-effective, we may not generate sufficff ient revenue. effeff ctive, Government and third-par limit cii overage and/or// stattt us of our products t tt hatt - ty payors mrr reimbursement forff ay impose salesll and pharmaceutical pricing controls oll r impii t could limit our product revenues and delay sa ustained profitff abi our products ott ose policll tt ies and/odd r make decisiii ons regardingii .yy liii tyii n our products ott r the Our abia lity to continue to commercialize INGREZZA successfulff on the extent to which coverage and adequate reimbursement for these products and related treatments will be availabla e. The continuing effoff and the price of prescription drugs through various means may impact our revenues. These payors’ effoff decrease the price that we receive for any products we may develop and sell in the future. rts of government and third-party payors to contain or reducd e the costs of healthcare ly or any of our other products will depend in part rts could Assuming we obtain coverage for a given product by a third-party payor, the resulting reimbursement rates may not be adequate or may require co-payments that patients finff d unacceptabla y high. Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover all or a significant portion of the out- of-pff ocket cost of our products. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more establa ished or lower cost therapeutic alternatives are already availabla e or subsu equently become availabla e regardless of whether they are appr Coverage decisions by payors forff our competitors' products may also impact coverage for our products. oved by the FDA forff that particular use. u a Government authorities and other third-party payors are developing increasingly sophisticated methods of controlling healthcare costs, such as by limiting coverage and the amount of reimbursement for particular medications. Further, no uniform policy requirement for coverage and reimbursement for drug products exists among third-party payors in the U.S. Thereforff e, coverage and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and the use of our products to each payor costly process that will require us to provide scientificff separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the firff st instance. In addition, communications from government offiff cials, media outlets, and others regarding healthcare costs and pharmaceutical pricing could have a negative impact on our stock price, even if such communications do not ultimately impact coverage or reimbursement decisions for our products. and clinical suppor t forff u 23 r es for which the drug is appr uthorities. Moreover, eligibility forff There may also be significant delays in obtaining coverage and reimbursement for newly approved drugs or indications, and coverage may be more limited than the purpos comparable foreign regulatory arr a drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufact sale and distribution. In addition, we could also be subject to amendments in our rebate agreements with pharmaceutical benefit managers that require us to pay larger rebate amounts or modify our formulary prr which could have a material adverse effect on our business. Even if favorable coverage and reimbursement statust attained for one or more products for which we receive regulatory arr oval, less favorable coverage policies and a ppr reimbursement rates may be implemented in the future. For example, government authorities could make a decision that adversely impacts the statust government reimbursement for that product. of one of our products, which could impact the eligibility and/or the amount of coverage and reimbursement does not imply that oved by the FDA or osition, urt e, is a ff turer, we are subjeb ct to various federal statutes and regulations requiring the reporting As a pharmaceutical manufacff of price data and the subsequent provision of concessions to certain purchasers/pa/ yors, including state Medicaid programs. Federal agencies issue guidance to manufacff this guidance has changed and may change or be updated over time. In interpreting these laws, regulations and guidance, manufacff to be updated uponu turers may make reasonabla e assumptions to fill gapsa issuance of additional agency guidance. turers related to the interpretation of laws and regulations, and , and these reasonabla e assumptions may need ly commercialize INGREZZA or any of our other products, or any other product candidate for If coverage and reimbursement are not availabla e or reimbursement is availabla e only to limited levels, we may be unabla e to successfulff which we obtain marketing approval in the future. Our inability to promptly obtain coverage and profitabla e reimbursement rates froff m both government-funded and private payors forff could have a material adverse effect products and our overall financial condition. Further, a majority of our current revenue is derived froff m fedff healthcare program payors, including Medicare and Medicaid. Thus, changes in government reimbursement policies, government negotiation of the price of any of products, reducd tions in payments and/or our suspension or exclusion from participation in fedff oved products that we develop on our operating results, our ability to raise capital needed to commercialize eral healthcare programs could have a material adverse effect on our business. a any appr eral ff Further, during the COVID-19 pandemic, the use of physician telehealth services rapia dly increased, fueff unprecedented expansion of coverage and reimbursement for telehealth services across public and private insurers. The limitations that telehealth places on the abia lity to conduct a thorough physical examination may impact the er patients being diagnosed and/or treated. ability of providers to screen for movement disorders, leading to fewff led by an Outside the United States, reimbursement and healthcare payment systems vary srr ignificantly by country, and many countries have instituted price ceilings on specificff products and therapia es. The EU provides options for EU Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. An EU Member State may approve a specific price for the medicinal product, it may refusff urt er or it may instead adopt a system of direct or indirect controls on the profitabia lity of the company placing the medicinal product on the market. e to reimburse a product at the price set by the manufact ff 24 granted to these medicinal products by the competent authorities of individual EU To obtain reimbursement for our products in some European countries, including some EU Member States, we may be required to compile additional data comparing the cost-effeff ctiveness of our products to other availabla e therapia es. The Health Technology Assessment (HTA) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedurd es in some EU Member States, including those representing the larger markets. The HTA process is the procedurd e to assess therapeutic, economic and societal impact of a given medicinal product in the national healthcare systems of the individual country. The outcome of an HTA will ofteff n influff ence the pricing and reimbursement statust Member States. The extent to which pricing and reimbursement decisions are influff enced by the HTA of the specific medicinal product currently varies between EU Member States. In December 2021, Regulation No 2021/2282 on HTA, amending Directive 2011/24/EU, was adopted in the EU. This regulation, which entered into force in January 2022 will apply as of January 2025. The regulation will permit EU Member States to use common HTA tools, methodologies, and procedurd es across the EU to identify pff cooperation in other areas. Individual EU Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement. If we are unabla e to maintain favff orable pricing and reimbursement statust candidates that we may successfulff revenue from and growth prospects forff in EU Member States for product a ly develop and for which we may obtain regulatory arr ppr those products in the EU could be negatively affected. romising technologies early, and continuing voluntaryrr oval, any anticipated t that the UK has left tff he EU, Regulation No 2021/2282 on HTA will not apply in the UK. In light of the facff However, the MHRA iRR s working with UK HTA bodies and other national organizations, such as the Scottish Medicines Consortium, the National Institute for Health and Care Excellence, and the All-Wales Medicines Strategy Group, to introduce new pathways suppor timely and efficient development of medicinal products. ting innovative approaches to the safe,ff u Legislators, policymakers and healthcare insurance funds in the EU and the UK may continue to propose and implement cost-containing measures to keep healthcare costs down, particularly due to the finff ancial strain that the COVID-19 pandemic has placed on national healthcare systems of European countries. These measures could ly include limitations on the prices we would be abla e to charge forff develop and for which we may obtain regulatory arr a ppr from governmental authorities or third-party payors. Further, an increasing number of EU and other forff eign countries use prices for medicinal products establa ished in other countries as “referff ence prices” to help determine the price of the product in their own territory. Consequently, a downward trend in prices of medicinal products in some countries could contribute to similar downward trends elsewhere. oval or the level of reimbursement availabla e forff product candidates that we may successfulff these products We face intense compem titiii on, and if we are unable t reduced.dd ll o ctt ompem te effeff ctivtt ely,ll the demdd and forff our products mtt ay be The biotechnology and pharmaceutical industries are subju ect to rapia d and intense technological change. We face, will continue to face, competition in the development and marketing of our products and product candidates fromff academic institutions, government agencies, research institutt ions and biotechnology and pharmaceutical companies. ff and Competition may also arise froff m, among other things: • other drugrr development technologies; • methods of preventing or reducd ing the incidence of disease, including vaccines; and • new small molecule or other classes of therapea utic agents. Developments by others (including the development of generic equivalents) may render our product candidates or technologies obsolete or noncompetitive. We are commercializing and performing research on or developing products for the treatment of several disorders roids, classic including endometriosis, tardive dyskinesia, chorea associated with Huntington's disease, uterine fibff congenital adrenal hyperplasia, pain, Parkinson’s disease and other neurology, neuroendocrinology and neuropsychiatry-related diseases and disorders, and there are a number of competitors to our products and product candidates. If one or more of our competitors’ products or programs are successfulff (including the development of generic equivalents), the market for our products may be reducd ed or eliminated. 25 • • • • • • INGREZZA competes with AUSTEDO® (deutetrabenazine), marketed by Teva Pharmaceuticals Industries, for the treatment of tardive dyskinesia in adults and chorea associated with Huntington's disease. A once- ry 2023. Additionally, there are a daily dosing of AUSTEDO (AUSTEDO XR) was introduced in Februar number of commercially availabla e medicines used to treat tardive dyskinesia off-l abel, such as XENAZINE® (tetrabea nazine) and generic equivalents, and various antipsychotic medications (e.g., clozapine), anticholinergics, benzodiazepines (off-lff abel), and botult programs in clinical development by other companies targeting Huntington's disease. inum toxin. In addition, there are several ff ORILISSA and ORIAHNN each compete with several FDA-approved products for the treatment of tility and central precocious puberty. Additionally, there is also endometriosis, uterine fibroids, inferff competition froff m surgical intervention, including hysterectomies and ablations. Separate froff m these options, there are many programs in clinical development which serve as potential futff urt e competition. Lastly, there are numerous medicines used to treat the symptoms of disease (vs. endometriosis or uterine fibroids directly) which may also serve as competition: oral contraceptives, NSAIDs and other pain medications, including opioids. For CAH, high doses of corticosteroids are the current standard of care to both correct the endogenous cortisol deficiency as well as reduce the excessive ACTH levels. In the U.S. alone, there are more than two turing steroid-based products. In addition, there are several programs in clinical dozen companies manufacff development by other companies targeting CAH. potential use in epilepsy may in the futff urt e compete with numerous Our investigational treatments forff approved anti-seizure medications and development-stage programs being pursued by several other companies. Commonly used anti-seizure medications include phenytoin, levetiracetam, brivaracetam, cenobamate, carbar mazepine, clobazam, lamotrigine, valproate, oxcarbar perampanel and cannabia diol, among others. There are currently no FDA-approved treatments specifically indicated forff anti-seizure medications are currently used in these patient populations. the early infantile epileptic encephalopathy SCN8A-DEE; however, a number of diffeff zepine, topiramate, lacosamide, rent Our investigational treatments forff future compete with several development-stage programs being pursued by other companies. Currently, there are no FDA-approved treatments specifically indicated for anhedonia or CIAS; however, there are a rent anti-psychotic medications currently used in these patient populations. number of diffeff potential use in schizophrenia, anhedonia and depression may in the Our investigational treatments forff potential use in neurology, neuroendocrinology and neuropsychiatry may in the futff urt e compete with numerous approved products and development-stage programs being pursued by several other companies. Compared to us, many of our competitors and potential competitors have substantially greater: • • • • • capital resources; sales and marketing experience; research and development resources, including personnel and technology; regulatory err xperience; preclinical studyt and clinical testing experience; • manufacff turing, marketing and distribution experience; and • production facff ilities. Moreover, increased competition in certain disorders or therapia es may make it more diffiff cult for us to recruir enroll patients in our clinical trials for similar disorders or therapies. t or 26 Because thett uncertainty, wyy developmll ent of oo ur product candiddd atdd estt any on e may not succeed in developi ngii is subject to a s . f oo ur product candiddd atdd estt ubstantt ll tt tial degdd ree of to echtt nologio cal Only a small number of research and development programs ultimately result in commercially successfulff r drugs . Potential products that appear to be promising at early stages of development may not reach the market forff of reasons. These reasons include the possibilities that the potential products may: a number • • • • • ff be found ineffeff ctive or cause harmful side effects durd ing preclinical studi t es or clinical trials; faiff a l to receive necessary regulatory arr ppr ovals on a timely basis or at all; be precluded froff m commercialization by proprietary rights of third parties; be diffiff cult to manufacff ture on a large scale; or be uneconomical to commercialize or fail to achieve market acceptance. If any of our product candidates encounters any of these potential problems, we may never successfulff product candidate. ly market that Our clinical trials may ba product candiddd atdd estt e deldd ayll hich could pll ed for safetff y ott r other reasons or faiff revent or signigg fii cantlytt delay ta hett , ws l tii o dtt ir regue latory approval.ll emdd onstratt te the safetff y att nd effiff cacy of our a Before obtaining regulatory arr ppr candidates to extensive preclinical and clinical testing to demonstrate their safety and efficacy for humans. Clinical trials are expensive, time-consuming and may take years to complete and the outcomes are uncertain. the sale of any of our potential products, we must subject these product oval forff In connection with the clinical trials of our product candidates, we face the risks that: • • • • • • • • • • • • the FDA or similar forff eign regulatory arr to initiate human clinical studi authorities may require additional preclinical studi t studi NDA appr es, or additional clinical studi a es for our drugrr oval; t t uthority may not allow an IND or foreign equivalent filings required candidates or the FDA or similar forff eign regulatoryrr t es as a condition of the initiation of Phase 1 clinical es for progression from Phase 1 to Phase 2, or Phase 2 to Phase 3, or for the product candidate may not prove to be effeff ctive or as effective as other competing product candidates; we may discover that a product candidate may cause harmful side effects or results of required toxicology or other studies may not be acceptable to the FDA or similar foreign regulatory arr uthorities; clinical trial results may not replicate the results of previous trials; the FDA or similar forff eign regulatory arr may prove insensitive to treatment effeff cts; uthorities may require use of new or experimental endpoints that we or the FDA or similar foreign regulatory arr uthorities may suspend or vary the trials; the results may not be statistically significant; clinical site initiation or patient recruir tment and enrollment may be slower or more difficult than expected; the FDA or similar forff eign regulatory arr of the U.S.; uthorities may not accept the data from any trial or trial site outside patients may drop out of the trials; unforff eseen disruptu ions or delays may occur, caused by man-made or naturt al disasters or public health pandemics or epidemics or other business interruptu ions, including, for example, the conflicff and Ukraine and the confliff ct in the Middle East; and t between Russia regulatory r rr equirements may change. a These risks and uncertainties impact all of our clinical programs and any of the clinical, regulatory orr events described above could change our planned clinical and regulatory arr between Russia and Ukraine, together with sanctions imposed on Russia, caused us to suspend all planned clinical trial activities in RusRR sia and Ukraine. As a result, our planned clinical development timelines for valbenazine and luvadaxistat were significantly delayed while we identifieff d and operationalized alternative clinical trial sites, which we have now done. Additionally, any of these events described above a obviate any filings for necessary regulatory arr ppr could result in suspension of a program and/or ctivities. For example, the confliff ct r operational ovals. a 27 In addition, late-stage clinical trials are often conducted with patients having the most advanced stages of disease. During the course of treatment, these patients can die or suffeff reasons that may not be related to the pharmaceutical agent being tested but which can nevertheless adversely affect clinical trial conduct, completion and results. Any faiff lure or subsu tantial delay in completing clinical trials for our product candidates may severely harm our business. r other adverse medical effeff cts forff Even if the clinical trials are successfulff ly completed, we cannot guarantee that the FDA or foreign regulatoryrr authorities will interprr et the results as we do, and more trials could be required beforff e we submit our product candidates forff regulatory arr significantly delayed, or we may be required to expend significant additional resources, which may not be availabla e to us, to conduct additional trials in support of potential approval of our product candidates. approval. To the extent that the results of the trials are not satisfactory t a ication, approval of our product candidates may be o the FDA or forff eign t of a marketing appl uthorities forff u suppor rr We depeee nd on our current collabor and product candiddd atdd estt . our product candiddd atdd estt the devedd atortt and may need to enter intii o f s frr orff ll lopmo ent and commercializatiott n of so everal of our productstt tt utff ure collall boratiott ns to developll and commercialize certain of the development and commercialization of several of our products and We depend on our current collaborators forff product candidates and may need to enter into future collabor urt e and commercialization of ORILISSA product candidates. For example, we depend on AbbVie for the manufact and ORIAHNN and forff a commercialization of DYSVAL in Japaa n and for the continued development and commercialization of valbenazine for movement disorders in other select Asian markets. Our additional collabor ators include Xenon Pharmaceuticals, Inc., Idorsia Pharmaceuticals Ltd., Takeda Pharmaceutical Company Limited, Heptares Therapeutics Limited and Voyager Therapea utics, Inc. the continued development of elagolix. We collabor ations to develop and commercialize certain of our ate with MTPC for the a a ff Our current and futff urt e collabor a ations and licenses could subject us to a number of risks, including: • • • • • • • • • • • strategic collabor producd t candidates; a ators may sell, transferff or divest assets or programs related to our partnered product or we may be required to undertake the expenditure of subsu tantial operational, financial and management resources; we may be required to assume subsu tantial actuat l or contingent liabilities; we may not be able to control the amount and timing of resources that our strategic collabor the development or commercialization of our products or product candidates; a ators devote to we may not be able to influence our strategic collabor a ation of our partnered product and product candidates, and as a result, our collabor a collabor may not pursue or prioritize the development and commercialization of those partnered products and product candidates in a manner that is in our best interest; ator’s decisions regarding the development and a ation partners strategic collabor a than if we were doing so; ators may select indications or design clinical trials in a way that may be less successfulff a ators may not conduct collabor strategic collabor funding, terminate a clinical trial or abaa ndon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; ative activities in a timely manner, provide insufficient a strategic collabor a from the strategic collabor programs; a ators may not pursue furff ther development and commercialization of products resulting ation arrangement or may elect to discontinue research and development disagreements or disputes may arise between us and our strategic collabor costly litigation or arbitration that diverts management’s attention and consumes resources; ators that result in delays or in a a a ators may experience financial diffiff culties; ators may not properly maintain, enforce or defenff d our intellectuat strategic collabor strategic collabor l property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; 28 • • ators could terminate the arrangement (in whole or in part) or allow it to expire, we or strategic collabor which would delay the development and commercialization, result in disagreements or disputes or may increase the cost of developing and commercializing our products or product candidates; and a strategic collabor compete with ours. a ators could develop, either alone or with others, products or product candidates that may If any of these issues arise, it may delay and/or negatively impact the development and commercialization of drug candidates and, ultimately, our generation of product revenues. Use of oo ur approved products ott r thott se of our collall boratortt s crr ould be associatedtt withii side effeff cts ott r adverserr events. a a ators could be a ators’ ability to maintain regulatory arr ppr ators may be observed at any time, including afteff a As with most pharmaceutical products, use of our approved products or those of our collabor associated with side effeff cts or adverse events which can vary i n severity (from minor adverse reactions to death) and rr frequency (infrequent or prevalent). Side effects or adverse events associated with the use of our products or those of our collabor side effeff cts or adverse events may negatively impact demand for our or our collabor our collabor associated with the use of our approved products or those of our collabor ators to modify or halt commercialization of these products or expose us to product liabia lity lawsuits which will harm our business. We or our collabor gencies to conduct additional studies regarding the safety and efficff acy of our products which we have not planned or anticipated. Furthermore, there can be no assurance that we or our collabor satisfaction of the FDA or any regulatory arr prospects and financial condition. r a product is commercialized, and reports of any such ators’ products or affeff ct our or such products. Side effects or other safety issues ators could require us or our collabor ators will resolve any issues related to any product related adverse events to the gency in a timely manner or ever, which could harm our business, ators may be required by regulatory arr oval forff a a a a a We license some of our core techtt obligll atiott ns underdd technologio es and drudd g cu andidatestt nologio es and drudd g cu tt hett or be forced to pay damages. those licll enses, or violatll e t terms of to hett se licenses, we could l osll ll e our righi ts to those andidatestt from third parties. If we defae ult oll n any of our l to comply with these obligations, we some of our key technologies. These licenses typically subju ect ation and license agreements allow our licensors to terminate such agreements if we challenge the validity or We are dependent on licenses from third parties forff us to various commercialization, reporting and other obligations. If we faiff could lose important rights. If we were to default on our obligations under any of our licenses, we could lose some or all of our rights to develop, market and sell products covered by these licenses. In addition, several of our collabor a enforceability of certain intellectuat agreement and do not cure such breach within the agreed upon cure period. In addition, if we were to violate any of the terms of our licenses, we could become subju ect to damages. Likewise, if we were to lose our rights under a license to use proprietary research tools, it could adversely affect our existing collabor ability to forff m new collaborations. We also faceff patent protection or lose their rights to the technologies we have licensed, thereby impairing or extinguishing our rights under our licenses with them. l property rights or if we commit a material breach in whole or in part of the the risk that our licensors could, for a number of reasons, lose ations or adversely affect our a 29 We have increased thett i diffi We may ea ncountertt sizeii culties withii managia ngii of our organizatiott n and willii need to contintt ue to increase the size of oo ur organr izatiott n. ly affeff ct our resultsll of operations. our growth,tt which could adverserr r u t our recruir t, maintain and integrate additional ng other aspects of our business, including development and commercialization of our product As of December 31, 2023, we had approximately 1,400 full-time employees. Although we have subsu tantially increased the size of our organization, we may need to add additional qualifieff d personnel and resources, especially with the recent increase in the size of our sales forff ce. Our current infraff structurt e may be inadequate to suppor development and commercialization efforts and expected growth. Futurt e growth will impose significant added responsibilities on our organization, including the need to identify,ff employees and implement and expand managerial, operational and financial systems and may be costly and take time away from runni candidates. For example, we are in the process of implementing a new company-wide enterprise resource planning (ERP) system to streamline certain existing business, operational, and finff ancial processes. This project has required and may continue to require investment of capital and human resources, the re-engineering of processes of our business, and the attention of many employees who would otherwise be focused on other aspects of our business. Any disruptu ions, delays, or deficiencies in the implementation or design of the ERP system could adversely affect the effectiveness of our internal control over finff ancial reporting or our ability to accurately maintain our books and records, provide accurate, timely and reliabla e reports on our financial and operating results, or otherwise operate our business. Any of these consequences could have an adverse effect on our results of operations and finff ancial condition. Our futff urt e finff ancial performance and our ability to commercialize INGREZZA and any of our other products, or any of our product candidates that receive regulatory arr a ppr manage any futff urt e growth effectively. In particular, as we commercialize INGREZZA, we will need to support training and ongoing activities of our sales forff ce and will likely need to continue to expand the size of our employee base for managerial, operational, financial and other resources. To that end, we must be able to successfulff oval in the future, will partially depend on our ability to the ly: u • manage our development efforts effectively; • • • • integrate additional management, administrative and manufact ff urt ing personnel; furff ther develop our marketing and sales organization; compensate our employees on adequate terms in an increasingly competitive, inflationary market; attract and retain personnel; and • maintain suffiff cient administrative, accounting and management information systems and controls. We may not be able to accomplish these tasks or successfulff achieve our research, development and commercialization goals. Our failure to accomplish any of these goals could harm our financial results and prospects. ly manage our operations and, accordingly, may not ll o rtt etaitt n aii If we are unable t executives discii ontinues his or her employmo commercializaii or any on in the futff ure. tion of INGRNN EZRR ZAZZ nd recruit qii ualifieff d scientistii s att ent with utt f oo ur othett nd othett o r employees rts ott dd s, it may da our devel a ppr roduct candiddd atdd e att r products,tt or any pn or if any on ent effoe enior f oo ur key se r impii act our oved by the FDAFF eldd ayll opmll We are highly dependent on the principal members of our management, commercial and scientificff any of these people could impede the achievement of our objectives, including the successfulff INGREZZA or any of our other products, or any product candidate approved by the FDA in the future. Furthermore, recruirr ting and retaining qualifieff d scientificff personnel to perform research and development work in the future, along with personnel with experience marketing and selling pharmaceutical products, is critical to our success. We may be unabla e to attract and retain personnel on acceptabla e terms given the competition among biotechnology, pharmaceutical and healthcare companies, universities and non-profitff and individuals with experience marketing and selling pharmaceutical products. We may face particular retention challenges in light of the recent rapid growth in our personnel and infrastructurt e and the perceived impact of those changes uponu formulating our research and development strategy and our commercialization strategy. Our consultants may have commitments to, or advisory or consulting agreements with, other entities that may limit their availabia lity to us. our corporate culture. In addition, we rely on a significant number of consultants to assist us in staff.ff The loss of commercialization of research institutions for experienced scientists 30 r products,tt or any on We currentlytt have no manufau cturing capabilitii othett their pii .ee riseii f oo ur product candidatestt erfor rmance is substandardd d, our clinical trials and product introductiott ns may ba iett s. If third-par - fail to devote suffiu cient time turers of INGRNN EZR ZAZZ ty manufacff tt or any on f oo ur and resources to our concerns, os r ifi ed, add nd our costs maya e deldd ayll ff ff urt urt urt ers to produce the drugr ing products for commercial purpos es and do not currently have any manufact the commercialization of our products. We have limited experience We have in the past utilized, and intend to continue to utilize, third-party manufact compounds we use in our clinical trials and forff r in manufact ff Establa ishing internal commercial manufact ing capabilities would require significant time and resources, and we ly establa ish such capabilities. Consequently, we depend on, and will continue may not be able to timely or successfulff to depend on, several contract manufact all production of products for development and commercial urt ers forff purposes, including INGREZZA. If we are unabla e to obtain or retain third-party manufact to develop or commercialize our products, including INGREZZA. The manufact and commercial purpos Manufact foreign regulations relating to manufact regulatory r rr following risks: ing Practice regulations. Our third-party manufacff ff turers might not comply with FDA or equivalent es or other es is subju ect to specific FDA and equivalent foreign regulations, including current Good equirements now or in the futff urt e. Our reliance on contract manufact ing our products for clinical trials and commercial purpos urt e of our products for clinical trials urt ers also exposes us to the urt ers, we will not be able ff ing faci lities. urt urt urt ff r ff ff ff rr ff ff • • • • turers may encounter difficulties in achieving volume production, quality control or contract manufacff quality assurance, and also may experience shortages in qualified personnel or materials and ingredients necessary to conduct their operations. As a result, our contract manufact clinical schedules or adequately manufact urt e our products in commercial quantities when required; urt ers might not be able to meet our ff ff switching manufact be difficult or impossible forff ff our contract manufacff business forff urt ers may be difficult because the number of potential manufact ff urt ers is limited. It may turer quickly on acceptabla e terms, or at all; us to find a replacement manufacff t turers may not perform as agreed or may not remain in the contract manufact uri ff ng the time required to successfulff ly produce, store or distribute our products; and turers are subject to ongoing periodic unannounced inspection by the FDA, the U.S. Drug drug manufacff Enforcement Administration, equivalent foreign regulatory arr compliance with cGMP and other government regulations and corresponding foreign standards. We do not have control over third-party manufacff turers’ compliance with these regulations and standards. uthorities, and other agencies to ensure strict Our current dependence upon ture of our products may reducd e our profitff margin, if any, on the sale of INGREZZA or any of our other products, or our future products and our ability to develop and deliver products on a timely and competitive basis. third parties forff the manufacff u We currentlytt depeee nd on a limi problemll abilityii ll suppu ly of INGRNN EZR ZAZZ II ii hett to successfulff teii d number of to hitt or any on commercializll e INGR s in t lyll EZR ZAZZ -pdd arty supplu rdii f oo ur othett iell rs. The losll r products,tt could mll f oo ur othett r products.tt s of to hett atertt or any on iell rs, or delaysa se supplu ially and adverserr ly affeff ct our or ff turers of pharmaceutical products may encounter difficulties in production, such as product and packaging in suffiff cient quantities while meeting detailed product specifications on a urt e of pharmaceutical products requires significant expertise and capital investment, including the The manufact development of process controls required to consistently produce the active pharmaceutical ingredients (API), the finished drugr repeated basis. Manufacff difficulties with production costs and yields, process controls, quality control and quality assurance, including testing of stabia lity, impurities and impurity levels and other product specifications by validated test methods, compliance with strictly enforced U.S., state and non-U.S. regulations, and disrupt made or natural disasters, pandemics or epidemics, or other business interruptu ions. We depend on a limited number u of suppl INGREZZA encounter these or any other manufact meet commercial demand forff commercialize INGREZZA. ing, quality or compliance diffiff culties, we may be unabla e to ly INGREZZA, which could materially and adversely affect our ability to successfulff iers for the production and packaging of INGREZZA and its API. If our third-party suppliers for ions or delays caused by man- urt ff r 31 a u ove manufact iers fail or refuse to supplu y us with INGREZZA or its API forff In addition, if our suppl significant amount of time and expense to qualify aff authorities must appr materials used in pharmaceutical products. The loss of a supplier could require us to obtain regulatory crr to incur validation and other costs associated with the transfer of the API or product manufact there are delays in qualifyiff ng new suppliers or facilities or if a new suppl foreign regulatory arr materially and adversely affect our ability to successfulff ier is unabla e to meet FDA or a similar approval, there could be a shortage of INGREZZA, which could urt ers of the active and inactive pharmaceutical ingredients and certain packaging learance and new supplier. The FDA and similar forff eign regulatoryrr ly commercialize INGREZZA. uthority’s requirements forff any reason, it would take a ing processes. If urt u ff ff The indii clinll epdd endent clinll ical investigtt atortt s arr ical trials may na ot be diliii gei nt, ctt arefulff nd contratt or timeii ct research organr ly, oyy r may make mistakes in t ii hett conduct of oo ur trials. izatiott ns that we rely upon to conduct our We depend on independent clinical investigators and CROs to conduct our clinical trials under their agreements with us. The investigators are not our employees, and we cannot control the amount or timing of resources that they l to devote suffiff cient time and resources to our drugrr devote to our programs. If our independent investigators faiff development programs, or if their performance is subsu tandard, or not in compliance with GCPs, it may delay or prevent the approval of our regulatory applications and our introducd tion of new treatments. The CROs we contract with for execution of our clinical trials play a significant role in the conduct of the trials and the subsu equent collection and analysis of data. Failure of the CROs to meet their obligations could adversely affect clinical development of our products. Moreover, these independent investigators and CROs may also have relationships with other commercial entities, some of which may compete with us. If independent investigators and CROs assist our competitors at our expense, it could harm our competitive position. We are subjeb ct to ongoing obligll atiott ns and continued regulatll ortt product candiddd atdd estt restritt ctiott ns. oved, cdd ould be subject to labeling and othett a , is f ai y rr ppr eview for INGR EZR ZAZZ II r . Additioii nally, oyy ur othett r post-marketintt g requireii ments att nd ovals for any of our product candidates may be subju ect to limitations on the appr Regulatory arr a ppr for which the product may be marketed or to the conditions of approval, or contain requirements forff costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, with respect to INGREZZA, and any product candidate that the FDA or a comparable foreign regulatory arr adverse event reporting, storage, advertising, promotion and recordkeeping forff extensive and ongoing regulatory r issions of safety and other post- marketing inforff mation and reports, registration, as well as continued compliance with GCPs for any clinical trials that we conduct post-approval. Failure to comply with these ongoing regulatory r previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacff ing processes, may result in, among other things: equirements. These requirements include submu oved indicated uses potentially equirements, or later discovery of uthority approves, the manufact the product will be subju ect to ling, packaging, distribution, ing processes, labea turers or manufact urt urt a ff rr ff rr • • • • • • restrictions on the marketing or manufact urt the product froff m the market, or voluntary orr ff ing of the product, changes in the product’s label, withdrawal of r mandatory product recalls; finff es, warning or untitled letters or holds on clinical trials; refusff to approved appl a al by the FDA or similar forff eign regulatory arr uthorities to appr a ove pending applications or suppl u ements ications filed by us, or suspension or revocation of product license approvals; adverse inspection finff dings or other activities that temporarily delay manufact products; ff urt e and distribution of our product seizure or detention, or refusal to permit the import or export of products; and product injunctions or the imposition of civil or criminal penalties. The occurrence of any of these events may adversely affect our business, prospects and ability to achieve or sustain profitaff bia lity on a sustained basis. 32 If the markerr expexx ctedtt t oppor o tunitiii es for our products att nd product candiddd atdd estt are smaller thatt n we beliell ve they are, our revenues may be adverserr ly affeff ctedtt , add nd our business may suffeu r. Certain of the diseases that INGREZZA, crinecerfont, and our other product candidates are being developed to address are in underserved and underdiagnosed populations. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who will seek treatment utilizing our products or product candidates, may not be accurate. If our estimates of the prevalence or number of patients potentially on therapy prove to be inaccurate, the market opportunities for INGREZZA, crinecerfont, and our other product candidates may be smaller than we believe they are, our prospects forff affeff cted and our business may suffer. generating expected revenue may be adversely Because our operatingii results may va ary sr ignigg fii cantlytt in future periods, os ur stoctt k price may da ecldd inll e. te to te, forff among other reasons, dued tions in our effeff ctive tax rate, and disrupt tion Reducd tion Act, our achievement of product development objectives and milestones, clinical trial enrollment Our quarterly revenues, expenses and operating results have fluctuated in the past and are likely to fluff ctuat significantly in the futff urt e. Our finff ancial results are unpredictabla e and may fluff ctuat seasonality and timing of customer purchases and commercial sales of INGREZZA, royalties froff m out-licensed products, the impact of Medicare Part D coverage, including redesign of the Part D benefit enacted as part of the Inflaff and expenses, research and development expenses and the timing and nature of contract manufact research payments, fluff ctuat public health pandemics or epidemics or other business interruptu ions, including, for example, the conflicff t between Russia and Ukraine, or in the Middle East. Because a majority of our costs are predetermined on an annual basis, due in part to our significant research and development costs, small declines in revenue could disproportionately affeff ct financial results in a quarter. Thus, our future operating results and profitabia lity may fluff ctuat period, and even if we become profitaff bla e on a quarterly or annual basis, we may not be able to sustain or increase our profitff ability. Moreover, as our company and our market capia talization have grown, our financial performance has become increasingly subject to quarterly and annual comparisons with the expectations of securities analysts or lure of our financial results to meet these expectations, either in a single quarterly or annual period investors. The faiff over a sustained period time, could cause our stock price to decline. ions caused by man-made or naturt al disasters or te from period to ing, contract urt rr ff ebdd tedness could expos xx Our indii of operations. e us to rtt isks that could all dverserr ly affeff ct our business, finaii ncial conditioii n and resultstt In May 2017, we sold $517.5 million aggregate principal amount of the 2024 Notes. In 2020, we entered into separate, privately negotiated transactions with certain holders of the 2024 Notes to repurchase $136.2 million aggregate principal amount of the 2024 Notes forff we entered into separate, privately negotiated transactions with certain holders of the 2024 Notes to repurchase an aggregate repurchase price of $279.0 million in $210.8 million aggregate principal amount of the 2024 Notes forff cash. As of December 31, 2023, $170.4 million aggregate principal amount of the 2024 Notes remained outstanding. We may also incur additional indebtedness to meet future financing needs. an aggregate repurchase price of $186.9 million in cash. In 2022, ff Our business may not generate sufficient funds reserves, to pay amounts dued any futff urt e indebtedness that we may incur may contain finff ancial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in defauff indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full. under the 2024 Notes and any additional indebtedness that we may incur. In addition, , and we may otherwise be unabla e to maintain suffiff cient cash lt under that We have a history of losses and expexx ct to increase our expe able t ustain profitff abi ll o stt litii y.tt ee tt nses for thett foreseeable f ll utff ure, and we may not be Since our inception, we have incurred significant net losses and negative cash floff w froff m operations. As of December 31, 2023, we had an accumulated deficit of $157.1 million as a result of historical operating losses. 33 INGREZZA for tardive dyskinesia in April 2017 and forff We received FDA approval forff Huntington's disease in August 2023. Our partner AbbVie received FDA appr in July 2018 and forff ORIAHNN for uterine fibroids in May 2020. Additionally, our partner MTPC received Japaa nese Ministry of Health, Labour and Welfare approval forff DYSVAL for the treatment of tardive dyskinesia in ovals for any other product candidates. Even if we a March 2022. However, we have not yet obtained regulatory arr ppr continue to succeed in commercializing INGREZZA, or are successfulff our other product candidates, we may not be able to sustain profitabia lity. We also expect to continue to incur significant operating and capital expenditures as we: in developing and commercializing any of oval forff ORILISSA for endometriosis chorea associated with a • • • • • • commercialize INGREZZA for tardive dyskinesia and chorea associated with Huntington's disease; a seek regulatory arr ppr ovals for our product candidates or forff additional indications for our current products; develop, formulate, manufacff ture and commercialize our product candidates; in-license or acquire new product development opportunities; implement additional internal systems and infraff structurt e; and hire additional clinical, scientificff , sales and marketing personnel. We expect to increase our expenses and other investments in the coming years as we fund expenditures. Thus, our future operating results and profitabia lity may fluff ctuat factors described above, and we will need to generate significant revenues to achieve and maintain profitabia lity and positive cash floff w on a sustained basis. We may not be able to generate these revenues, and we may never achieve profitaff bia lity on a sustained basis in the futff urt e. Our faiff lure to maintain or increase profitabia lity on a sustained basis could negatively impact the market price of our common stock. te from period to period dued our operations and capital to the ff Changes in t effeff ct on our business, cash flowll laws or regue axtt ii s, finaii ncial conditioii n or resultsll of operations. lations that are appl a iell d adverserr ly to us or our customers may ha ave a material adverserr Effeff ctive January 1, 2022, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017 eliminated the option to deducd t research and development expenses for tax purpos requires taxpayers to capia talize and subsu equently amortize such expenses over fivff e years forff conducted in the U.S. and over 15 years for research activities conducted outside the U.S. Unless the U.S. Department of the Treasury i research and development expenses or the provision is deferred, modified, or repealed by Congress, we expect a material decrease in our cash flows froff m operations and an offseff red tax assets over these amortization periods. The actual impact of this provision will depend on multiple factors, including the amount of research and development expenses we will incur and whether we conduct our research and development activities inside or outside the U.S. ssues regulations that narrow the application of this provision to a smaller subset of our tting similarly sized increase in our net deferff es in the year incurred and research activities rr r In addition, new income, sales, use, excise or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business and financial condition. Further, existing tax laws, statutt es, rulr es, regulations or ordinances could be interprr eted, modified or applied adversely to us. For example, the Tax Cuts and Jobs Act of 2017, the Coronavirus Aid, Relief, and Economic Security Act and the Inflaff Act enacted many significant changes to the U.S. tax laws. Future guidance froff m the Internal Revenue Service and other tax authorities with respect to such legislation may affeff ct us, and certain aspects of such legislation could be repealed or modified in future legislation. Furthermore, it is uncertain if and to what extent various states will conforff m to fedff tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. eral tax laws. Future tax reforff m legislation could have a material impact on the value of our deferred tion Reducd tion Our abilityii to use taxtt attrtt ibutestt may ba ll e limit .dd edtt r Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corpor “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corpor development tax credits to offset its post-change income or taxes may be limited. Based on completed Section 382 analysis done annually, we do not believe we have experienced any previous ownership changes, but the determination is complex and there can be no assurance we are correct. Furthermore, we may experience ownership changes in the future as a result of subsequent shiftsff control. ation’s abia lity to use certain pre-change federal tax attributes such as research and in our stock ownership, some of which may be outside of our ation undergoes an r 34 Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes, including net operating loss (NOL) carryforwards. In addition, at the state level, there may be periods during which the use of NOLs or credits is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, we may be unabla e to use all or a material portion of our NOLs, research and development credits, and other tax attributes, which could adversely affect our future cash flows. ctivtt e taxtt Our effee amounts.tt rate may fa luff ctuate, ae nd we may ia ncii ur obligll atiott ns in tax jaa urisdictiott ns in excess of ao ccrued ff ive tax rate is derived froff m a combination of appl icable tax rates in the various places that we operate. In Our effect a preparing our financial statements, we estimate the amount of tax that will become payabla e in each such place. Nevertheless, our effeff ctive tax rate may be diffeff to numerous factors, including the impact of stock-based compensation, changes in the mix of our profitaff bia lity from jurisdiction to jurisdiction, the results of examinations and audits of our tax filff ings, our inability to secure or sustain acceptabla e agreements with tax authorities, changes in accounting forff experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements. The price of our common stock is volatile.ee income taxes and changes in tax laws. Any of these fact rent than experienced in the past dued ors could cause us to ff securities of biotechnology and pharmaceutical companies historically have been highly these securities has from time to time experienced significant price and volume The market prices forff volatile, and the market forff fluctuations that are unrelated to the operating performance of particular companies. The COVID-19 pandemic, for example, negatively affected the stock market and investor sentiment and resulted in significant volatility, as has the applicability of the Medicare drug price negotiation provisions in the Inflaff especially as we and our market capitalization have grown, the price of our common stock has been increasingly affeff cted by quarterly and annual comparisons with the valuations and recommendations of the analysts who cover our business. If our results do not meet these analysts’ forecasts, the expectations of our investors or the financial guidance we provide to investors in any period, which is based on assumptions that may be incorrect or that may change from quarter to quarter, the market price of our common stock could decline. Over the course of the last 12 months, the price of our common stock has ranged froff m appr a share. oximately $89 per share to approximately $143 per tion Reducd tion Act. Furthermore, The market price of our common stock may fluff ctuat te in response to many fact ff ors, including: • • • • • • • • • • • • • • • • sales of INGREZZA and our other products; the results of our clinical trials; reports of safety issues related to INGREZZA, ORILISSA, ORIAHNN, DYSVAL, or any of our other products; developments concerning new and existing collabor a ation agreements; announcements of technological innovations or new therapea utic products by us or others, including our competitors; general economic and market conditions, including economic and market conditions affeff cting the biotechnology industry;rr developments in patent or other proprietary rights; developments related to the FDA, CMS and foreign regulatory arr gencies; government regulation, including the Inflaff tion Reducd tion Act; futff urt e sales of our common stock by us or our stockholders; comments by securities analysts; additions or departurt es of key personnel; tions in our operating results; fluff ctuat potential litigation matters; government and third-party payor coverage and reimbursement; faiff lure of any of our product candidates, if approved, to achieve commercial success; 35 • • disruptu ions caused by man-made or natural disasters, pandemics or epidemics or other business interruptu ions, including, for example, the COVID-19 pandemic and the conflicff Ukraine; and t between Russia and public concern as to the safety of our drugs r . In addition, we are a member of the S&P MidCap 400 index. If we cease to be represented in the S&P MidCap 400 index, or other indexes or indexed products, as a result of our market capitalization falff inclusion in the index, certain institutional shareholders may, due to their internal policies and investment guidelines, be required to sell their shareholdings. Such sales may result in furff when combined with reduced trading volume and liquidity, could adversely affect the value of your investment and your ability to sell your shares. ther negative pressure on our stock price and, ling below the threshold forff Our customers are concentratt ted and thereforff e thett loss of a signigg fii cant customtt er may ha rr arm o ur busineii ss. the distribution of INGREZZA with a limited number of specialty pharmacy We have entered into agreements forff providers and distributors, and all of our product sales of INGREZZA are to these customers. Four of these customers represented approximately 91% of our total product sales for 2023 and appr oximately 98% of our accounts receivabla e balance as of December 31, 2023. If any of these significant customers becomes subject to cy, is unabla e to pay us for our products or is acquired by a company that wants to terminate the relationship r bankrupt with us, or if we otherwise lose any of these significant customers, our revenue, results of operations and cash floff ws would be adversely affected. Even if we replace the loss of a significant customer, we cannot predict with certainty that such transition would not result in a decline in our revenue, results of operations and cash floff ws. a We may na our business plan and our futff ure research, developmo eed additioii nal capitaii future. Iee ii hett l in t f wII e cannot raiseii additioii nal fund ff ent, commercial and manufacff indd g, we may ba effoff turingii e unable t rts.tt ff ll o f tt und Our futff urt e fundi our business plan and our future research, development, commercial and manufact ng requirements will depend on many factors and we may need to raise additional capital to fund ing efforts. urt ff ff ff Our futff urt e capital requirements will depend on many factors, including: • • • • • • • • • • • • • • the commercial success of INGREZZA, ORILISSA, ORIAHNN, DYSVAL, and/or any of our other products; debt services obligations on the 2024 Notes; continued scientific progress in our R&D and clinical development programs; the magnitude and complexity of our research and development programs; progress with preclinical testing and clinical trials; a the time and costs involved in obtaining regulatory arr ppr ovals; the cost involved in filff ing and pursuing patent appl interference proceedings or other patent litigation; a ications, enforff cing patent claims, or engaging in costs associated with securing adequate coverage and reimbursement for our products; competing technological and market developments; developments related to any future litigation; the cost of commercialization activities and arrangements, including advertising campaigns; the cost of manufacff turing our product candidates; the impact of the COVID-19 pandemic or a futff urt e pandemic or epidemic on our business; and the cost of any strategic alliances, collabor a ations, product in-licensing, or acquisitions. ding through strategic alliances and may seek additional fundi We intend to seek additional funff ng through public or private sales of our securities, including equity securities. In addition, during the second quarter of 2017, we issued the 2024 Notes and we have previously financed capital purchases and may continue to pursue opportunities to obtain additional debt finff ancing in the futff urt e. In 2020, we entered into separate, privately negotiated transactions with certain holders of the 2024 Notes to repurchase $136.2 million aggregate principal amount of the 2024 Notes for an aggregate repurchase price of $186.9 million in cash. In 2022, we entered into separate, privately negotiated transactions with certain holders of the 2024 Notes to repurchase $210.8 million aggregate principal amount of the ff 36 an aggregate repurchase price of $279.0 million in cash. As of December 31, 2023, $170.4 million 2024 Notes forff aggregate principal amount of the 2024 Notes remained outstanding. Additional equity or debt financing might not be availabla e on reasonabla e terms, if at all. Any additional equity financings will be dilutive to our stockholders and any additional debt finff ancings may involve operating covenants that restrict our business. Compliance with ctt expexx nses. hanging regulatll iott n of co rr orpor ate gtt overnance and publicll discii losure may ra esult ill n aii dditioii nal r ate governance and public disclosure, including the Changing laws, regulations and standards relating to corpor Dodd-Frank Wall Street Reforff m and Consumer Protection Act, new SEC regulations and Nasdaq rulr es, are creating uncertainty for companies such as ours. These laws, regulations and standards are subju ect to varying interprr etations in some cases due to their lack of specificity, and as a result, their appl new guidance is provided by regulatory arr regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance ate governance and public disclosure. As a practices. We are committed to maintaining high standards of corpor result, our effoff rts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased selling, general and administrative expenses and management time related to compliance activities. If we fail to comply with these laws, regulations and standards, our reputation may be harmed and we might be subju ect to sanctions or investigation by regulatory arr could adversely affect our financial results and the market price of our common stock. nd governing bodies, which could result in continuing uncertainty uthorities, such as the SEC. Any such action ication in practice may evolve over time as a r Increasingii use of so ocial mediadd could gll ive rise to l tt iall bilitii y att nd result in harm to our business. a our products or business, or any inadvertent disclosure of material, nonpublic rts to monitor social media communications, there is risk that the unauthorized use of social media by our Our employees are increasingly utilizing social media tools and our website as a means of communication. Despite our effoff employees to communicate about information through these means, may result in violations of applicable laws and regulations, which may give rise to liability and result in harm to our business. In addition, there is also risk of inappr opriate disclosure of sensitive information, which could result in significant legal and finff ancial exposure and reputational damages that could potentially have a material adverse impact on our business, financial condition and results of operations. Furthermore, negative posts or comments about reputation, brand image and goodwill. us or our products on social media could seriously damage our a a We may ba their fii orff merr r employeo rs. e subjeb ct to claill msii that we or our employeeo s have wrongfugg lly used or discii fo losed allegee d tratt de secrets ott As is commonplace in the biotechnology industry,rr we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successfulff could result in substantial costs and be a distraction to management. in defending against these claims, litigation 37 Our business could be adverserr signi ificff ant disdd ruptu iott n in t rely.yy ii hett ly affeff ctedtt by the effee operations of third-pa- ealth ptt cts ott rty mtt f ho anufacff andemics or epiee demics, which could alsoll r thitt turers, CROs, or othett parties uponu cause whom we rdii ff rr u ions that could severely impact our suppl urt ers, CROs and other third parties upon all employees except certain key essential members involved Our business could be adversely affected by the effects of health pandemics or epidemics, which could also cause whom we significant disruptu ion in the operations of third-party manufact u rely. As a result, we may experience disrupt y chain, ongoing and futff urt e clinical trials and commercialization of INGREZZA or any of our other products. In response to the COVID-19 pandemic, we implemented a remote work model forff in business-critical activities. Our employees have resumed in-person interactions and have returt ned to the officff e under fleff xible work guidelines. However, a remote work model may nevertheless need to be reinstated at some point in the futff urt e. The effects of a remote and fleff xible work model may negatively impact productivity, disruptu business and delay our clinical programs and timelines, the magnitude of which will depend on our ability to conduct our business in the ordinary course. Remote work may also create increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations. In addition, we may face several challenges or disruptu ions upon a returt n back to the workplk ace, including re-integration challenges by our employees and distractions to management related to such transition. These and similar, and perhapsa more severe, disruptu ions in our operations could negatively impact our business, operating results and finff ancial condition. In addition, clinical site initiation and patient enrollment may be delayed due to concerns for patient safety. Some patients may not be able to comply with clinical trial protocols and our ability to recruirr investigators and site staff mff ay be hindered, which would adversely impact our clinical trial operations. t and retain patients, principal our t The ultimate effeff cts of health pandemics or epidemics is highly uncertain and subject to change and these effeff cts could have a material impact on our operations, or the operations of third parties on whom we rely. Risks Related to Our Industry If we are unable t our disdd coveries, which may reduce demand for our products.tt rotect our intii eltt dd lell ctual propeo rty,tt our compem titors could dll ll o ptt evel opll and markerr t products btt ased on Our success will depend on our ability to, among other things: • • • • obtain patent protection forff our products; preserve our trade secrets; prevent third parties from infriff nging upon our proprietary rights; and operate without infringing upon the proprietary rights of others, both in the U.S. and internationally. oval processes in order to reach the marketplace, the pharmaceutical industry prr Because of the subsu tantial length of time and expense associated with bringing new products through the development and regulatory arr a ppr considerable importance on obtaining patent and trade secret protection forff processes. Accordingly, we intend to seek patent protection forff However, we face the risk that we may not obtain any of these patents and that the breadth of claims we obtain, if any, may not provide adequate protection of our proprietary technology or compounds. Additionally, if our employees, commercial collabor ators or consultants use generative artificff develop our proprietary technology and compounds, it may impact our ability to obtain or successfulff certain intellectuat new technologies, products and our proprietary technology and compounds. ial intelligence (AI) technologies to ly defend l property rights. a laces We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, through confidff entiality agreements with our commercial collabor or patent assignment agreements with our employees and some, but not all, of our commercial collabor consultants. However, if our employees, commercial collabor not have adequate remedies for any such breach, and our trade secrets may otherwise become known or independently discovered by our competitors. ators, employees and consultants. We also have invention ators or consultants breach these agreements, we may ators and a a a 38 a eviated new drugrr ly challenge our patents or that application (ANDA) with the FDA seeking appr ly avoid them through design innovation. In addition, potential competitors have in the past and may in In addition, although we own a number of patents, the issuance of a patent is not conclusive as to its validity or enforceability, and third parties may challenge the validity or enforff ceability of our patents. We cannot assure you how much protection, if any, will be given to our patents if we attempt to enforff ce them and they are challenged in court or in other proceedings. It is possible that a competitor may successfulff challenges will result in limitations of their coverage. Moreover, competitors may infriff nge our patents or successfulff the futff urt e filff e an abbr version of our products, or our competitors’ products, beforff e the expiration of the patents covering our products or our competitors’ products, as appl icable. To prevent infringement or unauthorized use, we have in the past and may in the futff urt e need to filff e infriff ngement claims, which are expensive and time-consuming. Refer to Note 13 to the consolidated financial statements for da descriip ition of our lleggall proce dediinggs rellatedd t ll propertyy matters. In addition, in an infringement proceeding a court may decide that a patent of ours or a patent of a competitor is not valid or is unenforff ceable or may refusff e to stop the other party from using the technology at issue on the grounds that our patents do not cover its technology. Derivation proceedings declared by the U.S. Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patent applications (or those of our licensors) or a patent of a competitor. Litigation or derivation proceedings may faiff , may result in subsu tantial costs and be a distraction to management. Litigation or derivation proceedings, including proceedings of a competitor, may also result in a competitor entering the marketplt ace faster than expected. We cannot assure you that we will be able to prevent misappropriation of our proprietary rights, particularly in countries ly as in the U.S. where the laws may not protect such rights as fulff oval to market a generic l and, even if successfulff io int lelllectuat a a Enacted healthctt are reforff m,rr our business. drug pricing measures and othett r recent legll islative iniii tiaii tives could all dverserr ly affeff ct The business and financial condition of pharmaceutical and biotechnology companies are affeff cted by the efforts of government and third-party payors to contain or reducd e the costs of healthcare and to lower drug prices. In the U.S., comprehensive drug pricing legislation enacted by the Federal government implements, for the first time, government control over the pricing of certain prescription pharmaceuticals. Moreover, in some foreign jurisdictions, pricing of prescription pharmaceuticals is also subject to government control. Additionally, other federal and state laws impose obligations on manufact disclosure of new drug products introduced to the market and increases in drugrr urt ers of pharmaceutical products, among others, related to prices above a specified threshold. ff ff r r tion Reducd tion Act of 2022, or the IRA, whose prices increase greater than the rate of inflaff f the HHS to negotiate the price of certain high-expenditure, individuals purchasing health insurance coverage in the ACA marketplt aces through plan year 2025 and and biologics covered under Medicare; (2) redesigns the Medicare Part D prescription drug urt er liabia lity; and (3) requires drug manufact tion. The IRA also extends enhanced For example, in August 2022, President Biden signed into law the Inflaff which, among other things: (1) directs the Secretary orr single-source drugs benefit to lower patient out-of-pocket costs and increase manufact to pay rebates on drugs subsu idies forff beginning in 2025, eliminates the “donut hole” under the Medicare Part D program and creates a new, permanent n beneficff cap oa urt er discount program. The ermits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial IRA pRR years. HHS has issued and upda implemented. These provisions take effeff ct progressively starting in 2023. On August 29, 2023, HHS announced the list of the firff st 10 drugs program is currently subju ect to legal challenges. It is currently uncertain how the IRA will be implemented over time; however, it is likely to have a significant impact on the pharmaceutical industry arr that will be subju ect to price negotiations, although the Medicare drug price negotiation ted and will continue to issue and update guidance as these programs are iary out-of-pocket spending, in addition to a newly establa ished manufact nd prescription drug pricing. urt ers u r ff ff price negotiation program targets high-expenditure drugs While the IRA drugrr several years without generic or biosimilar competition, we believe we will qualify f from negotiation that is set to expire in 2029. However, the qualificff ation forff requirements and there is no assurance that we will continue to qualify f loss of this exception or the potential loss of this exception, including as a result of a potential acquisition or strategic transaction, could have an adverse impact on our business. this exception is subject to various this exemption in the future. Further, the that have been on the market forff the small biotech exception orff orff ff ff r 39 eral legislation impacting the pharmaceutical industryrr Prior to the IRA’RR s enactment, the most significant recent fedff occurred in March 2010, when the ACA was signed into law. The ACA was intended to broaden access to health insurance and reduce the number of uninsured individuals, reducd e or constrain the growth of healthcare spending, enhance remedies against fraud and abus the healthcare and health insurance industries, impose taxes and feeff nd impose additional health policy reforff ms. e, add transparency requirements forff s on the health industry arr a Other legislative changes have been adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fisff cal year pursuant to the Budget Control Act of 2011, which began in 2013 and, due to subsu equent legislative amendments to the statute, including the Infraff structure Investment and Jobs Act and Consolidated Appropriations Act of 2023, will remain in effeff ct until 2032. The American Taxpayer Relief Act of 2012, among other things, furff providers, including hospitals and cancer treatment centers, increased the statute of limitations period for the government to recover overpayments to providers from three to fivff e years. ther reduced Medicare payments to several At the state level, legislaturt es have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation froff m other countries and bulk purchasing. For example, on January 5, 2024, the FDA approved Florida’s SIP proposal to import certain drugs unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subju ect to legal challenges in the United States or Canada. Other states have also submu itted SIP proposals that are pending review by the FDA. Any such approved importation plans, when implemented, may result in lower drug prices for products covered by those programs. Further, certain states through legislation have created a state PDAB to help control costs of drugs recommending or setting uppe reviews, and advising state lawmakers on additional ways to reducd e the state’s drug spending. It is possible that the actions taken by the PDABs may result in lower prices for certain drugrr from Canada for specific state healthcare programs. It is r limits on the price the state pays for certain drugs for that state. The functions of the PDABs vary brr y state, and may include among other things, , performing drug affordability products sold in their in states. u r r r The implementation of these cost containment measures may prevent us froff m being able to generate revenue, attain sustained profitff ability or commercialize our drugs , particularly since the majoa rity of our current revenue is derived from fedff eral healthcare programs, including Medicare and Medicaid. r Proposed healthll care refoe rm, drudd g pu affeff ct our business. ricingii measures and other prospes ctivtt e legll islative iniii tiaii tives could all dverserr ly We expect that there will continue to be a number of fedff controls over the pricing of prescription pharmaceuticals. In addition, increasing emphasis on reducd ing the cost of healthcare in the U.S. will continue to put pressure on the pricing and reimbursement of prescription pharmaceuticals. For example, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Center for Medicare and Medicaid Innovation which will be evaluated on their ability to lower the cost of drugs , promote accessibility, and improve quality of care. It is unclear whether the models will be utilized in any health reform measures in the futff urt e. eral and state proposals to implement additional government rr In addition, certain jurisdictions outside of the U.S., including the EU, have instituted price ceilings on specific products and therapia es, as described further in the risk factor titled “Government and third-party payors may impose sales and pharmaceutical pricing controls on our products or limit coverage and/or reimbursement for our products of our products that could limit our product revenues or impose policies and/or make decisions regarding the statust and delay sustained profitabia lity.” ay be enacted in the futff urt e or what effecff We are currently unabla e to predict what other additional legislation or regulation, if any, relating to the healthcare industry mrr such additional legislation or regulation would have on our business. The pendency or appr reforms could result in a decrease in our stock price or limit our ability to raise capital or to enter into collabor agreements for the further development and commercialization of our programs and products. t recently enacted federal or equivalent foreign legislation or any oval of such proposals or ation a a 40 rdii tial) and thitt iott nshipsii withii healthll care profesff Any rn elatll potentt contintt ue to be subject, direii ctlytt or indireii ctlytt have not fulff such laws, ws complied, withii ished profio tsii and futff ure earningii diminii -pdd arty payors irr n cii s agg lyll sionals,ll principal investigtt atortt onnectiott n with our current and futff ure business activtt consultall nts,tt s,rr customtt ii edff erdd al and state healthll care laws. If wII , tyy o f tt e could face penaltiett s, contratt ages, repuee ctual damdd cturing of oo ur operations. ii nd curtaitt lme nt or restrutt ers (rr ac(( tual and ities are and will ll o ctt tational harm,rr e are unable t omplm y,ll or Our business operations and activities may be directly, or indirectly, subject to various federal and state healthcare laws, including without limitation, fraud and abus transparency laws regarding payments or other items of value provided to healthcare providers. These laws may restrict or prohibit a wide range of business activities, including, but not limited to, research, manufact distribution, pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. These laws may impact, among other things, our current activities with principal investigators and research subju ects, as well as current and futff urt e sales, marketing, patient co-payment assistance and educd ation programs. e laws, false claims laws, data privacy and security laws, as well as ing, urt a ff Such laws include: • • • • • the federal Anti-Kickbak ck Statutt e which prohibits, among other things, persons and entities froff m knowingly and willfulff cash or in kind, to induce or reward, or in return for, either the referff order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; ring, receiving or providing remuneration, directly or indirectly, in ral of an individual forff ly soliciting, offeff , or the purchase, the federal civil and criminal false claims laws, including the fedff eral civil False Claims Act, and Civil Monetary Penalties Laws, which impose criminal and civil penalties against individuals or entities forff among other things, knowingly presenting, or causing to be presented, to the fedff eral government, claims forff payment that are false or fraff udulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; , HIPAA, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; HIPAA, as amended by HITECH and its implementing regulations, which also imposes obligations, including mandatory contractuat l terms, on covered entities, including certain healthcare providers, health plans and healthcare clearinghouses, as well as their business associates and their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiaff bla e health information; u ies forff which payment is availabla e under Medicare, Medicaid or the Children’s the federal Physician Payments Sunshine Act, which requires certain manufact biologics and medical suppl Health Insurance Program, with specific exceptions, to report annually to CMS inforff mation related to payments or other transfers of value made to physicians (definff ed to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare profesff practitioners) and teaching hospitals, and applicable manufact organizations to report annually to CMS ownership and investment interests held by physicians and their immediate famff sionals (such as physician assistants and nurse urt ers and applicable group purchasing urt ers of drugs, devices, ily members; and ff ff 41 • turers to report inforff mation related to payments and other transfers of value to physicians and other analogous state, local and forff eign laws and regulations, such as state anti-kickbakk ck and falff se claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’rr and the relevant compliance guidance promulgated by the fedff manufacff healthcare providers or marketing expenditures or drug pricing; state laws that require disclosure of price increases above that create Prescription Drug Price Affoff spending; state and local laws that require the registration of pharmaceutical sales representatives; state and local “drug take back” laws and regulations; and state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ froff m each other in significant ways and ofteff n are not preempted by HIPAA, thus complicating compliance efforff ompliance guidelines eral government; state laws that require drugr certain identified thresholds as well as of new commercial launches in the state; state laws rdability Boards to review or attempt to cap drugr s voluntary crr ts. a sionals, including our speaker programs and other tured to comply with these laws and related guidance, it is possible that governmental rts to ensure that our business arrangements will comply with applicable healthcare laws may involve Effoff subsu tantial costs. While our interactions with healthcare profesff arrangements have been strucr and enforff cement authorities will conclude that our business practices, or a rogue employee’s activities, may not comply with current or future statutt es, regulations or case law interpreting appl healthcare laws. For example, we maintain a patient assistance program to help eligible patients afford our products. These and other types of programs have become the subject of governmental scrutiny, and numerous organizations, including pharmaceutical manufact urt ers, have been subju ect to litigation, enforcement actions and settlements related to their patient assistance programs. If our operations or activities are found described above significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion eral healthcare programs, additional reporting requirements from participation in Medicare, Medicaid and other fedff ate integrity agreement or similar agreement to resolve allegations of rr and oversight if we become subju ect to a corpor non-compliance with these laws, contractuat l damages, reputational harm, diminished profits and futff urt e earnings and curtailment or restructurt or any other governmental regulations that apply to us, we may be subject to, without limitation, ing of our operations, any of which could adversely affect our ability to operate. to be in violation of any of the laws icable fraud and abus e or other a a a ff ff In addition, any sales of our product once commercialized outside the U.S. will also likely subject us to foreign equivalents of the healthcare laws mentioned above , among other forff eign laws. a ll We could f product candiddd atdd estt acff e liall biliii tyii if a regulatll ortt y ar that receives regulatll ortt uthott y ar rityii determines that we are promoting INGR ppra ll “off-l ff abe oval, fll orff l” uses. II EZR ZAZZ or any on f oo ur a its drugr oved by the applicable regulatory arr products. An off-label use is the use of a product forff abel” uses forff A company may not promote “off-lff indication that is not described in the product’s FDA-approved label in the U.S. or forff differ froff m those appr gencies do not regulate a physician’s choice of products for off-label uses. Although the FDA and other regulatory arr treatment made in the physician’s independent medical judgment, they do restrict promotional communications drugr from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued. However, companies may share trutrr hfulff with a product’s FDA approved labeling. A company that is found to have promoted off-l be subju ect to significant liabia lity, including civil and criminal sanctions. and not misleading inforff mation that is otherwise consistent gencies. Physicians, on the other hand, may prescribe uses in other jurisdictions that abel use of its product may an ff If the FDA or any other governmental agency, including equivalent foreign authorities, initiates an enforff cement action against us, or if we are the subject of a qui tam suit brought by a private plaintiff off and it is determined that we violated prohibitions relating to the promotion of products for unappr could be subject to subsu tantial civil or criminal fines or damage awards and other sanctions such as consent decrees and corpor monitoring to ensure compliance with applicable laws and regulations. Any such fines, awards or other sanctions would have an adverse effect on our revenue, business, financial prospects and reputation. ate integrity agreements pursuant to which our activities would be subject to ongoing scrutiny and n behalf of the government, oved uses, we a r 42 tion technologyo systemtt s, those thitt rdii parties upon which we rely,ll or our datdd a i tt s oii r were e could expexx rience adverserr ruptu iott ns to our opeo rations such as our clinll impacts resultingii ical trials, cs from such compromise, includindd g, but not limitedtt laims that we breached our datdd a ptt ur repuee tation, regue latory investigat iott ns or actions, ls itigll i atiott n, fineii rotectiott n s and penalties, and a losll s If our infii orff marr compromised, wdd to, intii ertt obligll atiott ns, hs ers orr of customtt arm t o ott rr r sales. a s fakff are or hardware faiff lures, loss of data or other ourse of our business, we and the third parties upon y-chain attacks, software bugs, server malfunctions, softwff We are increasingly dependent on information technology systems and infrastructurt e, including mobile technologies, to operate our business. In the ordinary crr which we u rely, collect, receive, store, process, generate, disclose, make accessible, protect, dispose of, transmit, use, safeguard, , or collectively, process, confidff ential and sensitive electronic inforff mation on our networks and in share and transferff our data centers. This inforff mation includes, among other things, de-identifieff d or pseudonymous sensitive personal data (including health data), our intellectuat l property and proprietary information, the confidff ential inforff mation of our collabor ators and licensees, and the personal data of our employees. It is important to our operations and business strategy that this electronic inforff mation remains secure and is perceived to be secure. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, and the volume of data we retain, make such systems potentially vulnerabla e to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more diffiff cult to identify aff e, and phishing attacks), malicious code, malware (such as malicious code, adware, and command and control (C2)), denial-of-service attacks, credential harvesting, personnel misconduct or error, ransomware attacks, suppl u information technology assets, attacks enhanced or facilitated by AI, telecommunications failures, and other similar threats. Cyber-attacks, malicious internet-based activity, online and offlff ine fraff ud, and other similar activities threaten the confidff entiality, integrity, and availabia lity of our sensitive inforff mation and information technology systems, and those of the third parties upon which we rely. Such threats continue to rise, are increasingly diffiff cult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft off r misuse), sophisticated nation states, and nation-state- ted actors (also referred to as APTs). Some actors now engage and are expected to continue to engage in u suppor cyber-attacks, including without limitation nation-state actors forff military confliff cts and defense activities. During times of war and other majoa r conflicff which we rely may be vulnerabla e to a heightened risk of these attacks, including retaliatory cyber-attacks, which our systems and operations, as well as our ability to conduct clinical trials. Ransomware could materially disruptu attacks are also becoming increasingly prevalent and severe, and can lead to significant interruptions in our operations (including our ability to conduct clinical trials), loss of sensitive data (including related to our clinical trials) and income, reputational harm, and diversion of funds. To alleviate the finff ancial, operational and reputational impact of a ransomware attack, it may be preferabla e to make extortion payments, but we may be unwilling or unabla e u to do so (including, for example, if appl y chain attacks have increased in frequency and severity, and we cannot guarantee that third parties in our suppl y chain have not been compromised or that they do not contain exploitabla e defect breach of or disrupt systems and infrastructurt e of third parties that support our operations. Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees work from home, utilizing network connections, computers and devices outside our premises, including at home, while in transit or in public locations. ff ion to our information technology systems and infrastructurt e or the information technology icable laws or regulations prohibit such payments). Similarly, suppl s, vulnerabia lities, or bugs that could result in a geopolitical reasons and in conjunction with ts, we and the third parties uponu u a rr Additionally, naturt al disasters, public health pandemics or epidemics, terrorism, war and geopolitical conflicff ts, and telecommunication and electrical failures may result in damage to or the interruptu ion or impairment of key business processes, or the loss or corruptu ion of confidff ential information, including intellectuat l property, proprietary business information and personal data. Future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabia lities, as our systems could be negatively affected by vulnerabia lities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during dued information technology environment and security program. diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our 43 As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabia lities or modify our business activities (including our clinical trial activities) to try t o protect against security incidents. rr We take steps designed to detect, mitigate, and remediate vulnerabia lities in our information security systems (such as which we rely). We may not, however, detect and our hardware and/or software, including that of third parties upon remediate all such vulnerabia lities including on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identifieff d vulnerabia lities. Vulnerabilities could be exploited and result in a security incident. u We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infraff structurt e, data center facff ilities, encrypt ion and authentication technology, employee email and other functions. We also rely on third-party service rr providers to provide other products, services, parts, or otherwise to operate our business, including clinical trial sites and investigators, contractors, manufact information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers or CROs experience a security incident or other interruptu ion, we could experience adverse consequences. In addition, suppl u severity, and we cannot guarantee that third parties’ infraff structurt e in our suppl suppl u damages if our third-party service providers fail to satisfy t award may be insufficient to cover our damages, or we may be unabla e to recover such award. y chain or our third-party partners’ y chains have not been compromised or otherwise subject to a security incident. While we may be entitled to iers and consultants. Our abia lity to monitor these third parties’ heir privacy or security-related obligations to us, any y-chain attacks have increased in frequency and urt ers, suppl u u ff ff u Although to our knowledge we, or the third parties upon disrupt ion to date that is material to us, we and our vendors have been, either directly or indirectly, the target of r cybersecurity incidents and expect them to continue. While we have implemented security measures designed to protect our data security and inforff mation technology systems, such measures may not prevent such events. Furthermore, while we have implemented and are planning to implement redunda interruptu ions to our operations, not all potential events can be anticipated and interruptu ions to our operations could lead to decreased productivity. who we rely, have not experienced a security incident or ncies designed to avoid d If we (or a third party upon whom we rely) experience a security incident, ransomware attack or are perceived to have experienced a security incident, we may experience adverse consequences. Such consequences may include: government enforcement actions (for example, investigations, finff es, penalties, audits and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive inforff mation (including personal data); litigation (including class claims); indemnificff ation obligations; negative publicity; reputational harm (including but not limited to ddamagge to our pa itient, partner, or em lpl yoyee r lelatiionshihips);) monetary fund diversions; diversion of management’s attention; interruptu ions in our operations (including availabia lity of data, loss of connectivity to our network or internet); finff ancial loss (including decreased productivity resulting froff m interruptu ions in our operations); and other similar harms. Similarly, the loss of clinical trial data froff m completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforff ts and significantly increase our costs to recover or reproduce l property or proprietary business inforff mation could require subsu tantial the data. In addition, theft off expenditures to remedy. Applicable data privacy and security obligations may also require us to notify r stakeholders, including affeff cted individuals, customers, regulators, and investors, of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. f our intellectuat elevant ff Our contracts, with for example third parties or CROs, may not contain limitations of liabia lity, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabia lities, damages, or claims related to our data privacy and security obligations. We also cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabia lities arising out of our privacy and security practices, that such coverage will continue to be availabla e on commercially reasonabla e terms or at all, or that such coverage will pay futff urt e claims. 44 In addition to experiencing a security incident, third parties may gather, collect, or inferff us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. Additionally, our sensitive information could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ potential use of generative AI technologies. sensitive inforff mation about a If we fail to obtaitt n oii candiddd atdd estt , os ur competittt ivtt e positiott n would be harmed.dd r maintii aitt n oii rphan drudd g du esdd ignagg tion or other regue latory exclusivity for some of oo ur product rr rocess as well as potential commercial benefitff s folff In addition to any patent protection, we rely on forms of regulatory err xclusivity to protect our products such as n drug designation. A product candidate that receives orpha r orpha n drug designation can benefit froff m a streamlined regulatory prr lowing approval. Currently, this designation provides market exclusivity in the U.S. for seven years and EU for 10 years if a product is the first such product appr oved forff n indication. This market exclusivity does not, however, pertain to indications other than those forff which such orpha n the drug was specifically designated in the approval, nor does it prevent other types of drugs from receiving orpha designations or approvals in these same indications. Further, even after an orpha oved, the FDA can subsu equently approve the same drug forff supeu rior to the orphan product or a market shortage occurs. r the same condition if the FDA concludes that the new drug is clinically n drug is appr a a r r rr n exclusivity may be reducd ed to six years if the drug no longer satisfies the original designation In the EU, orpha criteria or can be lost altogether if the marketing authorization holder consents to a second orpha or cannot suppl original orpha or when a second applicant demonstrates its drugrr is “clinically supeu rior” to the y enough drug, n drug appl n drug. u a r r r ication If we do not have adequate patent protection forff exclusivity is even greater. We may not be successfulff even if we succeed, such product candidates with such orphan drug designations may faiff Even if a product candidate with orpha to result in or maintain orpha n drug designation may receive marketing appr a rr r our products, then the relative importance of obtaining regulatoryrr n drug designations for any indications and, obtaining orpha r n drug exclusivity upon approval, which would harm our competitive position. l to achieve FDA appa roval. l oval froff m the FDA, it may faiff nologio es we use in oii The techtt the propro ietary righi ts of third parties. ur research as well as the drudd g tu artt ger ts we select may ia nfii riff ngii e thett patentt ts or violatll ett ff a urt ators, we or our collaboa l property infriff ngement claims ing or selling potential products that are claimed to infriff nge a third party’s intellectuat We cannot assure you that third parties will not assert patent or other intellectuat against us or our collaborators with respect to technologies used in potential products. If a patent infringement suit rators could be forff ced to stop or delay developing, were brought against us or our collabor manufact l property unless that party grants us or our collaborators rights to use its intellectuat obtain licenses to patents or proprietary r However, we may not be able to obtain any licenses required under any patents or proprietary rights of third parties on acceptabla e terms, or at all. Even if our collaborators or we were abla e to obtain rights to the third party’s l property, these rights may be non-exclusive, thereby giving our competitors access to the same intellectuat l property. Ultimately, we may be unabla e to commercialize some of our potential products or may have to intellectuat cease some of our business operations as a result of patent infriff ngement claims, which could severely harm our business. ights of others in order to continue to commercialize our products. l property. In such cases, we could be required to rr Our business opeo rations may subject us to dispii utestt atertt consuming and could mll laims and lawll - e costly and time ly impacm t our finaii ncial position and results of operations. hich may ba nd adverserr suw its, ws ially all , cs tt insurance coverage and acquisition or divestiture-related matters. Any dispute, claim or lawsuit may From time to time, we may become involved in disputes, claims and lawsuits relating to our business operations. In particular, we may face claims related to the safety of our products, intellectuat l property matters, employment matters, tax matters, commercial disputes, competition, sales and marketing practices, environmental matters, personal injury,rr divert management’s attention away froff m our business, we may incur significant expenses in addressing or defending any dispute, claim or lawsuit, and we may be required to pay damage awards or settlements or become subju ect to equitabla e remedies that could adversely affect our operations and finff ancial results. For example, we recently settled various intellectuat Refer to Note 13 to the consolidated financial statements for a mor de det iailled dd descriip ition of hthese matters. l property litigation matters against potential competitors related to INGREZZA. 45 Litigation related to these disputes may be costly and time-consuming and could materially and adversely impact our financial position and results of operations if resolved against us. In addition, the uncertainty associated with litigation could lead to increased volatility in our stock price. epdd endent contratt ngage in miscii onduct or othett Our employeo es, is ndii may ea requirements. ctortt r impii s,rr principal ropeo r activtt ii i investigat consultall nts,tt itiett s, includindd g non-complm iall nce with regue commercial partners arr ortt s,rr latory stantt dards and nd vendorsrr turing standards we have established, to comply with federal and state healthcare We are exposed to the risk of employee fraff ud or other misconduct. Misconduct by employees and independent contractors, such as principal investigators, consultants, commercial partners and vendors, or by employees of our commercial partners could include failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacff frff aud and abuse laws, to report finff ancial information or data accurately, to maintain the confidff entiality of our trade secrets or the trade secrets of our commercial partners, or to disclose unauthorized activities to us. In particular, sales, marketing and other business arrangements in the healthcare industry arr prevent fraff ud, kickbak cks, self-dff ealing and other abus could also involve the improper use of individually identifiaff bla e inforff mation, including, without limitation, information obtained in the course of clinical trials, which could result in regulatory srr our reputation. Any action against our employees, independent contractors, principal investigators, consultants, commercial partners or vendors forff administrative penalties, fines and imprisonment. re subju ect to extensive laws intended to ive practices. Employee and independent contractor misconduct violations of these laws could result in significant civil, criminal and anctions and serious harm to a We face potentt tial product liabiliii tyii xx expos ure farff in excess of oo ur insurance coverage.ee The use of any of our potential products in clinical trials, and the sale of any approved products, including INGREZZA, may expose us to liabia lity claims. These claims might be made directly by consumers, healthcare providers, pharmaceutical companies or others selling our products. We have product liabia lity insurance coverage for both our clinical trials as well as related to the sale of INGREZZA in amounts consistent with customaryrr ractices. However, our insurance may not reimburse us or may not be sufficient to reimburse us for any industry prr expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and we may not be able to maintain insurance coverage at a reasonabla e cost or in suffiff cient amounts to protect us against losses due to liabia lity from any current or future clinical trials or approved products. A successfulff series of claims, brought against us would decrease our cash reserves and could cause our stock price to fall. Furthermore, regardless of the eventuat may decrease demand forff investigations that could require costly recalls or product modifications, cause clinical trial participants to withdrawal, result in costs to defend the related litigation, decrease our revenue, and divert management’s attention from managing our business. l outcome of a product liabia lity claim, any product liabia lity claim against us our approved products, including INGREZZA, damage our reputation, result in regulatoryrr product liabia lity claim, or Our activtt ities invii olvell hazardoudd s matertt ials, as nd we may ba e liall ble f orff ll any rn esultinll g contaminatiott n or injii uries. Our research activities involve the controlled use of hazardous materials. We cannot eliminate the risk of accidental contamination or injury f damages, which may harm our results of operations and cause us to use a substantial portion of our cash reserves, which would forff ce us to seek additional finff ancing. roff m these materials. If an accident occurs, a court may hold us liabla e forff any resulting rr We are subjeb ct to stritt ngii or perceived failure to comply withii busineii ss, finaii ncial conditiii on or results ott ent and changingii such obligll atiott ns could hll peo rations. f oo obligll atiott ns related to dtt atdd a ptt rivacy and infii orff marr ave a material adverserr tion securityii . Oyy effeff ct on our reputattt iott n, ur actual ourse of our business, we process confidff ential and sensitive inforff mation, including personal data, In the ordinary crr proprietary and confidff ential business data, trade secrets, intellectuat participants in connection with clinical trials, and sensitive third-party data, on our networks and in our data centers. We are subject to numerous federal, state, local and forff eign laws, orders, codes, regulations and regulatory grr uidance regarding privacy, data protection, information security and the processing of personal inforff mation (including clinical trial data), the number and scope of which are expanding, changing, subju ect to differing applications and interpretations, and may be inconsistent among jurisdictions. Our data processing activities may also subju ect us to other data privacy and security obligations, such as industry srr tandards, external and internal privacy and security policies, contracts and other obligations that govern the processing of data by us and by third parties on our behalf.ff l property, data we collect about clinical trial 46 hh ve enacted comprehensive privacy Laws regarding privacy, data protection, information security and the processing of personal data are becoming increasingly common in the U.S. at both the federal and state level. Additionally, in the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, and Utah—ha laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profilff ing, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services. Certain states also impose stricter requirements for processing certain personal data, including sensitive inforff mation, such as conducting data privacy impact assessments. These state laws allow forff Privacy Act, as amended by the Califorff nia Privacy Rights Act of 2020 (CPRA)RR (collectively, CCPA), requires businesses to provide specificff disclosures in privacy notices, and honor requests of Califorff nia residents to exercise certain privacy rights. The CCPA allows for finff es for noncompliance (up to $7,500 per intentional violation). Although some U.S. comprehensive privacy laws and the CCPA exempt some data processed in the context of clinical trials, these laws may increase compliance costs and potential liabia lity with respect to other personal data we may maintain about jurisdictions to pass similar laws in the future. These developments may furff may increase legal risk and compliance costs for us and the third parties upon Additionally, HIPAA, as amended by HITECH, imposes specific requirements relating to the privacy, security, and transmission of individually identifiaff bla e health information. Califorff nia residents. Other states have also enacted data privacy laws and we expect more inff es for noncompliance. For example, the Califorff nia Consumer ther complicate compliance efforts, and whom we rely. statutt ory f u a rr enhanced data protection obligations for processors and controllers of personal data, Laws in Europe regarding privacy, data protection, information security and the processing of personal data have also been significantly reformed and continue to undergo reforff m. For example, the EU’s General Data Protection Regulation (EU GDPR) and the UK’s GDPR (UK GDPR) (collectively, GDPR) impose strict requirements forff processing the personal data of individuals located, respectively, within the European Economic Area (EEA) and the UK. The GDPR provides forff including, for example, obligations relating to: processing health and other sensitive data; obtaining consent of individuals; providing notice to individuals regarding data processing activities; responding to data subju ect requests; taking certain measures when engaging third-party processors; notifyiff ng data subju ects and regulators of data breaches; and implementing safegff uards to protect the security and confidff entiality of personal data. The GDPR impose substantial finff es for breaches of data protection requirements. For example, under the GDPR, such fines can be up to four percent of global revenue or 20 million euros under the EU GDPR / 17.5 million pounds sterling under the UK GDPR, whichever is greater in either case, and also allow for private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as EU regulations governing clinical trial data and other healthcare data, could require us to change our business practices or lead to government enforcement actions, private litigation or significant penalties against us and could have a material adverse effect on our business, financial condition or results of operations. a We may be subject to additional forff eign data laws. For example, in Canada, the Personal Inforff mation Protection and Electronic Documents Act (PIPEDA) and various related provincial laws, as well as Canada’s Anti-Spam Legislation (CASL), may appl de Proteção de Dados Pessoais (LGPD) (Law No. 13,709/2018), may apply to our operations. The LGPD broadly regulates processing personal data of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the EU GDPR. We also target customers in Asia and may be subject to new and emerging data privacy regimes in Asia, including Japaa n’s Act on the Protection of Personal Inforff mation and Singapor Personal Data Protection Act. y to our operations. As another example, the General Data Protection Law, Lei Geral e’s a 47 ompliance and participate in the Framework), these mechanisms are personal data to the U.S. If we cannot implement a valid compliance mechanism forff ourse of business, we may transfer personal data froff m Europe and other jurisdictions to the U.S. or In the ordinary crr other countries. Certain jurisdictions have enacted data localization laws and cross-border personal data transfers laws. For example, countries in the EEA and the UK have significantly restricted the transfer of personal data to the U.S. and other countries, whose privacy laws it generally believes are inadequate. Although there are currently various mechanisms that may be used to transfer personal data froff m the EEA and UK to the U.S. in compliance with law, such as the EEA standard contractuat l clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S. Data Privacy Framework and the UK extension thereto (which allows for transfers for to relevant U.S.-based organizations who self-certify cff subju ect to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfulff transferff data transferff s or if the requirements forff to regulatory arr ring personal data froff m Europe or elsewhere. The inabia lity to import personal data to the U.S. may significantly and negatively impact our business operations, including by limiting our ability to conduct clinical trial activities in Europe and elsewhere; limiting our ability to collabor ate with parties subju ect to European and other data protection laws or requiring us to increase our personal data processing capabilities in Europe and/or elsewhere at significant expense. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutr iny froff m regulators, individual litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transferff s out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations. ctions, substantial finff es and injunctions against processing or transferff are too onerous, we may face increased exposure a legally-compliant transferff cross-border personal ly a Our employees and personnel may use generative AI technologies to perform some of their work, and the disclosure and use of personal inforff mation data in generative AI technologies is subju ect to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI. Our use of this technology could result in additional compliance costs, regulatory i consumer lawsuits. Furthermore, any use of generative AI to develop our proprietary technology and compounds may also impact our ability to obtain or successfulff use generative AI, it could make our business less efficient and result in competitive disadvantages. l property rights. If we are unabla e to nvestigations and actions, and ly defend certain intellectuat rr roups and, we are, or may become subju ect to such obligations in the futff urt e. We are also bound by l obligations related to data privacy and security, and our effoff In addition to data privacy and security laws, we may contractuat industry grr contractuat be successfulff security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfaiff or other adverse consequences. . We publish privacy policies, marketing materials and other statements regarding data privacy and r, or misrepresentative of our practices, we may be subju ect to investigation, enforcement actions by regulators rts to comply with such obligations may not lly be subju ect to industry srr tandards adopted by Our obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing in an increasingly stringent fashion and creating uncertainty. These obligations may be subject to differing applications and interprrr etations, which may be inconsistent among jurisdictions or in conflicff complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources). These obligations may necessitate changes to our information technologies, systems and practices and those of any third parties that process personal data on our behalf. Iff n addition, these obligations may even require us to change our business model. t. Preparing forff and 48 a rts, our personnel or third-parties upon led) to do so. Moreover, despite our effoff icable data privacy and security obligations, we may at times faiff l to comply such obligations that impacts our compliance posture. If we faiff Although we endeavor to comply with all appl be perceived to have faiff rely may faiff failed, to address or comply with data privacy and security obligations, we could faceff These consequences may include, but are not limited to, government enforcement actions, litigation(including class claims), additional reporting requirements and/or oversight, bans on processing personal data, imprisonment of company officials, and orders to destroy or not use personal data. In particular, plaintiffsff have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow forff the recovery of statutt ory drr carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these events could have a material adverse effecff or results of operations. whom we l, or are perceived to have significant consequences. t on our reputation, business, financial condition amages on a per violation basis, and, if viable, l (or u Item 1B. Unresolved Staftt None. f Cff omCC mentstt y.gg We rely on information technology and data to operate our business and develop, Item 1C. Cybersecurityii Riskii Managea ment and StrSS ategtt market, and deliver our therapies to our customers. We have implemented and maintain various information security processes designed to identify,ff networks, third party hosted services, communications systems, hardware, lab equipment, software, and our critical data includes confidff ential, personal, proprietary, and sensitive data (collectively “Information Assets”). Accordingly, we maintain certain risk assessment processes intended to identify cff of occurring, and assess potential material impact to our business. Based on our assessment, we implement and maintain risk management processes designed to protect the confidff entiality, integrity, and availabia lity of our Information Assets and mitigate harm to our business. assess and manage material risks from cybersecurity threats to critical computer ybersecurity threats, determine their likelihood The Company’s general risk management program is designed to manage identifieff d material risks, which would include material cybersecurity risks. We engage in processes designed to identify sff using manual and automated tools, subsu cribing to reports and services that identify cff reports of threats and actors, conducting scans of the threat environment, evaluating our and our industry’rr profileff assessments for internal and external threats, and conducting vulnerabia lity assessments to identify vff , evaluating threats reported to us, coordinating with law enforff cement concerning threats, conducting threat ulnerabia lities. uch threats by, among other things, monitoring the threat environment ybersecurity threats, analyzing s risk We rely on a multidisciplinary t service providers, as described further below) to assess how identifieff d cybersecurity threats could impact our business. These assessments may leverage, among other processes, industry t the assessment of risks from such cybersecurity threats. eam (including from our information security function, management, and third party ools and metrics designed to assist in rr rr Depending on the environment, we implement and maintain various technical, physical and organizational measures designed to manage and mitigate material risks froff m cybersecurity threats to our Information Assets. The cybersecurity risk management and mitigation measures we implement for certain of our Information Assets include: policies and procedurd es designed to address cybersecurity threats, including an incident response plan, vulnerabia lity management policy, and disaster recovery/business continuity plans; incident detection and response tools; internal and/or external audits to assess our exposure to cybersecurity threats, environment, compliance with risk mitigation procedures, and effeff ctiveness of relevant controls; documented risk assessments; implementation of security standards/certifications; credit and background checks on our and/or third parties’ personnel; encrypt ion of data; network security controls; threat modeling; data segregation; physical and electronic access controls; physical security; asset management, tracking and disposal; systems monitoring; vendor risk management program; employee security training; penetration testing; red/bl/ ue team exercises; cyber insurance; dedicated cybersecurity staff/ff offiff cer. rr We work with third parties from time to time that assist us from time to time to identify,ff cybersecurity risks, including profesff consultants, cybersecurity software providers, managed cybersecurity service providers, and penetration testing. assess, and manage sional services firff ms, threat intelligence service providers, cybersecurity 49 To operate our business, we utilize certain third-party service providers to perform a variety of functions, such as outsourced business critical functions, clinical research, professional services, SaaS platforms, managed services, property management, cloud-based infraff structurt e, data center faci authentication technology, corporate productivity services, and other func management processes designed to help to manage cybersecurity risks associated with our use of certain of these providers. Depending on the naturt e of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, our vendor management process may include reviewing the cybersecurity practices of such provider, contractuat lly imposing obligations on the provider related to the services they provide and/or the inforff mation they process, conducting security assessments, conducting on-site inspections, requiring their completion of written questionnaires regarding their services and data handling practices, and conducting periodic re-assessments during their engagement. ion and tions. We have certain vendor lities, content delivery,rr rr encrypt ff ff For a description of the risks froff m cybersecurity threats that may materially affeff ct us and how they may do so, refer to Part I, Item 1A. Risk Factors forff additional inforff mation about cybersecurity-related risks. Governance. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including a Chief Information Officer, who reports to the CFO. Management is also hiring appropriate personnel, integrating cybersecurity considerations into the company’s overall risk responsible forff approving budgets, helping management strategy, and forff prepare forff other security-related reports. Our cybersecurity incident response and vulnerabia lity management processes involve management, who participates in our disclosure controls and procedures. oving cybersecurity processes, and reviewing security assessments and communicating key priorities to employees, as well as forff cybersecurity incidents, appr a Our cybersecurity incident response and vulnerabia lity management processes are designed to escalate certain cybersecurity incidents and vulnerabia lities to members of management depending on the circumstances, including work with the company’s incident response team to help the company mitigate and remediate cybersecurity incidents of which they are notifieff d. In addition, the company’s incident response processes include reporting to the Audit committee of the board of directors forff certain cybersecurity incidents. Management is involved with the Company’s efforts to prevent, detect, and mitigate cybersecurity incidents by overseeing preparation of cybersecurity policies and procedurd es, testing of incident response plans, engagement of vendors to conduct penetration tests. Management participates in cybersecurity incident response efforts by being a member of the incident response team and helping direct the company’s response to cybersecurity incidents. Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The board of directors’ audit committee is responsible for overseeing the company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. The audit committee also has access to various reports, summaries or presentations related to cybersecurity threats, risk, and mitigation. r ate headquarters are located in San Diego, California. We believe that our property and equipment are Item 2. Propertiett s Our corpor generally well maintained, in good operating condition and suitabla e forff Details of our leased facilities, which include our corporate headquarters and consist of office space and research and development laboratories, follow. the conduct of our business. Address 12780 El Camino Real, San Diego, Califorff nia 6027 Edgewood Bend Court, San Diego, Califorff nia 6029 Edgewood Bend Court, San Diego, Califorff nia 12790 El Camino Real, San Diego, Califorff nia 10420 Wateridge Circle, San Diego, Califorff nia 12777 High Bluff Dff rive, San Diego, Califorff nia 12770 El Camino Real, San Diego, Califorff nia Type Office Space, Research and Development Laboratories Office Space Office Space Office Space Research and Development Laboratories Office Space Office Space Square Feet 141,000 124,000 110,000 88,000 46,000 45,000 26,000 ry 8, 2022, we entered into a lease agreement forff On Februarr Diego, Califorff nia, including a six-year option forff comprised of office space and research and development laboratories, will serve as our new corpor r-building campus facility to be construcr tion of a fifth building. This campus facility, the construcr a fouff r ate headquarters. ted in San 50 tion of the campus facility is phased. The firff st phase of construcrr The construcr completed in December 2023. As we begin to occupyu existing leased premises when we determine there is excess leased capacity. our new campus facility, we will sublu ease certain of our tion relating to office space was e Proceedindd gs Item 3. Legal For a description of our legal proceedings, referff incorporated herein by reference. Item 4. Mineii None. Safea ty Discii losures to Note 13 to the consolidated financial statements, which is 51 PART II Item 5. Market for Registrant’s C’ Purchases of Eo Our common stock is traded on the Nasdaq Global Select Market under the symbol “NBIX”. omCC mon Equity, Ryy s quity Securitieii Stoctt kholdell elatll edtt r MatMM tett rs and IssuII er ry 5, 2024, there were approximately 43 stockholders of record of our common stock. We have not paid As of Februarr any cash dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future. Recent Sales of Unregistered Securities and Issuer Purchases of Equity Securities There were no unregistered sales of our equity securities and we did not repurchase any of our equity securities during 2023. Stock Perforff mance Graph and Cumulative Total Return* lowing graph presents the cumulative total stockholder returt n assuming the investment of $100 on The folff December 31, 2018 (and the reinvestment of dividends thereafteff common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index. The comparisons in the r intended to forff ecast, future performance of graph below are based upon historical data and are not indicative of, off our common stock or Indexes. r) in each of (i) Neurocrine Biosciences, Inc.’s $250 $225 $200 $175 $150 $125 $100 $75 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 Neurocrine Biosciences, Inc. Nasdaq Composite Nasdaq Biotechnology ection is not “soliciting material”, i” s nii ot deemed “fileff d” with the SecuSS * The material in thitt s sii Commissi ii date hereof ao specifici ally incorporate thitt s sii nd irrespective of any general incorpor ection by rb r eferff ence. on and is not to be incorporated by refee rence into any of our SEC filinff gs whethett ation language in any such SEC filinff rities and Exchange r made befoe re or afteff r thett ee g excep extent we t to thett 52 lowing Management’s Discii ussion and Analysll Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The folff contains forward-looking statements ptt expected continuation of oo product candidates, thett implm ications of clinical trials and other development activities, our plans regul e our financial results of operations. Our actual results ctt s akk forward-looking statements att Repor e this Annual Repor ing capital resources will meet our funding requirements,tt and ifferff materially from those anticipated in these n thitt s Aii ould dll nd uncertainties, including those set forth i is of Financial Condi CC r thitt ngs, thett tion and Results of Operations section heading “IteII m 1A. Riskii Factors.rr ” SeeSS and timing with respect to seeking ur collaborative agreements, thett “ForFF ward-Ldd ooking StaS tements”tt progress, timing, results or t on ForFF m 10-K under thett ertaining to, among othett nnual in Part I ofo s a result of various riskii commercialization of oo the period of to ime that t on ForFF m 10-K. ur product and our existii a atory ar ovals,ll ppr e tt tt l io includes U.S. Food and Drug Administration (FDA) approved treatments forff patients with under-addressed neurological, neuroendocrine and neuropsychiatric disorders. The Overview Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company with a simple purpos suffering for people with great needs, but few options. We are dedicated to discovering and developing life-ff changing treatments forff Company’s diverse portfolff dyskinesia, chorea associated with Huntington's disease, adrenal insuffiff ciency, and endometriosis and uterine fibroids in collaboration with AbbVie Inc. (AbbVie), a European Medicines Agency (EMA) approved treatment for classic congenital adrenal hyperplasia (CAH) and a diversifieff d portfolff multiple therapea utic areas. We launched INGREZZA® (valbenazine) in the U.S. as the firff st FDA-approved drug forff dyskinesia in May 2017 and forff 2023. INGREZZA net product sales totaled $1.8 billion forff net product sales for 2023. the treatment of aduld ts with chorea associated with Huntington's disease in August oximately 99% of our total 2023 and accounted for appr io of advanced clinical-stage programs in the treatment of tardive e: to relieve tardive a r r ation (MTPC) launched DYSVAL® (valbenazine) in Japan for the Our partner Mitsubishi Tanabe Pharma Corpor treatment of tardive dyskinesia in June 2022 and subsequently in other select Asian markets, where it is marketed as REMLEAS® (valbenazine). We receive royalties at tiered percentage rates on MTPC net sales of valbenazine. Our partner AbbVie launched ORILISSA® (elagolix tabla ets) in the U.S. forff associated with endometriosis in August 2018 and ORIAHNN® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsules) in the U.S. forff June 2020. We receive royalties at tiered percentage rates on AbbVie net sales of elagolix. the treatment of heavy menstrual bleeding dued the treatment of moderate to severe pain to uterine fibff roids in Business Highlights • INGREZZA net product sales for 2023 increased $0.4 billion, or 28.6%, to $1.8 billion, reflecting higher prescription demand and increased commercial activities, including continued investment in our branded direct-to- consumer INGREZZA advertising campaign and benefit froff m the expansion of our sales forff ce completed in April 2022. • In the fourth quarter of 2023, we announced that all patent litigation brought by Neurocrine Biosciences against oval to market the companies that filed an Abbreviated New Drugr Application (ANDA) to the FDA seeking appr generic versions of INGREZZA prior to the expiration of the Orange Book listed patents have been resolved. Pursuant to the terms of the respective settlement agreements, such companies have the right to sell generic versions of INGREZZA in the U.S. beginning March 1, 2038, or earlier under certain circumstances. a Pipeline Highlights • Announced positive top-line data from the Phase 3 clinical studi t es of crinecerfont in aduld ts and pediatrics with CAH. Crinecerfont subsu equently received Breakthrough Therapy designation froff m the FDA forff CAH. Data from the Phase 3 studi second quarter of 2024. t a New Drug Application (NDA) submu es will suppor u t the treatment of ission to the FDA in the 53 • Expanded strategic partnership with Voyager Therapea utics Inc. (Voyager) to advance multiple gene therapy the treatment of neurological programs, each enabled by Voyager's next-generation TRACERTM capsids, forff diseases. Upfroff nt fee associated with the agreement totaled $175.0 million, including an equity investment valued at $31.3 million on the transaction date, with the remaining $143.9 million of the purchase price, which includes a the appl icable transaction costs, expensed as in-process research and development in 2023. • In the third quarter of 2023, we announced the FDA accepted the NDA for INGREZZA oral granules, a new sprinkle forff mulation of INGREZZA capsules forff Act target action date of April 30, 2024. oral administration. The agency set a Prescription Drug User Fee • In the third quarter of 2023, the FDA approved INGREZZA for the treatment of aduld ts with chorea associated with Huntington's disease. • In the fourth quarter of 2023, we announced the Phase 2 clinical studi es of NBI-921352 in focal onset seizures and NBI-1065846 for anhedonia in major depressive disorder (MDD) did not meet their primary endpoints. No further development of NBI-921352 in focal onset seizures or NBI-1065846 for anhedonia in MDD is planned at this time. t Results of Operations Revenues Net ProPP duct Sales by Sb alSS esll Product.tt (in mii illill ons) INGREZZA Other Total net product sales Year Ended December 31, 2023 2022 2021 $ $ 1,836.0 24.6 1,860.6 $ $ 1,427.8 13.1 1,440.9 $ $ 1,081.9 8.2 1,090.1 The increases in total net product sales from 2021 to 2022 and froff m 2022 to 2023 were primarily driven by increased INGREZZA net product sales on higher prescription demand and increased commercial activities, including continued investment in our branded direct-to-consumer INGREZZA advertising campaign and benefit from the expansion of our sales forff ce completed in April 2022. Collaboratiott n Revenues by Cb atCC egtt ory.r (in mii illill ons) Royalties Milestones Collabor ation and other a a Total collabor ation revenue Year Ended December 31, 2023 2022 2021 $ $ 21.2 — 5.3 26.5 $ $ 22.3 20.0 5.5 47.8 $ $ 22.3 15.0 6.1 43.4 Royalties refleff ct revenue earned on AbbVie net sales of elagolix for all periods presented and MTPC net sales of valbenazine beginning in June 2022. For 2022, total collabor MTPC's first commercial sale of DYSVAL in Japaa n. a ation revenue also reflected the achievement of a $20.0 million milestone in connection with For 2021, total collabor a MTPC's marketing authorization appl Japaa n. a ation revenue also reflected the achievement of a $15.0 million milestone in connection with ication submission for valbenazine for the treatment of tardive dyskinesia in 54 Operating Expenses Cost of Revenues. illill ons) (in mii Cost of revenues Year Ended December 31, 2023 2022 2021 $ 39.7 $ 23.2 $ 14.3 For 2023 compared to 2022, the increase in cost of revenues was primarily driven by increased INGREZZA and other net product sales, increased amortization costs related to intangible assets, increased reserves for ONGENTYS inventory orr urt ff manufact bsolescence in connection with the termination of our license agreement with BIAL, and increased y of valbenazine drugr ing costs in connection with our suppl product under our collabor ation with MTPC. u a For 2022 compared to 2021, the increase in cost of revenues was primarily driven by increased INGREZZA net product sales. ent by Cb atCC egtt ory.r discovery and development efforff Research and Developmll We suppor t our drugr u discovery, research and development programs, and business development opportunities. Costs are reflected in the the program statust when incurred. Thereforff e, the same program could be applicable development stage based upon reflected in different development stages in the same reporting period. For several of our programs, the research and development activities are part of our collabor ts through the commitment of significant resources to ative arrangements. u a (in mii illill ons) Late stage Early stage Research and discovery Milestones Payroll and benefits Facilities and other Research and development tt Late Stage activities. .ee Consists of costs incurred forff Year Ended December 31, 2023 2022 2021 $ 106.1 $ 107.4 96.5 0.8 206.7 47.5 $ 68.7 81.1 63.7 42.7 163.8 43.8 $ 565.0 $ 463.8 $ 55.7 43.9 50.5 5.4 129.1 43.5 328.1 product candidates in Phase 2 registrational studies and all subsu equent The increases in late stage expenses from 2021 to 2022 and froff m 2022 to 2023 primarily reflected increased investment in the Phase 3 programs forff for EFMODY in CAH. crinecerfont in CAH and valbenazine in schizophrenia and Phase 2 program taSS gea . Consists of costs incurred forff Early Sll application by the applicable regulatory arr product candidates after the appr a oval of an investigational new drug gency through Phase 2 non-registrational studies. For 2023 compared to 2022, the increase in early stage expenses primarily refleff cted increased investment in the Phase 2 program for NBI-1117568 in schizophrenia and other advancing Phase 2 programs in psychiatry,rr offsff et by decreased spend on early stage programs in epilepsy. partially For 2022 compared to 2021, the increase in early stage expenses primarily refleff cted increased investment in advancing Phase 2 programs in epilepsy and psychiatry. Research and Discovery.r Consists of expenses incurred prior to the approval of an investigational new drugr application by the applicable regulatory arr gency. For 2023 compared to 2022, the increase in research and discovery expenses primarily refleff cted increased investment in preclinical development programs including muscarinic agonists, gene therapies, and second generation VMAT2 inhibitors. For 2022 compared to 2021, the increase in research and discovery expenses reflected increased investment in preclinical development programs including psychiatry, epilepsy, and gene therapia es . 55 Mileii stontt arrangements. es. Consist of development and regulatory milestone expenses incurred in connection with our collabor a ative In 2022, we recognized milestone expenses of $30.0 million in connection with the FDA's acceptance of the investigational new drugrr acceptance of the amended KAYAK clinical trial appl application forff NBI-1117568 in schizophrenia, $7.3 million in connection with the FDA's protocol, and $5.0 million in connection with the approval of the ication forff NBI-1070770 in majoa r depressive disorder. TM studyt KK a In 2021, we recognized milestone expense of $5.4 million in connection with the regulatory arr a ppr a trial appl ication in Europe for NBI-921352 in epilepsy. oval of the clinical . Consists of costs incurred forff Payra oll all nd Benefie tsii compensation associated with employees involved in research and development activities. Stock-based compensation may fluctuate froff m period to period based on factors that are not within our control, such as our stock price on the dates stock-based grants are issued. salaries and wages, payroll taxes, benefits and stock-based For 2023 compared to 2022, the increase in payroll and benefitff s expenses primarily refleff cted higher headcount and an increase of $10.3 million in non-cash stock-based compensation expense primarily driven by an incremental charge related to a change in equity grant agreement terms. For 2022 compared to 2021, the increase in payroll and benefitff s expenses primarily refleff cted higher headcount, including an increase of $9.3 million in non-cash stock-based compensation expense driven by an August 2021 equity grant of appr offiff cers and performance-based restricted stock units to our executive officers forff which attainment of the performance-based criteria was achieved in 2022. oximately 0.5 million restricted stock units to our full-time employees other than our executive a s and Othett Facilitie r. Consists of indirect costs incurred forff ii information technology, and other facility-based expenses, such as rent expense. the benefitff of multiple programs, including depreciation, Acquired In-ProPP cess Research and Developmll ent, or IPR&PP D. illill ons) (in mii Acquired in-process research and development Year Ended December 31, 2023 2022 2021 $ 143.9 $ — $ 105.3 In 2023, we recognized $143.9 million of IPR&D expense in connection with our payment of the upfroff nt fee pursuant to our expanded strategic partnership with Voyager. In 2021, we recognized $105.3 million of IPR&D expense, of which $100.3 million was in connection with our payment of the upfroff nt fee pursuant to our collabor ation with Heptares Therapea utics Limited. a Selling, General and Admindd istrativtt e, or SG&A. illill ons) (in mii Selling, general and administrative Year Ended December 31, 2023 2022 2021 $ 887.6 $ 752.7 $ 583.3 For 2023 compared to 2022, the increase in SG&A expenses was primarily driven by increased investment in our commercial initiatives, including our branded direct-to-consumer INGREZZA advertising campaign and deployment of our expanded salesforce completed in April 2022, and increased payroll and benefits expenses on higher headcount and an increase of $10.9 million in non-cash stock-based compensation expense primarily driven by an incremental charge related to a change in equity grant agreement terms. For 2022 compared to 2021, the increase in SG&A expenses was primarily driven by increased investment in our commercial initiatives and increased payroll and benefits expenses on higher headcount and an increase of $29.6 million in non-cash stock-based compensation expense driven by an August 2021 equity grant of appr million restricted stock units to our full-time employees other than our executive officers and performance-based restricted stock units to our executive officers forff which attainment of the performance-based criteria was achieved in 2022. oximately 0.5 a 56 Othett r IncII ome (Ex(( pexx nse), NetNN .tt (in mii illill ons) Interest expense Unrealized gain on equity securities Loss on extinguishment of convertible senior notes Investment income and other, net Total other income (expense), net Year Ended December 31, 2023 2022 2021 $ $ (4.6) $ (7.1) $ 28.4 — 57.4 81.2 30.8 (70.0) 11.2 $ (35.1) $ (25.8) 20.9 — 3.8 (1.1) The change in other income (expense), net from 2021 to 2022 and froff m 2022 to 2023 primarily reflected debt extinguishment charges in connection with the repurchase of our convertible senior notes in 2022, periodic fluctuations in the faiff investments and decreased interest expense on lower total debt outstanding. The change in other expense, net froff m 2021 to 2022 also reflected decreased interest expense dued r values of our equity security investments, increased interest income on our debt security to the adoption of ASU 2020-06 on January 1, 2022. Provision forff Income Taxeaa s. illill ons) (in mii Provision for income taxes Year Ended December 31, 2023 2022 2021 $ 82.4 $ 59.4 $ 11.8 For 2023, the effective tax rate varied from the federal and state statutory rates primarily due to credits generated for research activities, certain nondeductible expenses, the impact of changes in the state effective rate, and losses incurred in forff eign jurisdictions for which no tax benefitff was recorded as management cannot conclude that it is more likely than not that the tax benefit of such losses will be realized in the futff urt e. For 2022, the effective tax rate varied from the federal and state statutory rates primarily due to credits generated for research activities and certain nondeductible expenses, including the premium paid on the repurchase of our convertible senior notes in 2022. For 2021, the effective tax rate varied from the federal and state statutory rates primarily due to excess tax benefits research activities. In the firff st quarter of 2021, associated with stock-based compensation and credits generated forff we began recording a provision for income taxes using an effective tax rate that approximated fedff statutt ory r eral and state ates. rr Net IncII ome. illill ons) (in mii Net income Year Ended December 31, 2023 2022 2021 $ 249.7 $ 154.5 $ 89.6 For 2023 compared to 2022, the increase in net income primarily reflected increased INGREZZA net product sales, decreased debt extinguishment charges in connection with the repurchase of our convertible senior notes in 2022, and decreased milestone expenses in connection with our collabor payments in connection with our expanded strategic partnership with Voyager and increased investment in our commercial initiatives and expanded clinical portfolff ations, partially offsff et by increased upfroff nt io. a For 2022 compared to 2021, the increase in net income primarily reflected increased INGREZZA net product sales and lower upfroff nt payments for asset acquisitions, partially offsff et by increased debt extinguishment charges in connection with the repurchase of our convertible senior notes in 2022 and increased investment in our commercial initiatives and expanded clinical portfolff io. 57 Liquidity and Capital Resources ff Sources of Liquidity We believe that our existing capia tal resources, funds at least the next 12 investment income will be sufficient to satisfy our current and projeo cted funding requirements forff months. However, we cannot guarantee that our existing capital resources and anticipated revenues will be sufficient to conduct and complete all of our research and development programs or commercialization activities as planned. We may seek to access the public or private equity markets whenever conditions are favff orable or pursue opportunities to obtain additional debt finff ancing in the futff urt e. We may also seek additional fundi alliances or other finff ancing mechanisms. However, we cannot provide assurance that adequate funding will be availabla e on terms acceptable to us, if at all. generated by anticipated INGREZZA net product sales and ng through strategic ff Infon rmatiott n Regardingii Our FinFF ancial Conditiodd n. illions)s (in mii Total cash, cash equivalents and marketable securities Working Capital: Total current assets Less total current liabilities Total working capia tal Infon rmatiott n Regardingii Our CasCC h FloFF ws. (in mii illill ons) Cash flows froff m operating activities Cash flows froff m investing activities Cash flows froff m finff ancing activities Effeff ct of exchange rate changes on cash and cash equivalents Change in cash, cash equivalents and restricted cash Cash Flowll s fw roff m OpeOO ratingii Activities. December 31, 2023 1,719.1 1,607.0 654.8 952.2 $ $ $ 2022 1,288.7 1,453.5 537.7 915.8 $ $ $ Year Ended December 31, 2023 2022 2021 $ $ 389.9 $ 339.4 $ (467.1) 65.3 0.3 (177.1) (234.3) (1.3) (11.6) $ (73.3) $ 256.5 (130.2) 27.4 — 153.7 For 2023 compared to 2022, the change in cash flows froff m operating activities primarily reflected increased INGREZZA net product sales and lower milestone payments in connection with our collabor by higher upfu roff nt payments in connection with our expanded strategic partnership with Voyager and increased investment in our commercial initiatives and expanded clinical portfolff io. ations, partially offsff et a For 2022 compared to 2021, the change in cash flows froff m operating activities primarily reflected increased INGREZZA net product sales and lower upfroff nt payments for asset acquisitions, partially offsff et by increased investment in our commercial initiatives and expanded clinical portfolff accounts receivabla e driven by increased INGREZZA net product sales on extended customer payment terms attributed to the expansion of our distribution network at the end of 2021 and an increase in accruer d liabia lities driven discounts and allowances on higher INGREZZA net product sales and the by increased revenue-related reserves forff timing of payments. io. In addition, we experienced an increase in Cash Flowll s fw roff m InvII estingii Activitieii s. Periodic fluff ctuat related to our purchases, sales, and maturities of debt security investments and changes in our portfolff tions in cash floff ws from investing activities forff all periods presented refleff cted timing diffeff io-mix. rences For 2023, cash floff ws from investing activities also refleff cted a $31.3 million equity investment in Voyager. For 2022, cash floff ws from investing activities also refleff cted the acquisition of Diurnal Group plc forff cash, which is net of cash acquired, and a $7.7 million equity investment in Xenon Pharmaceuticals Inc. $42.7 million in 58 Cash Flowll s fw roff m FinFF ancingii Activities. Cash flows froff m finff ancing activities forff stock. all periods presented refleff cted proceeds froff m issuances of our common For 2022, cash floff ws from finff ancing activities also refleff cted the repurchase of $210.8 million aggregate principal amount of our convertible senior notes for an aggregate repurchase price of $279.0 million in cash. Material Cash Requirements In the pharmaceutical industry,rr complete all stages of research and development and commercialize a product candidate, which ultimate length of time and spend required cannot be accurately estimated as it varies substantially according to the type, complexity, novelty and intended use of a product candidate. it can take a significant amount of time and capital resources to successfulff ly ng necessary to execute our business strategies is subject to numerous uncertainties and we may be The fundi ff required to make substantial expenditures if unforff eseen diffiff culties arise in certain areas of our business. In particular, our future capia tal requirements will depend on many fact ors, including: ff • • • • • • • • • • the commercial success of INGREZZA, ORILISSA, ORIAHNN and/or DYSVAL; continued scientific progress in our research and clinical development programs; the magnitude and complexity of our research and development programs; progress with preclinical testing and clinical trials; a the time and costs involved in obtaining regulatory arr ppr ovals; the cost of commercialization activities and arrangements, including our advertising campaigns; the cost of manufacff turing of our product candidates; the costs involved in filff ing and pursuing patent appl interference proceedings or other patent litigation; a ications, enforff cing patent claims, or engaging in competing technological and market developments; and developments related to any future litigation. In addition to the foregoing factors, we have significant futff urt e capital requirements, including: ation and license agreements or acquire businesses froff m time-to-time to enhance our drugrr rts to develop and market products, we may a ss Developmo ents. In addition to our independent effoff External Busineii enter into collabor development and commercial capabilities. With respect to our existing collabor may be required to make potential future payments of up to $17.0 billion upon based milestones. u a ation and license agreements, we the achievement of certain event- Refer to Note 2 to the consolidated financial statements forff more information on our significant collabor license agreements. a ation and Leases. Our operating leases that have commenced have terms that expire beginning 2025 through 2036 and consist of offiff ce space and research and development laboratories, including our corporate headquarters. ry 8, 2022, we entered into a lease agreement forff On Februarr Diego, Califorff nia, including a six-year option forff comprised of office space and research and development laboratories, will serve as our new corpor r-building campus facility to be construcr tion of a fifth building. This campus facility, the construcr a fouff r ate headquarters. ted in San tion of the campus facility is phased. The firff st phase of construcrr The construcr completed in December 2023. As we begin to occupyu existing leased premises when we determine there is excess leased capacity. our new campus facility, we will sublu ease certain of our tion relating to office space was Refer to Note 11 to the consolidated financial statements forff more information on our leases, including a presentation of our approximate future minimum lease payments under non-cancelable operating leases. 59 Convertible Senior Notes. On May 2, 2017, we completed a private placement of $517.5 million in aggregate principal amount of 2.25% fixed-rated convertible senior notes due May 15, 2024 (the 2024 Notes). In 2020, we repurchased $136.2 million aggregate principal amount of the 2024 Notes forff $186.9 million in cash. In 2022, we repurchased $210.8 million aggregate principal amount of the 2024 Notes forff an aggregate repurchase price of $279.0 million in cash. As of December 31, 2023, $170.4 million aggregate principal amount of the 2024 Notes remained outstanding. an aggregate repurchase price of At our election, we may redeem all or any portion of the 2024 Notes under certain circumstances. In addition, holders of the 2024 Notes may convert the 2024 Notes at any time until the close of business on the scheduled trading day immediately preceding May 15, 2024. Upon conversion, holders will receive the principal amount of their 2024 Notes and any conversion premium, calculated based on the per share volume-weighted average price for each of the 30 consecutive trading days during the observation period (as more fulff Indenturt e), in cash. Unless earlier converted, redeemed, or repurchased, we would be required to pay interest of $1.9 million in 2024 and pay the aggregate principal amount outstanding of $170.4 million upon Notes. ly described in the 2017 maturity of the 2024 u The 2024 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by us. There are customary err default with respect to the 2024 Notes, including that upon accruer d and unpaid interest on the 2024 Notes would become dued certain events of default, 100% of the principal and and payable. vents of u Refer to Note 5 to the consolidated financial statements forff more information on the 2024 Notes. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon financial statements that we have prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements requires management to make estimates and judgments that affeff ct the reported amounts of assets, liabia lities and expenses, and related disclosures. On an on-going basis, we evaluate these estimates, including those related to revenue recognition. Estimates are based on historical experience, information received froff m third parties and on various other assumptions that are believed to be reasonabla e under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabia lities that are not readily apparent from other sources. Actuat estimates under diffeff material change to the finff ancial statements. rent assumptions or conditions. Historically, revisions to our estimates have not resulted in a l results may diffeff r froff m these u The items in our financial statements requiring significant estimates and judgments are as folff lows: ent Rebatestt . We recognize revenues froff m product sales of INGREZZA net of reserves applicable discounts and allowances that are offerff ed within contracts with our customers, payors, and discounts Reserves for GovGG ernmrr establa ished forff other third parties. Such reserves include estimates forff including under the Medicaid Drugr Rebate Program and Medicare Part D. The liabia lity for such rebates consists of claims from prior quarters that remain unpaid, or forff which an invoice has not been received, invoices received forff and estimated rebates for the current appl l historical rebates by state, estimated payor of our sales that will be subju ect to such rebates and are based on actuat mix, state and fedff l terms, as supplemented by management’s judgement. There is a significant time-lag in our receiving rebate notices from each state (generally, several months or longer afteff icable reporting period. Such estimates require us to project the magnitude l government rebates have not differed materially from our estimates. government rebates that we are obligated to pay forff eral regulations, and relevant contractuat r a sale is recognized). To date, actuat a 60 iffeff rence between the tax basis of assets and liabia lities and their rences are expected to reverse. A valuation allowance is establa ished forff rences) at enacted tax rates in effeff ct for the years in which deferred tax assets for which it is Income Taxeaa s. Our income tax provision is computed under the asset and liabia lity method. Significant estimates are required in determining our income tax provision. Some of these estimates are based on interprr etations of existing tax laws or regulations. We recognize deferred tax assets and liabia lities forff the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabia lities are determined on the basis of the diffeff respective finff ancial reporting amounts (temporary drr the diffeff more likely than not that some portion or all of the deferff will not be realized. We periodically re-assess the need forff based on various factors including our historical earnings experience by taxing jurisdiction, and forff ecasts of future operating results and utilization of net operating losses and tax credits prior to their expiration. Significant judgment is required in making this assessment and, to the extent that a reversal of any portion of our valuation allowance against our deferred tax assets is deemed appropriate, a tax benefitff will be recognized against our income tax provision in the period of such reversal. Additional Information Refer to Note 1 to the consolidated financial statements forff information on accounting pronouncements that have impacted or are expected to materially impact our consolidated financial condition, results of operations, or cash flows. red tax assets, including net operating losses and tax credits, a valuation allowance against our deferred tax assets Item 7A. Quantitative and Qualitall tive Disclosll ures About MarMM kerr t Risk Interest Rate Risk We maintain a diversified investment portfolff maturities of up tu entities and corpor to preserve principal and maintain liquidity. If a 1% unfavff orable change in interest rates were to have occurred on December 31, 2023, it would not have had a material effeff ct on the faiff io as of that date. o three years, including investments in commercial paper, securities of government-sponsored ate bonds that are subject to interest rate risk. The primary objective of our investment activities is io consisting of low-risk, investment-grade debt securities with r value of our investment portfolff r 61 Item 8. Finaii ncial StaSS tements att nd Supplpp emll entary Data NEUROCRINE BIOSCIENCES, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) Consolidated Balance Sheets Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements Pageg 63 65 66 67 68 69 62 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Neurocrine Biosciences, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Neurocrine Biosciences, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, stockholders’ equity and cash floff ws for each of the three years in the period ended December 31, 2023, and the red to as the “consolidated financial statements”). In our opinion, the consolidated related notes (collectively referff financial statements present fairly, in all material respects, the finff ancial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash floff ws for each of the three years in the period ended December 31, 2023, in conforff mity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over finff ancial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated Februar opinion thereon. ry 9, 2024 expressed an unqualified Basis forff Opinion These finff ancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s finff ancial statements based on our audits. We are a public accounting firff m registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. fedff securities laws and the appl icable rules and regulations of the Securities and Exchange Commission and the PCAOB. eral a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonabla e assurance about misstatement, whether dued to error or fraff ud, and performing procedurd es that material misstatement of the financial statements, whether dued respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonabla e basis for our opinion. to error or fraff ud. Our audits included performing procedurd es to assess the risks of whether the financial statements are free of material a Critical Audit Matter The critical audit matter communicated below is a matter arising froff m the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subju ective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. 63 Descripti the MatMM ter ion ofo Reserves for governmrr ent rebatestt related to ptt roduct sales The Company sells product to specialty pharmacies and specialty distributors in the US (collectively, “customers”). As described in Note 1 to the consolidated financial statements, the Company recognizes revenues forff management’s estimates of reserves, including drugr government rebate programs (“government rebates”). Estimated government rebates are presented within accounts payable and accruer d liabia lities on the consolidated balance sheet. sales of INGREZZA to its customers after deducting coverage gap ra ebates, it will provide under Auditing the estimates of government rebates was complex and judgmental dued uncertainty involved in management’s assumptions used in the measurement process. In particular, management was required to estimate at December 31, 2023, the portion of product that is expected to be subju ect to a government rebate, the applicable contractuat rebate percentage by payor type underlying the revenue and the applicable rebate amount applicable for the payor type. to the level of l government How WeWW Addrdd essed thett Matter in Our Audit We tested the Company’s internal controls over management’s process for estimating the portion of product that is expected to be subju ect to a government rebate at December 31, 2023. This included controls over management’s review of significant assumptions and other inputs into the estimation of government rebates including the accuracy of data used in the calculation. To test management’s estimate of government rebate reserves our audit procedurd es included, among others, evaluating the methodologies used, testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analyses. Specificff ally, we compared the significant assumptions to third-party reports used by the Company to estimate government rebate reserves at December 31, 2023. In addition, we compared the underlying government rebate percentages used in the Company’s analyses to those published by the applicable government entity. We assessed the historical accuracy of management’s rebate estimates, tested payments of rebates and performed a sensitivity analysis of significant assumptions to evaluate the changes in the rebate allowance that would result from changes in the assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1992. San Diego, Califorff nia Februar ry 9, 2024 64 December 31, 2023 2022 $ $ $ 251.1 780.5 439.3 38.3 97.8 1,607.0 362.6 687.5 276.5 161.9 70.8 35.5 49.6 3,251.4 448.8 170.1 35.9 654.8 258.3 106.3 1,019.4 262.9 726.4 350.0 35.1 79.1 1,453.5 305.9 299.4 87.0 102.1 58.6 37.2 25.0 2,368.7 347.6 169.4 20.7 537.7 93.5 29.7 660.9 — — 0.1 2,382.0 7.0 (157.1) 2,232.0 3,251.4 $ 0.1 2,122.4 (7.9) (406.8) 1,707.8 2,368.7 $ $ $ $ NEUROCRINE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEETS ept per share datdd a)tt illions, es xcee (in mii Assets Current assets: Cash and cash equivalents Debt securities availabla e-for-sale Accounts receivabla e, net Inventory,r net Other current assets Total current assets Deferred tax assets Debt securities availabla e-for-sale Right-of-use assets Equity securities Property and equipment, net Intangible assets, net Other assets Total assets Liabilities and Stockholders’ Equity Current liabia lities: Accounts payable and accruerr d liabia lities Convertible senior notes Other current liabia lities Total current liabia lities Noncurrent operating lease liabia lities Other long-term liabia lities Total liabia lities Stockholders’ equity: red stock, $0.001 par value; 5.0 shares authorized; no shares issued and outstanding Preferff Common stock, $0.001 par value; 220.0 shares authorized; 98.7 and 96.5 shares issued and outstanding, respectively Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficff it Total stockholders’ equity Total liabia lities and stockholders’ equity See accompanying notes to consolidated financial statements. 65 NEUROCRINE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS INCOME AND COMPREHENSIVE INCOME illill ons, except per share datdd a)tt (in mii Revenues: ation revenue Net product sales a Collabor Total revenues Operating expenses: Cost of revenues Research and development Acquired in-process research and development Selling, general and administrative Total operating expenses Operating income Other income (expense): Interest expense Unrealized gain on equity securities Loss on extinguishment of convertible senior notes Investment income and other, net Total other income (expense), net Income before provision for income taxes Provision for income taxes Net income Foreign currency translation adjustments, net of tax Unrealized gain (loss) on debt securities availabla e-for-sale, net of tax Comprehensive income Earnings per share, basic Earnings per share, diluted Weighted average common shares outstanding, basic Weighted average common shares outstanding, diluted Year Ended December 31, 2023 2022 2021 $ $ $ $ 1,860.6 26.5 1,887.1 39.7 565.0 143.9 887.6 1,636.2 250.9 (4.6) 28.4 — 57.4 81.2 332.1 82.4 249.7 2.4 12.5 264.6 2.56 2.47 97.7 101.0 $ $ $ $ 1,440.9 47.8 1,488.7 23.2 463.8 — 752.7 1,239.7 249.0 (7.1) 30.8 (70.0) 11.2 (35.1) 213.9 59.4 154.5 2.9 (9.1) 148.3 1.61 1.56 95.8 98.9 1,090.1 43.4 1,133.5 14.3 328.1 105.3 583.3 1,031.0 102.5 (25.8) 20.9 — 3.8 (1.1) 101.4 11.8 89.6 — (3.5) 86.1 0.95 0.92 94.6 97.9 $ $ $ $ See accompanying notes to consolidated financial statements. 66 NEUROCRINE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY illill ons) (in mii Balances at December 31, 2020 Net income Other comprehensive loss, net of tax Stock-based compensation expense Issuances of common stock under stock plans Balances at December 31, 2021 Net income Other comprehensive loss, net of tax Cumulative-effeff ct adjud stment due to adoption of ASU 2020-06 Stock-based compensation expense Issuances of common stock under stock plans Balances at December 31, 2022 Net income Other comprehensive income, net of tax Stock-based compensation expense Issuances of common stock under stock plans Balances at December 31, 2023 Common Stock $ $ Shares 93.5 — — — 1.4 94.9 — — — — 1.6 96.5 — — — 2.2 98.7 $ $ $ 0.1 — — — — 0.1 — — — — — 0.1 — — — — 0.1 $ $ $ Additional Paid-In Capital 1,849.7 $ — — 134.2 Accumulated Other Comprehensive Income (Loss) 1.8 $ — (3.5) — $ 27.5 2,011.4 — — (106.8) 173.1 44.7 2,122.4 — — 194.3 — $ (1.7) $ — (6.2) — — — $ (7.9) $ — 14.9 — Accumulated Deficit Total Stockholders’ Equity (725.4) $ 89.6 — — — (635.8) $ 154.5 — 74.5 — — (406.8) $ 249.7 — — 1,126.2 89.6 (3.5) 134.2 27.5 1,374.0 154.5 (6.2) (32.3) 173.1 44.7 1,707.8 249.7 14.9 194.3 65.3 2,382.0 $ — 7.0 $ — (157.1) $ 65.3 2,232.0 See accompanying notes to consolidated financial statements. 67 NEUROCRINE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS illill ons) (in mii Cash flows froff m operating activities: Net income Adjud stments to reconcile net income to net cash froff m operating activities: Stock-based compensation expense Depreciation (Accretion) amortization of (discount) premium on investments, net Amortization of debt discount Amortization of debt issuance costs Amortization of intangible assets Changes in faiff Deferred income taxes Loss on extinguishment of convertible senior notes Other r value of equity securities Changes in operating assets and liabia lities: Accounts receivabla e Inventoryr Accounts payable and accruerr d liabia lities Other assets and liabia lities, net Cash flows froff m operating activities Cash flows froff m investing activities: Purchases of debt securities availabla e-for-sale Sales and maturities of debt securities availabla e-for-sale Acquisition of business, net of cash acquired Purchases of equity securities Capia tal expenditures Cash flows froff m investing activities Cash flows froff m finff ancing activities: Issuances of common stock under benefitff plans Repurchases of convertible senior notes Cash flows froff m finff ancing activities Effeff ct of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Supplemental Disclosure: Non-cash capital expenditures Right-of-use assets obtained in exchange for new operating lease liabia lities Cash paid for interest Cash paid for income taxes Year Ended December 31, 2023 2022 2021 $ 249.7 $ 154.5 $ 89.6 194.3 17.8 (18.3) — 0.7 3.5 (28.4) (56.7) — (0.9) (89.3) 5.4 64.3 47.8 389.9 (1,379.9) 972.4 — (31.3) (28.3) (467.1) 65.3 — 65.3 0.3 (11.6) 270.7 259.1 2.5 200.8 3.8 51.5 $ $ $ $ $ $ $ $ $ $ 173.1 15.1 3.7 — 1.2 0.5 (30.8) 19.1 70.0 0.4 (162.2) (2.6) 114.6 (17.2) 339.4 (621.2) 511.0 (42.7) (7.7) (16.5) (177.1) 44.7 (279.0) (234.3) (1.3) (73.3) 344.0 270.7 $ 0.7 $ — $ $ 6.6 $ 14.4 134.2 10.9 7.4 16.2 1.1 — (20.9) 4.3 — (3.0) (28.4) (2.5) 56.8 (9.2) 256.5 (800.1) 697.9 — (4.6) (23.4) (130.2) 27.5 (0.1) 27.4 — 153.7 190.3 344.0 1.9 23.4 8.6 5.1 See accompanying notes to consolidated financial statements. 68 NEUROCRINE BIOSCIENCES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Summary of Significff ant Accounting Policies Organr Company, we, our or us) is a neuroscience-focused biopharmaceutical company focff used on discovering, developing and delivering innovative therapies to help ease the burden of debilitating disorders and diseases. ss. Neurocrine Biosciences, Inc. and its subsu idiaries (Neurocrine Biosciences, the izatiott n and Busineii We operate in a single business segment, which includes all activities related to the research, development and the treatment of neurological, neuroendocrine and neuropsychiatric commercialization of pharmaceuticals forff disorders and reflects the way in which internally-reported finff ancial information is regularly reviewed by our chief operating decision maker to analyze performance, make decisions and allocate resources. of Consolidll atdd iott n. The consolidated financial statements include the accounts of Neurocrine Biosciences Principlii esll as well as our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. tt stEE ima tes. The preparation of financial statements in conforff mity with accounting principles generally Use of Eo accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affeff ct the amounts reported in the financial statements and the accompanying notes. Actuat those estimates. l results could diffeff r froff m Cash Equivalents.tt We consider all highly liquid investments that are readily convertible into cash without penalty and have an original maturt ity of three months or less at the time of purchase to be cash equivalents. eceivable.ll Accounts receivable are recorded net of customer allowances for prompt payment discounts, credit losses. Our estimate for the allowance forff credit losses, which has not Accounts Rtt chargebacks, and any allowance forff been significant to date, is determined based on existing contractuat customers, and individual customer circumstances. l payment terms, actuat l payment patterns of our Our exposure to credit losses may increase if our customers are adversely affected by changes in healthcare laws, coverage and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, or other customer-specific fact ors. ff s valued at the lower of cost or net realizable value. We determine the cost of inventory urr l cost based on the firff st-in, first-out method. We perform an Inventory.yy Inventory i rr the standard-cost method, which appr assessment of the recoverabia lity of our inventory orr inventory t commercialization is considered probabla e and the futff urt e economic benefit is expected to be realized, based on management’s judgment, we capia talize pre-launch inventory crr o its net realizabla e value in the period in which the impairment is firff st identifieff d. When future n a quarterly basis and write down any excess and obsolete a osts prior to regulatory arr ppr oximates actuat oval. a rr sing s. Debt securities consist of investments in certificates of deposit, corpor Debt Securitieii ate debt securities and securities of government-sponsored entities. We classify debt securities as availabla e-for-sale. Debt securities availabla e-for-sale are recorded at fair value, with unrealized gains and losses included in other comprehensive income or loss, net of tax. We exclude accruer d interest froff m both the fair value and amortized cost basis of debt securities. A debt security is placed on nonaccruar days delinquent. Interest accrued but not received forff interest income. l status at the time any principal or interest payments become 90 a debt security placed on nonaccruar l status is reversed against r Interest income includes amortization of purchase premium or discount. Premiums and discounts on debt securities are amortized using the effeff ctive interest rate method. Gains and losses on sales of debt securities are recorded on the trade date in investment income and other, net, and determined using the specific identificff ation method. 69 r value through earnings. For debt securities availabla e-for-sale that do not meet the Alloll wance forff Creditdd Losses. For debt securities availabla e-for-sale in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to faiff aforff ementioned criteria, we evaluate whether the decline in faiff In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes in interest rates, and any changes to the rating of the security by a rating agency, among other fact assessment indicates that a credit loss exists, the present value of cash floff ws expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash floff ws expected to be credit losses is recorded, collected is less than the amortized cost basis, a credit loss exists and an allowance forff limited by the amount that the faiff r value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance forff credit losses is recognized in other comprehensive income or loss, as applicable. r value has resulted froff m credit losses or other factors. ors. If this ff Accruer d interest receivabla es on debt securities availabla e-for-sale were $11.2 million and $4.7 million, respectively, as of December 31, 2023 and 2022. We do not measure an allowance forff receivabla es. For the purpos es of identifyiff ng and measuring an impairment, accruer d interest is excluded froff m both the fair value and amortized cost basis of the debt security. Uncollectible accruer d interest receivabla es associated with an impaired debt security are reversed against interest income upon identificff ation of the impairment. No accrued interest receivabla es were written off dff urd ing 2023, 2022 or 2021. credit losses forff accruer d interest rr inFF ancial Instrutt ments.tt We record cash equivalents, debt securities availabla e-for-sale and equity Fair Value of Fo security investments at faiff market data (observabla e inputs) and our own assumptions (unobservabla e inputs). The fair value hierarchy consists of the folff r value based on a fair value hierarchy that distinguishes between assumptions based on lowing three levels: Level 1 – Quoted prices (unadjusted) in active markets forff identical assets or liabia lities. Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets subsu tantially or liabia lities in markets that are not active or inputs that are observabla e, either directly or indirectly, forff the fulff l term of the asset or liabia lity. Level 3 – Unobservabla e inputs that refleff ct our own assumptions about the assumptions that market participants would use in pricing the asset or liabia lity when there is little, if any, market activity for the asset or liabia lity at the measurement date. Investments in debt securities availabla e-for-sale are classified as Level 2 and carried at fair value. We estimate the fair value of debt securities available-for-sale by utilizing third-party pricing services. These pricing services utilize industry standard valuation models, including both income and market-based approaches, forff which all significant inputs are observabla e, either directly or indirectly, to estimate fair value. Such inputs include market pricing based on real-time trade data forff ents, issuer credit spreads, benchmark yields, broker/dealer quotes and other observabla e inputs. We validate valuations obtained froff m third-party pricing services by understanding the models used, obtaining market values from other pricing sources and analyzing data in certain instances. similar instrumr We deem transferff s between levels of the faiff during which the event or change in circumstances that caused the transferff occurred. r value hierarchy to have occurred at the end of the reporting period Investmett nts.tt We account for certain equity investments subject to the equity method of accounting, or Equityii through which we have the ability to exercise significant influence (but not control) over the operating and financial policies of an investee, under the fair value option. In assessing whether we exercise significant influff ence, we consider the naturt e and magnitude of such an investment, the voting and protective rights we hold, any participation ative or other business in the governance of the investee and other relevant fact r value relationship. Such investments in publicly traded companies are currently classified within Level 1 of the faiff hierarchy and carried at faiff r value, with any changes in the fair value of such investments recognized in earnings. ors, such as the presence of a collabor a ff nd Equipmii ent. Property and equipment are stated at cost and depreciated over the estimated useful lives Property att of the assets using the straight-line method. Equipment is depreciated over an average estimated useful life off f 3 to 7 years. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining lease term. Depreciation expense was $17.8 million forff 2022 and $10.9 million forff 2023, $15.1 million forff 2021. 70 ss Combinatiott ns. Under the acquisition method of accounting, we allocate the faiff Busineii consideration transferred to the tangible and identifiable intangible assets acquired and liabia lities assumed based on their estimated faiff especially with respect to intangible assets. We record the excess consideration over the aggregate faiff tangible and intangible assets, net of liabia lities assumed, as goodwill. In addition, costs that we incur to complete the business combination, such as legal and other professional fees when incurred. r values on the date of acquisition. These valuations require us to make estimates and assumptions, , are expensed as selling, general and administrative r value of the total r value of ff Goodwill, Intangible Assets and Other Long-Lgg ived Assets. Assets acquired, including intangible assets and in- process research and development (IPR&D) and liabia lities assumed are measured at fair value as of the acquisition date. Goodwill, which has an indefinite usefulff acquired. Intangible assets acquired in a business combination that are used forff indefinite lived until the completion or abaa ndonment of the associated research and development efforts. Upon reaching the end of the relevant research and development projeo ct (i.e., upon commercialization), the IPR&D asset is amortized over its estimated useful life.ff asset is expensed in the period of abaa ndonment. If the relevant research and development projeo ct is abandoned, the IPR&D r value of the net assets IPR&D activities are considered life, represents the excess of cost over faiff Goodwill and IPR&D are not amortized; however, they are reviewed for impairment at least annually, as of October 1, and more freff quently if an event occurs indicating the potential forff considered to be impaired if the carrying value of the reporting unit or IPR&D asset exceeds its respective faiff impairment. Goodwill and IPR&D are r value. We perform our goodwill impairment analysis at the reporting unit level, which aligns with our reporting strucr and availabia lity of discrete finff ancial information. During the goodwill impairment review, we assess qualitative factors to determine whether it is more likely than not that the faiff amount, including goodwill. The qualitative fact industry and market considerations, and our overall financial performance. If, afteff qualitative facff the carrying amount, then no additional assessment is deemed necessary. Otherwise, we proceed to compare the estimated faiff reporting unit exceed the faiff the qualitative assessment in a period and proceed to perform the quantitative goodwill impairment test. r value of the reporting unit with the carrying value, including goodwill. If the carrying amount of the r value, we record an impairment loss based on the difference. We may elect to bypass r assessing the totality of these r value of the reporting unit is less than tors, we determine that it is not more likely than not that the faiff ors include, but are not limited to, macroeconomic conditions, r value of the reporting unit is less than the carryirr ng ture ff Our identifiaff bla e intangible assets with a finff identifiaff bla e intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives. re typically comprised of acquired product rights. The cost of ite life aff lives and other long-lived assets are potentially impaired. If indicators of impairment exist, an We perform regular reviews to determine if any event has occurred that may indicate that intangible assets with finite usefulff impairment test is performed to assess the recoverabia lity of the affected assets by determining whether the carrying amount of such assets exceeds the undiscounted expected future cash floff ws. If the affeff cted assets are not recoverabla e, we estimate the faiff r value of the assets and record an impairment loss if the carrying value of the assets exceeds the fair value. Factors that may indicate potential impairment include a significant decline in our stock price and market capitalization compared to the net book value, significant changes in the ability of a particular asset to generate positive cash floff ws for our strategic business objectives, and the pattern of utilization of a particular asset. la lease at contract iinceptiion. )OU) assets represent our hth le lease term a dnd opera iti gng lleas le liiabibia li ilities represent our blobligigatiion to m kake LLeases. We ddetermiin ie if an arra gngement iis irightght to use an u dnde lrlyiyi gng asset forff llease p yayments a iri isi gng from thhe llease. ROU assets andd opera iting lg leas le liiabibia li ilities are recognigni dzed at hthe commencement ddate bbasedd on thhe present v lalue of llease p yayments over thhe llease term. term, w ie inclludde optiions to exte dnd or termiinate thhe llease whhe in i it is reasonablbla yy certaiin hthat su hch optiions exer icisedd. iRightght-of-use ((R hWhen ddetermiiniingg thhe llease iwillll bbe As none of our opera iting lg leases pro ividde an iim lpliiciit rate, we use our iincremental bl borro iwi gng rate bbasedd on thhe iinformatiion availilablbla e at commencemen dt dat borborro iwi gng rate iis ddetermiin ded usiingg a secured bd borro iwi gng rate for thhe same currencyy a dnd term as hthe asso iciat ded llease. iminiingg thhe present v lalue of llease p yayments. Ou ir increment lal ie i dn deter hTh le lease p yayments usedd t do deter iincen itives receiiv ded a dnd are recogni imine our ROU assets may iy inclludde prep iaidd or accruer d ld lease p yayments a dnd any ly lease ogni dzed iin ROU assets iin our cons lolididat ded bballance shheets. 71 Ou lr lease aggreements m yay iin lcl dude bboth lh lease a dnd non-llease components, hwhiichh we account for as a isinglngl component hwhen hthe p yayments are fifixedd. Va iri bablle payyments iin lcl duded id i ln lease aggreements are expens ded as iincurredd. le lease Our opera iting lg leases are reflflected id in ROU assets, noncurrent opera iting lg leas le liiabibia li ilities, andd o hther current liliabibia lili ities iin our cons lolididat ded bballance shheets. Lease expense forff over thhe llease term. is is recognigni dzed on a str iaightght l-liin be basiis lm lease p yayment imi inimu urrency.c Assets and liabia lities are translated into the reporting currency using the exchange rates in effect Foreign cgg on the consolidated balance sheet dates. Equity accounts are translated at historical rates, except forff the change in retained earnings during the period, which is the result of the income statement translation process. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive income (loss) in the accompanying consolidated statements of stockholders’ equity. itiott n. We recognize revenue when the customer obtains control of promised goods or services in an Revenue Recogno amount that reflects the consideration which we expect to receive in exchange for such goods or services. Revenue is recognized using a fivff e-step model: (i) identify cff obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation. We only apply the five-step model to contracts when it is probabla e that we will collect the consideration we are entitled to in exchange for the goods or services we transferff ontract(s) with a customer; (ii) identify t to the customer. he performance ff Net ProPP duct Sales. In the U.S., we sell INGREZZA® (valbenazine) primarily to specialty pharmacy providers and distributors. We recognize net product sales when the customer obtains control of our product, which occurs at a point in time, typically upon delivery orr f our product to the customer. a icable discounts and allowances that Revenues froff m product sales are recorded net of reserves established for appl are offered within contracts with our customers, payors, and other third parties. Such estimates are based on information received froff m external sources (such as written or oral information obtained froff m our customers with respect to their period-end inventory l evels and sales to end-users durd ing the reporting period), as supplemented by management’s judgement. Our process forff components does not differ materially from historical practices. The transaction price, which includes variabla e consideration refleff cting the impact of discounts and allowances, may be subju ect to constraint and is included in the net sales price only to the extent that it is probabla e that a significant reversal of the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts may ultimately differ froff m our estimates. If l results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment. actuat estimating reserves established forff these variabla e consideration rr Our significant categories of sales discounts and allowances are as folff lows: Product Discounts.tt Product discounts are based on payment terms extended to our customers at the time of sale, which include incentives offeff prompt payment. We maintain a reserve for product discounts based on our historical experience, including the timing of customer payments. To date, actuat materially from our estimates. l product discounts have not differed red forff Government Rebates. We are obligated to pay rebates for discounts including under the Medicaid Drug Rebate Program and Medicare Part D. The liabia lity for such rebates consists of invoices received forff claims from prior quarters that remain unpaid, or forff which an invoice has not been received, and estimated rebates for the current applicable reporting period. Such estimates are based on actuat and fedff accruar significant time-lag in our receiving rebate notices from each state (generally, several months or longer after a sale is recognized). Estimated rebates are recorded as a reducd tion of revenue in the period the related sale is recognized. To date, actuat eral regulations, and relevant contractuat l terms, as supplemented by management’s judgement. Our rebate l calculations require us to project the magnitude of our sales that will be subju ect to these rebates. There is a l government rebates have not differed materially froff m our estimates. l historical rebates by state, estimated payor mix, state rence between the list price, or the price at which we sell our products to our customers, and Charger backs. The diffeff the contracted price, or the price at which our customers sell our products to qualifieff d healthcare professionals, is charged back to us by our customers. In addition to actuat chargebacks based on estimated contractuat channel. To date, actuat l chargebacks have not differed materially from our estimates. l chargebacks received, we maintain a reserve for l discounts on product inventory l evels on-hand in our distribution rr 72 Payoa r and Pharmacy Rebates. We are obligated to pay rebates as a percentage of sales under payor and pharmacy l rebate percentages, sales made contracts. We estimate these rebates based on actuat through the payor channel, and purchases made by pharmacies. To date, actuat l payor and pharmacy rebates have not differed materially from our estimates. l historical rebates, contractuat Patient Financial Assistii ance. To help patients afford our products, we offerff with prescription drugr the cost per claim we expect to receive in connection with inventory t period end. To date, actuat copay requirements. We accrue forff rr financial assistance to qualifieff d patients patient financial assistance based on estimated claims and hat remains in the distribution channel at l patient financial assistance has not differed materially from our estimates. r FeesFF Distii rit butor and Othett are generally recorded as a reducd tion of revenue, to certain customers that provide us with inventory mrr data, and/or distribution services. Costs associated with such services are expensed as selling, general and administrative to the extent we can demonstrate a separable benefit and fair value forff distributor and other fees have not differed materially froff m our estimates. . In connection with the sales of our products, we pay distributor and other fees, which anagement, l such services. To date, actuat Product Returns. We offeff r our customers product returt n rights primarily limited to errors in shipment, damaged product, and expiring product, provided it is within a specified period of the product expiration date, as set fort the associated distribution agreement. Where actuat based on benchmarking data forff reduction of revenue in the period the related sale is recognized. Once product is returt ned, it is destroyed. To date, actuat rr xperience. Such estimates are recorded as a h in s not availabla e, we estimate a returt ns allowance l product returt ns have not differed materially from our estimates. similar products and industry err l returt ns history i ff Collaboratiott n Revenues. We have entered into collabor certain rights to our product candidates to third parties. The terms of these arrangements typically include payment to us for one or more of the folff commercial milestone payments; and royalties on net sales of the out-licensed products. lowing: non-refundabla e, up-front license fees; development, regulatory,rr ation and license agreements under which we out-license and/or a If the license to our intellectuat Licenses of Io ntII ellectual Property.tt performance obligations identified in the arrangement, we recognize revenue from non-refundabla e, up-front fees allocated to the license when the license is transferff red to the customer and the customer is able to use, and benefitff from, the license. For licenses that are bundled with other promises, we assess the naturt e of the combined performance obligation to determine whether it is satisfieff d over time or at a point in time and, if over time, the appropriate method of measuring progress forff s. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. es of recognizing revenue from non-refundabla e, up-front feeff l property is determined to be distinct from the other rr purpos Milestones. At the inception of each arrangement that includes development, regulatory,rr milestones, we evaluate whether achieving the milestones is considered probabla e and estimate the amount to be included in the transaction price using the most likely amount method. If it is probabla e that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Amounts forff milestones that are not within our control, such as when achievement of a specified event is dependent on the development activities of a third party or approvals from regulators, are not considered probabla e of being achieved until such specifieff d event occurs. Revenue is recognized froff m the satisfaction of performance obligations in the amount billabla e to the customer. and/or commercial Royao lties. For arrangements that include sales-based royalties, and under which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Each quarterly period, sales-based royalties are recorded based on estimated quarterly net sales of the associated collaboration products. Diffeff the period in which they become known, which typically follows the quarterly period in which the estimate was made. To date, actual royalties received have not differed materially from our estimates. l results and estimated amounts are adjud sted for in rences between actuat 73 reCC dit Rii isk. Financial instrumr Concentratiott n of Co primarily of cash and cash equivalents, accounts receivabla e and debt securities availabla e-for-sale. We have establa ished guidelines to limit our exposure to credit risk by diversifying our investment portfolff io with low-risk investment-grade debt securities with maturities of up to three years and by placing our investments with high- credit-quality finff ancial institutions to maintain liquidity. To date, we have not experienced any credit losses and do not believe we are exposed to any significant credit risk in connection with these finff ancial instruments. ents that potentially subju ect us to concentration of credit risk consist We have entered into agreements forff providers and distributors and all of our product sales of INGREZZA are to these customers. Four of these customers represented approximately 91% of our total product sales for 2023 and appr accounts receivabla e balance as of December 31, 2023. the distribution of INGREZZA with a limited number of specialty pharmacy oximately 98% of our a Cost of Revenues. Cost of revenues includes third-party manufact overhead costs primarily for the manufact in connection with our suppl Corporation, royalty feeff obsolete inventory t future demand. ff y of valbenazine drugrr rr product under our collabor u s on net sales of elagolix, amortization of intangible assets, and adjud stments forff ation with Mitsubishi Tanabe Pharma excess and a o the extent management determines that the cost cannot be recovered based on estimates about a ff urt e and distribution of INGREZZA drugrr ing, transportation, freight, and indirect urt product sold, manufact urt ff ing costs ent, or R&D. R&D expenses primarily consist of preclinical and clinical trial costs, payroll Research and Developmll and benefitsff certain facility-based costs, and costs associated with our collabor milestones. All such costs are expensed as R&D when incurred. costs, including stock-based compensation associated with employees involved in R&D activities, a ative arrangements, including event-based tioii ns. We account for acquisitions of assets (or groups of assets) that do not meet the definff Asset Acquisiii business using the cost accumulation method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets (or group of assets) acquired on the basis of their relative faiff r value(s) on the measurement date. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition forff date. Futurt e costs to develop these assets are expensed as R&D when incurred. use in R&D activities which have no alternative futff urt e use are expensed as IPR&D on the acquisition ition of a tising ExpeEE Adverdd Advertising expense was $159.9 million forff nse. Advertising costs are expensed as selling, general and administrative when incurred. 2023, $149.7 million for 2022 and $139.8 million for 2021. sed ComCC pem nsatiott n. We grant stock options to purchase our common stock to eligible employees and Stoctt k-Ba- directors and also grant certain employees restricted stock units (RSUs) and performance-based restricted stock units (PRSUs). Additionally, we allow employees to participate in an employee stock purchase plan (ESPP). We estimate the fair value of stock options and shares to be issued under the ESPP using the Black-Scholes option- pricing model on the date of grant. RSUs are valued based on the closing price of our common stock on the date of grant. The faiff r value of equity instruments expected to vest is recognized and amortized on a straight-line basis over the requisite service period of the award, which is generally three to four years; however, certain provisions in our equity compensation plans provide for shorter vesting periods under certain circumstances. The fair value of shares to be issued under the ESPP is recognized and amortized on a straight-line basis over the purchase period, which is generally six months. PRSUs vest upon the achievement of certain predefinff ed company-specific performance-based criteria. Expense related to PRSUs is generally recognized ratabla y over the expected performance period once the vesting becomes probabla e. predefinff ed performance-based criteria forff ff 74 rences are expected to reverse. A valuation allowance is establa ished forff Income Taxeaa s. Our income tax provision is computed under the asset and liabia lity method. Significant estimates are required in determining our income tax provision. Some of these estimates are based on interprr etations of existing tax laws or regulations. We recognize deferred tax assets and liabia lities forff the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabia lities are determined on the basis of the diffeff respective finff ancial reporting amounts (temporary drr the diffeff more likely than not that some portion or all of the deferff will not be realized. We periodically re-assess the need forff based on various factors including our historical earnings experience by taxing jurisdiction, and forff ecasts of future operating results and utilization of net operating losses and tax credits prior to their expiration. Significant judgment is required in making this assessment and, to the extent that a reversal of any portion of our valuation allowance against our deferred tax assets is deemed appropriate, a tax benefitff will be recognized against our income tax provision in the period of such reversal. rences) at enacted tax rates in effeff ct for the years in which deferred tax assets for which it is red tax assets, including net operating losses and tax credits, a valuation allowance against our deferred tax assets rence between the tax basis of assets and liabia lities and their iffeff We recognize tax benefitff s froff m uncertain tax positions only if it is more likely than not that the tax position will be sustained upon resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period. examination by the tax authorities based on the technical merits of the position. An adverse u Earnings Per ShaSS re.ee Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the treasury srr methods and refleff ct the weighted average number of common and potentially dilutive shares outstanding during the period, excluding those which effeff ct would be anti-dilutive. tock and if-converted In 2021, we entered into the First Supplemental Indenture to the 2017 Indenturt e, pursuant to which we irrevocably elected to settle the principal amount of the 2.25% fixed-rate convertible senior notes due May 15, 2024 in cash upon conversion and to settle any conversion premium in either cash or shares of our common stock. As a result, only the shares required to settle any conversion premium are considered dilutive under the if-cff onverted method. Further, PRSUs forff which the performance condition has not been achieved are excluded froff m the calculation of diluted earnings per share. ff ff es. We entered into a collaboration and license agreement with Heptares, urt e and commercialize worldwide, excluding in Japaa n, where Heptares retains the rights to develop, urt e, and commercialize all compounds comprised of M1 receptor agonists, subju ect to certain exceptions. 2. Collaboration and License Agreements Heptee artt es Therapeutictt s Limiteii d, or Heptee artt which became effeff ctive in December 2021, to develop and commercialize certain compounds containing sub-u type selective muscarinic M1, M4, or duad l M1/M4 receptor agonists, for which we have the exclusive rights to develop, manufact manufact With respect to such rights retained by Heptares, we retain the rights to opt in to profitff pursuant to which we and Heptares will equally share in the operating profits and losses forff Japaa n. Subju ect to specified conditions, we may elect to exercise such opt-in rights with respect to each such compound either before initiation of the firff st proof of concept Phase 2 clinical trial forff our receipt from Heptares of the top-line data froff m such clinical trial forff development, manufacff such compound or following such compound. We are responsible for all turing, and commercialization costs of any collabor sharing arrangements, such compounds in ation product. a In connection with the agreement, we paid Heptares $100.0 million upfu roff nt, which, including certain transaction- related costs, was expensed as IPR&D in 2021 as the license had no forff eseeable alternative futff urt e use. We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business. In connection with the FDA's acceptance of our investigational new drugr treatment of schizophrenia in June 2022, we paid Heptares a milestone of $30.0 million, which was expensed as R&D in 2022. application forff NBI-1117568 for the Under the terms of the agreement, Heptares may be entitled to receive potential futff urt e payments of up tu upon the achievement of certain event-based milestones and would be entitled to receive royalties on the futff urt e net sales of any collaboa ration product. o $2.6 billion 75 Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by- country basis until the date on which the royalty term for such licensed product has expired in such country. On a licensed product-by-licensed producd t and country-by-country basis, royalty payments would commence on the first commercial sale of a licensed product and terminate on the later of (i) the expiration of the last patent covering such licensed product in such country, (ii) a number of years froff m the first commercial sale of such licensed product in such country and (iii) the expiration of regulatory err xclusivity for such licensed product in such country. a a ation term and upon 90 days’ written notice to Heptares folff ation term. Following the expiration of the research collabor We may terminate the agreement in its entirety or with respect to one or more targets upon to Heptares during the research collabor expiration of the research collabor may terminate the agreement on a target-by-target basis in the event that we do not conduct any material development activities outside of Japaa n with respect to a certain compound or licensed product within the appa target class forff days of receiving written notice. Either party may terminate the agreement, subju ect to specified conditions, (i) in the event of material breach by the other party, subject to a cure period, (ii) if the other party challenges the validity or enforceability of certain intellectuat insolvent or takes certain actions related to insolvency. a continuous period of not less than 365 days and do not commence any such activities within 120 180 days’ written notice lowing the ation term, Heptares l property rights, subju ect to a cure period, or (iii) if the other party becomes u a licable ceutictt al Company Ln imited, or Takeda. In 2020, we entered into an exclusive license agreement Takeda Pharmarr with Takeda, pursuant to which we acquired the exclusive rights to develop and commercialize certain early-to-mid stage psychiatry crr compounds. Luvadaxistat and the four non-clinical stage compounds have each been designated as a royalty-bearing share product. We are responsible product. NBI-1065845 and NBI-1065846 are currently each designated as a profit-ff for all manufacff turing, development, and commercialization costs of any royalty-bearing product. ompounds, including luvadaxistat, NBI-1065845, NBI-1065846 and four non-clinical stage ff With respect to NBI-1065845 and NBI-1065846, we and Takeda will equally share in the operating profits and losses. Takeda retains the rights to opt-out of the profit-sharing arrangements, pursuant to which Takeda would be entitled to receive potential futff urt e payments upon such compounds and receive royalties on the future net sales of such compounds (in lieu of equally sharing in the operating profits and losses). Takeda may elect to exercise such opt-out right for such compound immediately following the completion of a second Phase 2 clinical trial forff such compound, or, under certain circumstances related to the development and commercialization activities to be performed by us, beforff e the initiation of a Phase 3 clinical trial forff the achievement of certain event-based milestones with respect to such compound. u In connection with the approval of our clinical trial appl depressive disorder in 2022, we paid Takeda a milestone of $5.0 million, which was expensed as R&D in 2022. ication forff NBI-1070770 for the treatment of majoa r a o $1.9 billion Under the terms of the agreement, Takeda may be entitled to receive potential futff urt e payments of up tu upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any royalty-bearing product. Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by- country basis until the date on which, (i) for any royalty-bearing product, the royalty term has expired in such country; and (ii) for any profit-ff such licensed product. On a licensed product-by-licensed product and country-by-country basis, royalty payments wo luldd commence on thhe fifirst commerciiall s lale of a royyalltyy-bbeariingg prodduct a dnd termiinate on thhe llater of (f (i)i) hthe ex ipira ition of thhe llast patent cove iri gng su hch royyalltyy-bbeariingg prodduc it in suchh count yry (, (ii)ii) a numbber o yf years froff m thhe fifirst commerciiall s lale of suchh r yoyaltylty b-beariingg prodduc it in suchh count yry and (d (iii)iii) hthe e ex lclusiivityity for suchh r yoyalltyy-bbeariingg prodduc it in suchh count yry. share product, for so long as we continue to develop, manufact ixpira ition of r geg lulatoryyrr urt e, or commercialize ff 76 We may terminate the agreement in its entirety or in one or more (but not all) of the U.S., Japaa n, the European Union (EU) and the United Kingdom (UK) (collectively, the major markets) upon six months’ written notice to Takeda (i) with respect to all licensed products prior to the first commercial sale of the first licensed product forff which firff st commercial sale occurs, or (ii) with respect to all licensed products in one or more given target classes, as defined in the agreement, prior to the first commercial sale of the first licensed product in such target class for which first commercial sale occurs. We may terminate the agreement in its entirety or in one or more (but not all) of the majoa r markets upon 12 months’ written notice to Takeda (i) with respect to all licensed products following the firff st commercial sale of the first licensed product forff which firff st commercial sale occurs, or (ii) with respect to all licensed products in one or more given target classes folff lowing the firff st commercial sale of the first licensed product in such target class forff which firff st commercial sale occurs. Takeda may terminate the agreement, subju ect to specifieff d conditions, (i) if we challenge the validity or enforceability of certain Takeda intellectuat l property rights or (ii) on a target class-by-target class basis, in the event that we do not conduct any material development or commercialization activities with respect to any licensed product within such target class for a specified continuous period. Subju ect to a cure period, either party may terminate the agreement in the event of any material breach, solely with respect to the target class of a licensed product to which such material breach relates, or in its entirety in the event of any material breach that relates to all licensed products. td.,dd or Idordd sirr a. In 2020, we entered into a collabor Idordd sirr a PhaPP rmaceuticals Lll Idorsia, pursuant to which we acquired the global rights to NBI-827104, a potent, selective, orally active and brain penetrating T-type calcium channel blocker in clinical development forff other potential indications, including essential tremor. We are responsible for all manufact commercialization costs of any collabor the treatment of a rare pediatric epilepsy and ation and license agreement with ing, development, and ation product. urt a a ff Under the terms of the agreement, Idorsia may be entitled to receive potential futff urt e payments of up tu o $1.7 billion upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product. We may terminate the agreement, in its entirety or with respect to a particular compound or development candidate, upon 90 days’ written notice to Idorsia. Further, in the event a party commits a material breach and faiff ls to cure such material breach within 90 days afteff agreement in its entirety immediately upon r receiving written notice thereof, tff he non-breaching party may terminate the written notice to the breaching party. u Xenon PhaPP rmaceuticals Inc., or XenXX on. In 2019, we entered into a collaboration and license agreement with Xenon to identify,ff research and develop sodium channel inhibitors, including NBI-921352 and three preclinical candidates, which compounds we have the exclusive rights to develop and commercialize. We are responsible for all development and manufacff turing costs of any collaboration product, subju ect to certain exceptions. In connection with the agreement, we purchased approximately 1.4 million shares (at $14.196 per share) of Xenon common stock in 2019. The purchased shares were recorded at a faiff Xenon’s stock price and certain transferff restrictions that were applicable to the shares on the measurement date. r value of $14.1 million afteff r considering oval of our clinical trial appl In connection with the regulatory arr a ppr treatment of focal onset seizures in aduld ts in 2021, we paid Xenon a regulatory mrr a purchase of appr a shares were recorded at a faiff restrictions that were applicable to the shares on the measurement date. The remaining $5.4 million of the milestone payment was expensed as R&D in 2021. oximately 0.3 million shares (at $19.9755 per share) of Xenon common stock. The purchased r considering Xenon’s stock price and certain transferff ication in Europe for NBI-921352 for the ilestone of $10.0 million, including r value of $4.6 million afteff a In connection with the FDA's acceptance of our amended KAYAK regulatory mrr ilestone of $15.0 million, including a purchase of appr share) of Xenon common stock. The purchased shares were recorded at a faiff Xenon’s stock price on the measurement date. The remaining $7.3 million of the milestone payment was expensed as R&D in 2022. TM studyt protocol in 2022, we paid Xenon a oximately 0.3 million shares (at $31.855 per r value of $7.7 million afteff r considering KK a 77 o $1.7 billion Under the terms of the agreement, Xenon may be entitled to receive potential futff urt e payments of up tu upon the achievement of certain event-based milestones and would be entitled to receive royalties on the future net sales of any collaboration product. Xenon retains the right to elect to co-develop one product in a majoa r indication, pursuant to which Xenon would receive a mid-single digit percentage increase in royalties earned on the future net sales of such product in the U.S. and we and Xenon would equally share in the development costs of such product in the appl a product outside the U.S. a icable indication, except where such development costs relate solely to the regulatory arr ppr oval of such Unless earlier terminated, the agreement will continue on a licensed product-by-licensed product and country-by- such product in such country. Upon the expiration of the country basis until the expiration of the royalty term forff royalty term for a particular licensed product and country, the license obtained by us with respect to such product and country will become fully paid, royalty free, perpetuat 90 days’ written notice to Xenon, provided that such unilateral termination will not be effeff ctive forff until we have used commercially reasonabla e efforts to complete certain specified clinical studi terminate the agreement in the event of a material breach in whole or in part, subju ect to specified conditions. l and irrevocable. We may terminate the agreement upon certain products es. Either party may u t Voyao gea r TheTT rapea utictt s, Inc., or VoyVV ager. 2019 Voyao ger Agreement. In 2019, we entered into a collaboration and license agreement with Voyager (the 2019 Voyager Agreement), pursuant to which we retain certain rights to develop and commercialize the Friedreich’s ataxia program and two undisclosed programs. We are responsible for all development and commercialization costs of any collabor commercialization rights retained by Voyager. ation product under the 2019 Voyager Agreement, subject to certain co-development and co- a In connection with the 2019 Voyager Agreement, we purchased approximately 4.2 million shares (at $11.9625 per share) of Voyager common stock (the 2019 Purchased Shares), which are subject to certain transferff ial ownership, and voting restrictions for a period of up to three years from the effeff ctive date of the 2023 Voyager Agreement (defined below). The 2019 Purchased Shares were recorded at a fair value of $54.7 million afteff r restrictions that were applicable to the shares on the considering Voyager’s stock price and certain transferff measurement date. , beneficff Under the terms of the 2019 Voyager Agreement, Voyager may be entitled to receive potential futff urt e payments of up to $1.3 billion upon on the futff urt e net sales of any collaboration product, subju ect to certain co-development and co-commercialization rights retained by Voyager. the achievement of certain event-based milestones and would be entitled to receive royalties u Unless terminated earlier, the 2019 Voyager Agreement will continue in effeff ct until the expiration of the last to expire royalty term with respect to any collabor ation product under the agreement or the last expiration or termination of any exercised co-development and co-commercialization rights by Voyager as provided forff 2019 Voyager Agreement. We may terminate the 2019 Voyager Agreement upon Voyager prior to the firff st commercial sale of any collaboration product under the 2019 Voyager Agreement or upon u one year afteff ation product r the date of notice if such notice is provided after the firff st commercial sale of any collabor under the 2019 Voyager Agreement. 180 days’ written notice to in the u a a 78 2023 Voyao ger Agreement. In 2023, we entered into a collaboration and license agreement with Voyager (the 2023 Voyager Agreement), pursuant to which we acquired the global rights to the gene therapy products directed to the gene that encodes glucosylceramidase beta 1 (GBA1) for the treatment of Parkinson's disease and other diseases associated with GBA1 (the GBA1 Program), and three gene therapy programs directed to rare central nervous system (CNS) targets, each enabled by Voyager's next-generation TRACRR products subju ect to the GBA1 Program, we are responsible for all development and commercialization costs of any such products, including in the U.S., where Voyager retains certain co-development and co-commercialization rights. Voyager may elect to exercise such rights, pursuant to which we and Voyager would equally share in the operating profits and losses of such products in the U.S. (in lieu of Voyager being entitled to receive potential futff urt e payments of certain event-based milestones uponu net sales of such products in the U.S.), folff trial forff receive potential future payments upon the achievement of certain event-based milestones outside the U.S. and would be entitled to receive royalties on the future net sales of any such product outside the U.S. With respect to collabor a for all development and commercialization costs for any such products. ation products subju ect to the three gene therapy programs directed to rare CNS targets, we are responsible each such product. Irrespective of Voyager’s election to exercise such rights, Voyager may be entitled to lowing Voyager’s receipt of the top-line data froff m a first Phase 1 clinical their achievement in the U.S. and receive royalties on the future ERTM capsids. With respect to collaboration a a nted to Voyager's board of directors with an initial term expiring in 2024. In connection with the 2023 Voyager Agreement, we paid Voyager $175.0 million upfroff nt, including a purchase of approximately 4.4 million shares (at $8.88 per share) of Voyager common stock (the 2023 Purchased Shares), which are subject to certain transfer, beneficial ownership, and voting restrictions for a period of up to three years fromff the effeff ctive date of the 2023 Voyager Agreement. In addition, as part of the collabor ation, Jude Onyia, Ph.D., Chief Scientificff Offiff cer of Neurocrine, was appoi Mr. Onyia (or another individual designated by us) will be nominated for election to Voyager's board of directors annually for a maximum durd ation of 10 years from the effeff ctive date of the 2023 Voyager Agreement. As a result, our strategic investment in Voyager became subject to the equity method of accounting, and Voyager became a related party under ASC 850, following our purchase of the 2023 Purchased Shares, afteff 2019 Purchased Shares, we owned appr option to account for our strategic investment in Voyager as we believe it creates greater transparency regarding the investment's fair value at futff urt e reporting dates. The 2023 Purchased Shares were recorded at a faiff million after considering Voyager’s stock price on the measurement date. The remaining $143.9 million of the purchase price, which includes certain transaction-related costs, was expensed as IPR&D in 2023 as the license had no foreseeable alternative futff urt e use. We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business. We recognized unrealized gains of $15.5 million for 2023 and $14.5 million forff 2022 and an unrealized loss of $8.7 million forff 2023, the faiff r which, together with the oximately 19.9% of the voting stock of Voyager. We elected the fair value r value (Level 1) of our strategic investment in Voyager was $72.4 million. 2021 on our strategic investment in Voyager. As of December 31, r value of $31.3 a Under the terms of the 2023 Voyager Agreement, Voyager may be entitled to receive potential futff urt e payments of up to $6.1 billion upon on the futff urt e net sales of any collaboration product, subju ect to certain co-development and co-commercialization rights retained by Voyager. the achievement of certain event-based milestones and would be entitled to receive royalties u Unless terminated earlier, the 2023 Voyager Agreement will continue in effeff ct until the expiration of the last to expire royalty term with respect to any collabor expiration or termination of any exercised co-development and co-commercialization rights by Voyager as provided 180 days’ written notice for in the 2023 Voyager Agreement. We may terminate the 2023 Voyager Agreement upon to Voyager prior to the firff st commercial sale of any collaboration product under the 2023 Voyager Agreement or upon one year afteff product under the 2023 Voyager Agreement. r the date of notice if such notice is provided after the firff st commercial sale of any collabor ation product under the 2023 Voyager Agreement or the last ation u a a a – PorPP tela & Ca,CC S.A., or BIABB L. In 2017, we received from BIAL a license to commercialize and market ) in the U.S. and Canada. We launched ONGENTYS in the U.S. as an FDA-approved tions in BIALII ONGENTYS® (opicapone add-on treatment to levodopa/carbir dopa in patients with Parkinson's disease experiencing motor fluff ctuat 2020. In 2023, we provided BIAL with written notice of termination of the license agreement to commercialize and market ONGENTYS in the U.S. and Canada, and recognized reserves forff ONGENTYS inventory orr totaling $5.2 million in cost of revenues in connection with the termination, which became effective in December 2023, as management determined the cost cannot be recovered. bsolescence 79 ff u u product forff Corporatiott n, or MTPCTT y agreement with MTPC, commercial use in such markets. MTPC is .CC We out-licensed the rights to valbenazine in Japaa n and other Mitsii ubishi Tanabe Pharmarr select Asian markets to MTPC in 2015. In 2020, we entered into a commercial suppl y MTPC with valbenazine drugrr pursuant to which we suppl responsible for all development, manufact urt ing, and commercialization costs of valbenazine in such markets. MTPC launched DYSVAL® (valbenazine) in Japan for the treatment of tardive dyskinesia in June 2022 and subsu equently in other select Asian markets, where it is marketed as REMLEAS® (valbenazine). We receive royalties at tiered percentage rates on MTPC net sales of valbenazine. In connection with MTPC's first commercial sale of DYSVAL in Japaa n, we received a milestone payment of $20.0 million in 2022. ASC 606 provides a royalty a sales-based or usage-based royalty promised in exchange for a license of intellectuat exception forff the royalty exception, the milestone would be recognized as revenue only when the later of (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied (or partially satisfieff d). As the milestone related to a license of intellectuat l property and was contingent upon MTPC’s first commercial sale of DYSVAL in Japaa n, the milestone was recognized as revenue in 2022. l property. Under u Under the terms of our license agreement with MTPC, we may be entitled to receive potential futff urt e payments of upu to $30.0 million upon the achievement of certain sales-based milestones and are entitled to receive royalties at tiered percentage rates on futff urt e MTPC net sales of valbenazine for the longer of 10 years or the life off rights. MTPC may terminate the agreement upon product rights would revert to us. 180 days’ written notice to us. In such event, all out-licensed f the related patent u AbbVieVV Inc., or AbbVieVV .ee We out-licensed the global rights to elagolix to AbbVie in 2010. AbbVie is responsible for all development and commercialization costs of elagolix. AbbVie launched ORILISSA® (elagolix tabla ets) in the U.S. forff with endometriosis in August 2018 and ORIAHNN® (elagolix, estradiol and norethindrone acetate capsules and elagolix capsules) in the U.S. forff the treatment of heavy menstrual bleeding dued receive royalties at tiered percentage rates on AbbVie net sales of elagolix and recognized elagolix royalty revenue of $16.7 million forff the treatment of moderate to severe pain associated 2022 and $22.3 million for 2021. 2023, $21.2 million forff roids in June 2020. We to uterine fibff Under the terms of our license agreement with AbbVie, we may be entitled to receive potential futff urt e payments of up to $366.0 million upon the achievement of certain event-based milestones and are entitled to receive royalties at tiered percentage rates on futff urt e AbbVie net sales of elagolix for the longer of 10 years or the life off patent rights. AbbVie may terminate the agreement upon licensed product rights would revert to us. f the related 180 days’ written notice to us. In such event, all out- u 3. Debt Securities The folff comprehensive income (loss) and faiff l maturt and contractuat ity. lowing tabla e presents the amortized cost, unrealized gain and loss recognized in accumulated other r value of debt securities availabla e-for-sale, aggregated by majoa r security type December 31, 2023 December 31, 2022 (in mii illions)s Contractual Maturity Amortized Cost Unrealized Gain Unrealized Loss Fair Value Amortized Cost Unrealized Gain Unrealized Loss Fair Value Commercial paper 0 to 1 years $ 53.5 $ — $ — $ 53.5 $ Corporate debt securities 0 to 1 years 382.1 Securities of government- sponsored entities 0 to 1 years 346.1 781.7 $ $ 0.1 0.2 0.3 (1.0) 381.2 (0.5) $ (1.5) $ 345.8 780.5 $ 156.2 296.2 283.4 735.8 $ $ — $ (0.2) $ — — (3.2) (6.0) — $ (9.4) $ 156.0 293.0 277.4 726.4 Corporate debt securities 1 to 3 years $ 483.5 $ 2.9 $ (0.4) $ 486.0 $ 259.5 $ 0.2 $ (4.3) $ 255.4 Securities of government- sponsored entities 1 to 3 years 201.1 684.6 $ $ 0.5 3.4 (0.1) $ (0.5) $ 201.5 687.5 45.0 $ 304.5 $ — 0.2 (1.0) 44.0 $ (5.3) $ 299.4 80 Unrealized losses on our availabla e-for-sale debt security investments were primarily due to changes in interest rates. These investments are of high credit quality, and we do not intend to sell these investments and it is not more likely than not that we will be required to sell these investments beforff e recovery of their amortized cost basis. No allowance forff credit losses was recognized as of December 31, 2023 or 2022. lowing tabla e presents debt securities available-forff The folff December 31, 2023, aggregated by majoa r security type and length of time in a continuous loss position. -sale that were in an unrealized loss position as of illill ons) (in mii Corporate debt securities Securities of government-sponsored entities Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss $ $ 265.1 214.6 $ $ (0.4) $ 183.8 (0.2) $ 16.7 $ $ (1.0) $ 448.9 (0.4) $ 231.3 $ $ (1.4) (0.6) lowing tabla e presents debt securities available-forff The folff December 31, 2022, aggregated by majoa r security type and length of time in a continuous loss position. -sale that were in an unrealized loss position as of (in mii illill ons) Commercial paper Corporate debt securities Securities of government-sponsored entities Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss $ $ $ 32.1 199.5 107.7 $ $ $ (0.2) $ (1.9) $ — $ $ 299.1 — $ (5.6) $ 32.1 498.6 (2.5) $ 198.4 $ (4.5) $ 306.1 $ $ $ (0.2) (7.5) (7.0) 4. Fair Value Measurements The folff lowing tabla e presents a summary of financial assets, which were measured at fair value on a recurring basis. ff s illions)s (in mii Cash and money market fund Restricted cash Commercial paper Corporate debt securities Securities of government-sponsored entities Equity securities December 31, 2023 December 31, 2022 Fair Value Leveling Level 1 Level 2 Fair Value Leveling Level 1 Level 2 $ $ 251.1 8.0 53.5 867.2 547.3 161.9 1,889.0 $ $ 251.1 8.0 — — — 161.9 421.0 $ $ — $ — 53.5 867.2 262.9 7.8 156.0 548.4 547.3 — 1,468.0 $ 321.4 102.1 1,398.6 $ $ 262.9 7.8 — — — 102.1 372.8 $ $ — — 156.0 548.4 321.4 — 1,025.8 5. Convertible Senior Notes On May 2, 2017, we completed a private placement of $517.5 million in aggregate principal amount of 2.25% fixed- rate convertible senior notes due May 15, 2024 (the 2024 Notes) and entered into the 2017 Indenturt e with respect to the 2024 Notes. Interest on the 2024 Notes is dued semi-annually on May 15 and November 15 of each year. In 2020, we repurchased $136.2 million aggregate principal amount of the 2024 Notes forff price of $186.9 million in cash. In 2022, we repurchased $210.8 million aggregate principal amount of the 2024 Notes forff million loss on extinguishment. an aggregate repurchase price of $279.0 million in cash, which resulted in the recognition of a $70.0 an aggregate repurchase The folff lowing tabla e presents a summary of the 2024 Notes as of December 31, 2023. (in mii illions)s 2024 Notes Principal Amount Unamortized Issuance Costs Net Carrying Amount Amount Fair Value $ 170.4 $ (0.3) $ 170.1 $ 295.7 Leveling Level 2 81 The folff lowing tabla e presents a summary of the 2024 Notes as of December 31, 2022. (in mii illions)s 2024 Notes Principal Amount Unamortized Issuance Costs Net Carrying Amount Amount Fair Value $ 170.4 $ (1.0) $ 169.4 $ 268.0 Leveling Level 2 The folff lowing tabla e presents a summary of the interest expense of the 2024 Notes. (in mii illions)s Coupon interest Amortization of debt discount and issuance costs Total interest expense Year Ended December 31, 2023 2022 2021 $ $ 3.9 0.7 4.6 $ $ 5.9 1.2 7.1 $ $ 8.5 17.3 25.8 in the The initial conversion rate forff the 2024 Notes, which is subject to adjustment in some events (as provided forff 2017 Indenturt e), is 13.1711 shares of common stock per $1,000 principal amount and equivalent to an initial conversion price of approximately $75.92 per share, refleff cting a conversion premium of appr the closing price of $53.28 per share of our common stock on April 26, 2017. a oximately 42.5% above We may redeem for cash all or part of the 2024 Notes if the last reported sale price (as definff ed in the 2017 Indenturt e) of our common stock has been at least 130% of the conversion price then in effeff ct (equal to $98.70 as of December 31, 2023) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately before the date which we provide notice of redemption. Holders of the 2024 Notes may convert the 2024 Notes at any time prior to the close of business on the business day immediately preceding May 15, 2024, only under the following circumstances: (i) durd ing any calendar quarter (and only durd ing such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price (equal to $98.70 as of December 31, 2023) on each applicable trading day; (ii) during the five business-day period immediately afteff measurement period) in which the trading price (as definff ed in the 2017 Indenturt e) per $1,000 principal amount each trading day of the measurement period was less than 98% of the product of the last of the 2024 Notes forff reported sale price of our common stock and the conversion rate on each such trading day; r any five consecutive trading-day period (the (iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of our assets; or (iv) if we call the 2024 Notes forff preceding the redemption date. redemption, until the close of business on the business day immediately Until the close of business on the scheduled trading day immediately preceding May 15, 2024, holders of the 2024 Notes may convert the 2024 Notes at any time. On January 4, 2024, we provided notice to the holders of the 2024 Notes electing to settle all conversions of the 2024 Notes in cash. As such, upon principal amount of their 2024 Notes and any conversion premium, calculated based on the per share volume- weighted average price for each of the 30 consecutive trading days during the observation period (as more fully described in the 2017 Indenturt e), in cash. conversion, holders will receive the u If we undergo a fundamental change (as definff ed in the 2017 Indenturt e), subject to certain conditions, holders of the 2024 Notes may require us to repurchase forff cash all or part of their 2024 Notes at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole funda Indenturt e) occurs prior to January 15, 2024, we would, in certain circumstances, increase the conversion rate forff holder who elects to convert their notes in connection with the make-whole funda mental change (as definff ed in the 2017 mental change. a ff ff 82 The 2024 Notes are our general unsecured obligations that rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2024 Notes, and equal in right of payment to our unsecured indebtedness. The 2024 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by us. The 2017 lt with respect to the 2024 Notes, including that upon certain events of Indenturt e contains customary err default, 100% of the principal and accrued and unpaid interest on the 2024 Notes will automatically become due and payabla e. vents of defauff 6. Goodwill and Intangible Assets The folff our consolidated balance sheets. lowing tabla e presents the changes in the carryirr ng amount of goodwill. Goodwill is included in other assets in illions)s (in mii Balance as of December 31, 2021 Goodwill recognized in connection with business combination Foreign currency translation adjustments Balance as of December 31, 2022 Foreign currency translation adjustments Balance as of December 31, 2023 Amount — 5.2 0.2 5.4 0.4 5.8 $ $ The folff lowing tabla e presents inforff mation relating to our recognized intangible assets as of December 31, 2023. (doldd lall rs in millioii ns)s Developed product rights Acquired IPR&D Total intangible assets, net Usefulff Life 10 years Indefinite $ $ Gross Carrying Amount 35.9 3.6 Accumulated Amortization 4.0 $ — $ Net Carrying Amount $ $ 31.9 3.6 35.5 our finite-lived intangible assets as Amount 3.6 3.6 3.6 3.6 3.6 13.9 $ $ $ $ $ $ December 31, 2023 2022 21.5 9.7 12.3 43.5 (5.2) 38.3 $ $ 12.0 5.6 17.5 35.1 — 35.1 $ $ lowing tabla e presents appr The folff of December 31, 2023. a oximate future annual amortization expense forff illions)s (in mii Year ending December 31, 2024 Year ending December 31, 2025 Year ending December 31, 2026 Year ending December 31, 2027 Year ending December 31, 2028 r Thereafteff 7. Other Balance Sheet Details Inventory,rr net, consisted of the following: (in mii illions)s Raw materials Work in process Finished goods Less inventory r Total inventory,r rr eserves net 83 Property and equipment, net, consisted of the following: illions)s (in mii Tenant improvements equipment Scientificff Computer equipment tures Furniture and fixff Less accumulated depreciation Total property and equipment, net Accounts payable and accrued liabia lities consisted of the following: (in mii illions)s Sales rebates and reserves Accruerr d employee related costs Current branded prescription drug feeff Accruerr d development costs Current income taxes payable Accounts payable and other accruerr d liabia lities Total accounts payable and accruerr d liabia lities Other long-term liabia lities consisted of the following: (in mii illions)s Noncurrent income taxes payable Noncurrent branded prescription drug feeff Total other long-term liabia lities December 31, 2023 2022 38.1 79.6 25.2 10.9 153.8 (83.0) 70.8 $ $ 37.9 58.8 21.5 6.7 124.9 (66.3) 58.6 December 31, 2023 2022 139.3 86.2 45.7 44.3 24.4 108.9 448.8 $ $ 131.9 72.8 27.5 39.1 9.0 67.3 347.6 December 31, 2023 2022 96.0 10.3 106.3 $ $ 19.8 9.9 29.7 $ $ $ $ $ $ lowing tabla e presents a reconciliation of cash, cash equivalents and restricted cash reported within the The folff consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash floff ws. (in mii illions)s Cash and cash equivalents Restricted cash Total cash, cash equivalents and restricted cash December 31, 2023 2022 $ $ 251.1 8.0 259.1 $ $ 262.9 7.8 270.7 84 8. Earnings Per Share Earnings per share were calculated as follows: (in mii illill ons, except per share datdd a)tt Net income - basic and diluted Weighted-average common shares outstanding: Basic Effeff ct of dilutive securities Diluted Earnings per share: Basic Diluted Year Ended December 31, 2023 2022 2021 $ 249.7 $ 154.5 $ 89.6 97.7 3.3 101.0 95.8 3.1 98.9 $ $ 2.56 2.47 $ $ 1.61 1.56 $ $ 94.6 3.3 97.9 0.95 0.92 Shares which have been excluded froff m diluted per share amounts because their effect would have been anti-dilutive 2022 and 4.1 million for 2021. were 4.7 million forff 2023, 4.6 million forff Incentivtt e PlaPP n. In May 2022, our stockholders approved an amendment of the 2020 Equity Incentive 9. Stock-Based Compensation 2020 Equityii Plan (as so amended, the Amended 2020 Plan). The Amended 2020 Plan provides forff stock appr awards. As of December 31, 2023, 10.5 million shares of common stock remain availabla e forff Amended 2020 Plan. a eciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other the grant of stock options, future grant under the each share issued pursuant to an appr Under the terms of the Amended 2020 Plan, the number of shares of common stock availabla e forff (i) reducd ed by (a) one share forff 2020 Plan) granted under the Amended 2020 Plan and (b) 2.13 shares for each share issued pursuant to a full value award (as defined in the Amended 2020 Plan) granted under the Amended 2020 Plan on or afteff r May 18, 2022; and (ii) increased by (a) one share forff each share subject to an appr issuance under the terms of the Amended 2020 Plan and (b) 2.13 shares for each share subju ect to a fulff that becomes availabla e again for issuance under the terms of the Amended 2020 Plan on or afteff eciation award that becomes availabla e again for eciation award (as defined in the Amended issuance will be: r May 18, 2022. l value award a a 2011 Equityii Plan was a stockholder-appr further awards can or will be made. Incentivtt e PlaPP n. In May 2011, we adopted the 2011 Equity Incentive Plan (the 2011 Plan). The 2011 oved plan pursuant to which outstanding awards have been made, but from which no a ee Stoctt k Purchase PlaPP n. In May 2021, our stockholders approved an amendment and restatement of 2018 Emplm oyll the 2018 Employee Stock Purchase Plan (as so amended and restated, the Amended 2018 ESPP). As of December future issuance under the Amended 2018 ESPP. 31, 2023, 0.5 million shares of common stock remain availabla e forff Stoctt k-Ba- statements of income and comprehensive income by line-item folff sed ComCC pem nsatiott n ExpEE ense.ee The effect of stock-based compensation expense on our consolidated lows: (in mii illill ons) Selling, general and administrative expense Research and development expense Total stock-based compensation expense Year Ended December 31, 2023 2022 2021 $ $ 126.3 68.0 194.3 $ $ 115.4 57.7 173.1 $ $ 85.8 48.4 134.2 85 Stock-based compensation expense by award-type follows: (in mii illill ons) Stock options RSUs PRSUs ESPP Total stock-based compensation expense Year Ended December 31, 2023 2022 2021 $ $ 91.6 93.4 4.6 4.7 194.3 $ $ 62.6 86.4 20.1 4.0 173.1 $ $ 60.5 62.5 7.6 3.6 134.2 As of December 31, 2023, unrecognized stock-based compensation expense by award-type and the weighted- average period over which such expense is expected to be recognized, as appl icable, was as follows: a ns)s rs in millioii (doldd lall Stock options RSUs PRSUs Unrecognized Expense $ $ $ 94.1 162.4 22.3 Weighted-Average Recognition Period 2.3 years 2.3 years r value of stock options using the Black-Scholes option-pricing model on the date of grant. The Black-Scholes Stoctt k OptOO iott ns. Typically, stock options have a 10-year term and vest over a three to four price of stock options granted is equal to the closing price of our common stock on the date of grant. We estimate the faiff option-pricing model incorpor interest rates. The weighted-average grant-date fair values of stock options granted were $45.19 for 2023, $32.05 for 2022 and $45.02 for 2021. ates various and highly sensitive assumptions including expected volatility, term and -year period. The exercise r ff r value of each stock option granted was estimated on the date of grant using the Black-Scholes option- The faiff pricing valuation model with the folff lowing weighted-average assumptions: Risk-free interest rate Expected volatility of common stock Dividend yield Expected option term The weighted-average valuation assumptions were determined as follows: Year Ended December 31, 2023 3.9 % 40.8 % 0.0 % 5.5 years 2022 1.8 % 42.6 % 0.0 % 5.0 years 2021 0.6 % 45.9 % 0.0 % 5.2 years • • • The expected volatility of common stock is estimated based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our stock options. The expected option term is estimated based on historical experience as well as the status of the employee. For example, directors and offiff cers have a longer expected option term than all other employees. The risk-free interest rate forff a interest rates appr opriate for the expected term of our employee stock options. periods within the contractuat l life off f a stock option is based upon observed • We have not historically declared or paid dividends and do not intend to do so in the forff eseeable future. The folff lowing tabla e presents summary of activity related to stock options. ted average data)tt ept weighi illions, es xcee (in mii Outstanding at December 31, 2022 Granted Exercised Canceled Outstanding at December 31, 2023 Exercisabla e at December 31, 2023 Number of Stock Options Weighted Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value $ 9.0 1.9 $ (0.8) $ (0.1) $ $ 10.0 $ 6.8 79.10 103.66 66.84 98.29 84.46 78.75 86 6.2 years $ 5.2 years $ 467.8 361.3 The total intrinsic value of stock options exercised was $39.9 million forff million forff $20.7 million for 2021. 2021. Cash received froff m stock option exercises was $55.5 million forff 2023, $39.7 million forff 2022 and $58.0 2023, $37.0 million for 2022 and Stoctt k UniUU tsii . RSUs typically vest over a four-year period and may be subju ect to a deferff Restritt ctedtt arrangement at the election of eligible employees. The fair value of RSUs is based on the closing sale price of our common stock on the date of issuance. The total fair value of RSUs that vested was $101.0 million forff 2023, $72.4 million forff 2022 and $64.3 million forff red deliveryrr 2021. The folff lowing tabla e presents a summary of activity related to RSUs. ted average data)tt ept weighi illions, es xcee (in mii Unvested at December 31, 2022 Granted Released Canceled Unvested at December 31, 2023 Number of RSUs Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value $ 2.3 $ 1.1 (0.9) $ (0.1) $ $ 2.4 92.61 103.54 93.46 95.62 97.32 1.3 years $ 312.5 nce-Ba- sed Restricted StoSS ck Units.tt PRSUs vest based on the achievement of certain predefinff ed Company- Perforff marr specific performance criteria. Any unvested PRSUs will expire if it is determined the related performance criteria has not been met durd ing the applicable three to four- based on the closing sale price of our common stock on the date of grant. The fair value of PRSUs that vested during 2023 was $34.4 million. No PRSUs vested durd ing 2022 or 2021. year performance period. The faiff r value of PRSUs is estimated ff The folff lowing tabla e presents a summary of activity related to PRSUs. ted average data)tt ept weighi illions, es xcee (in mii Unvested at December 31, 2022 Granted Released Canceled Unvested at December 31, 2023 Number of PRSUs Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value $ 0.5 0.3 $ (0.3) $ (0.2) $ $ 0.3 101.00 97.22 98.43 115.60 89.23 1.7 years $ 33.0 ee Stoctt k Purchase PlaPP n. Under the Amended 2018 ESPP, eligible employees may purchase shares of our Emplm oyll common stock at a discount semi-annually based on a percentage of their annual compensation. The discounted purchase price is equal to the lower of 85% of (i) the market value per share of the common stock on the firff st day of the offering period or (ii) the market value per share of common stock on the purchase date. 10. Income Taxes The folff international operations. lowing tabla e presents income froff m continuing operations before provision for income taxes for domestic and illill ons) (in mii U.S. Foreign Income before provision for income taxes Year Ended December 31, 2023 2022 2021 $ $ 409.2 (77.1) 332.1 $ $ 218.0 (4.1) 213.9 $ $ 101.4 — 101.4 87 The folff lowing tabla e presents the components of income tax expense (benefit) for continuing operations. illill ons) (in mii Current: Federal State Current income taxes Deferred: Federal State Deferred income taxes Provision for income taxes Year Ended December 31, 2023 2022 2021 $ $ 115.0 28.1 143.1 (45.2) (15.5) (60.7) 82.4 $ $ 17.1 20.3 37.4 27.5 (5.5) 22.0 59.4 $ $ — 6.3 6.3 5.9 (0.4) 5.5 11.8 to the Year Ended December 31, 2023 2022 2021 The provision for income taxes on earnings subju ect to income taxes diffeff following: rs from the statutory federal rate dued (in mii illill ons) Federal income taxes at 21% State income tax, net of federal benefitff Branded prescription drug feeff Loss on extinguishment of convertible senior notes Stock-based compensation expense Offiff cer compensation Change in tax rate Expired tax attributes Research credits Change in valuation allowance Other Provision for income taxes $ $ 69.7 17.5 8.7 — (3.9) 9.6 (2.1) — (42.2) 22.0 3.1 82.4 The folff lowing tabla e presents the significant components of our deferred tax assets. illions)s (in mii Deferred tax assets: Net operating losses Research and development credits Capia talized research and development Stock-based compensation expense Operating lease assets Intangible assets Other Total deferff red tax assets Deferred tax liabia lities: Operating lease liabia lities Other Total deferff Net of deferff Valuation allowance Net deferff red tax assets red tax liabia lities red tax assets and liabia lities 88 $ $ $ $ 44.9 11.8 6.5 12.0 (2.5) 9.2 (1.3) — (29.9) 7.4 1.3 59.4 $ $ December 31, 2023 2022 36.4 55.3 178.7 52.7 72.0 110.0 25.0 530.1 (66.3) (12.3) (78.6) 451.5 (88.9) 362.6 $ $ 21.3 6.2 4.8 — (11.3) 7.0 0.2 0.6 (22.0) 5.0 — 11.8 27.4 108.9 91.1 45.9 26.8 80.7 24.9 405.7 (21.0) (11.8) (32.8) 372.9 (67.0) 305.9 As of December 31, 2023, our deferred tax assets were primarily the result of net operating loss carry forwards, capitalized research costs, acquired intangible assets and tax credit carryforwards. As of December 31, 2023 and 2022, we recorded a valuation allowance of $88.9 million and $67.0 million, respectively, against our gross deferff tax asset balance. red As of each reporting date, management considers new evidence, both positive and negative, that could affect its assessment of the future realizability of our deferred tax assets. As of December 31, 2023, management determined there was sufficient positive evidence to conclude that it is more likely than not deferred tax assets of $362.6 million are realizable. The recorded valuation allowance of $88.9 million consisted primarily of state and foreign net operating loss carryforwards and state credit carryforwards for which management cannot conclude it is more likely than not to be realized. As of December 31, 2023, we had state and foreign income tax net operating loss carryforwards of $286.0 million and $134.3 million, respectively. We had no fedff eral income tax operating loss carryforwards as of December 31, 2023. Califorff nia net operating losses will begin to expire in 2029 unless previously utilized and the net operating losses related to other states will begin to expire in 2026. Swiss net operating losses will begin to expire in 2030 unless previously utilized. UK net operating losses will carry forward indefinitely. As of December 31, 2023, we had state R&D tax credit carryforwards of $85.6 million. California R&D tax credits carry forward indefinitely, while R&D tax credits related to other states will begin to expire in 2033 unless previously utilized. Additionally, the future utilization of our net operating loss and R&D tax credit carryforwards to offsff et future taxabla e income may be subju ect to an annual limitation, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that could occur in the future. No ownership changes have occurred through December 31, 2023. The impact of an uncertain income tax position on the income tax returt n must be recognized at the largest amount that is more-likely-than-not to be sustained upon position will not be recognized if it has less than a 50% likelihood of being sustained. audit by the relevant taxing authority. An uncertain income tax u We recognize interest and penalties related to income tax matters in income tax expense. We had accruarr interest related to income tax matters of $3.1 million and $1.2 million, respectively, as of December 31, 2023 and penalties relates to income tax matters of $2.2 million and $0.4 million, respectively, as 2022. We had accruals forff ls for interest and penalties related to income tax matters were not material of December 31, 2023 and 2022. Accruar as of December 31, 2021. ls for We are subject to taxation in the U.S. and various state and foreign jurisdictions. Tax years forff inception forff California, 2016 to 2020 for other significant state jurisdictions, and 2021 and forff ward for forff eign are subju ect to examination by tax authorities dued credits. to the carryforward of unutilized net operating losses and R&D tax 2020 for fedff eral, The folff . lowing tabla e presents a summary of activity related to unrecognized tax benefitsff illill ons) (in mii Balance at January 1 Increase related to prior year tax positions Increase related to current year tax positions Decrease related to prior year tax positions Expiration of the statutt e of limitations for the assessment of taxes Balance at December 31 Year Ended December 31, 2023 2022 2021 $ $ 84.5 3.4 36.7 (3.6) — 121.0 $ $ 64.6 4.7 15.2 — — 84.5 $ $ 60.8 0.6 4.9 — (1.7) 64.6 As of December 31, 2023, we had $105.3 million of unrecognized tax benefitff s that, if recognized and realized, would affect the effective tax rate, subject to changes in the valuation allowance. We do not expect a significant change in our unrecognized tax benefitsff in the next 12 months. 89 In 2021, the OECD announced an Inclusive Framework on Base Erosion and Profitff Shiftinff Model RulRR es defining the global minimum tax, which calls for the taxation of large multinational corpor minimum rate of 15%. Subsequently, multiple sets of administrative guidance have been issued. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model RulRR es beginning in 2024 (including EU Member States) with the adoption of additional components in later years or announced their plans to enact legislation in futff urt e years. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model RulRR es in the non-U.S. tax jurisdictions we operate in. g including Pillar Two ations at a r 11. Leases Our operating leases that have commenced have terms that expire beginning 2025 through 2036 and consist of office space and research and development laboratories, including our corporate headquarters. Certain of these lease agreements contain clauses for renewal at our option. As we were not reasonabla y certain to exercise any of these renewal options at commencement of the associated leases, no such options were recognized as part of our ROU assets or operating lease liabia lities. The folff lowing tabla e presents supplemental operating lease information forff operating leases that have commenced. (in mii illions, es xcee ept weighi ted average data)tt Operating lease cost Sublu ease income $ Net operating lease cost $ Cash paid for amounts included in the measurement of operating lease liabia lities $ Weighted average remaining lease term Weighted average discount rate Restricted cash related to letters of credit issued in lieu of cash security deposits Year Ended December 31, 2023 2022 2021 17.1 (0.7) 16.4 17.9 $ $ $ 16.3 — 16.3 16.9 $ $ $ 15.3 — 15.3 12.6 December 31, 2023 10.8 years 5.1 % 7.8 $ December 31, 2022 7.9 years 5.3 % 7.8 $ lowing tabla e presents appr The folff and sublease income as of December 31, 2023. a oximate future non-cancelable minimum lease payments under operating leases (in mii illions)s Year ending December 31, 2024 Year ending December 31, 2025 Year ending December 31, 2026 Year ending December 31, 2027 Year ending December 31, 2028 r Thereafteff Total operating lease payments (sublu ease income) Less accreted interest Total operating lease liabia lities Less current operating lease liabia lities included in other current liabilities Noncurrent operating lease liabia lities _________________________ gg Operating Leases (1) Sublease Income (1.7) (1.7) (1.7) (1.7) (1.7) (4.3) (12.8) $ $ $ $ 33.0 34.7 34.0 34.8 35.6 211.4 383.5 93.2 290.3 32.0 258.3 (1) Amounts presented in the table above exclude $15.4 million forff a r of appr 2027, $25.1 million forff payments under operating leases that have not yet commenced. 2028 and $223.5 million thereafteff 2025, $23.6 million forff 2026, $24.3 million forff oximate non-cancelabla e futff urt e minimum lease .yy On Februar New CamCC pum s FacFF ilityii to be construcr campus facility, comprised of offiff ce space and research and development laboratories, will serve as our new corporate headquarters. ry 8, 2022, we entered into a lease agreement for a four-building campus facility tion of a fifth building. This ted in San Diego, Califorff nia, including a six-year option forff the construcr 90 The construcr liabia lities of $189.8 million in association with the commencement of operating leases folff the firff st phase of construcrr tion of the campus facility is phased. We recognized ROU assets of $199.0 million and operating lease lowing the completion of tion relating to office space in December 2023. As we begin to occupyu our new campus facility, we will sublease certain of our existing leased premises when we determine there is excess leased capacity. Certain of these subleases contain both lease and non-lease components. Sublu ease income is recognized as an offset to operating expense on a straight-line basis over the lease term. Income related to non-lease components is recognized in operating expenses as a reducd tion to costs we incur in relation to the primary lease. 12. Retirement Plan We have a 401(k) defined contribution savings plan for the benefit of all qualifyiff ng employees and permits voluntary crr contributions were $12.5 million forff ontributions by employees up to 60% of base salary limited by the IRS-imposed maximum. Employer 2023, $10.3 million for 2022 and $8.1 million for 2021. 13. Legal Proceedings During 2021, 2022, and 2023, we received notices from (i) Teva Pharmaceuticals Development, Inc., (ii) Lupiu n Limited, (iii) Crysrr eviated new drugrr that each company had filed an abbr generic version of INGREZZA. These companies represented that their respective ANDAs Paragraph IV Patent Certification alleging that certain of our patents covering INGREZZA are invalid and/or will not be infriff nged by the manufacff tal Pharmaceutical (Suzhou) Co. Ltd., (iv) Sandoz Inc. and (v) Zydus Pharmaceuticals (USA) Inc. ture, use or sale of the medicine forff which the ANDA was submitted. application (ANDA) with the FDA seeking appr each contained a oval of a AA a a the District of Delaware durd ing 2021, 2022 and 2023, against (i) Teva We filed suit in the U.S. District Court forff Pharmaceuticals, Inc., Teva Pharmaceuticals Development, Inc., Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (entity dismissed), collectively, "Teva", (ii) Lupiu n Limited, Lupiu n Pharmaceuticals, Inc., Lupin Inc. and Lupiu n Atlantis Holdings S.A., collectively, “Lupin”, (iii) Crysrr tal Pharmaceutical (Suzhou) Co., Ltd., Crysrr dismissed) and Sandoz AG (entity dismissed), collectively, “Sandoz” and (v) Zydus Pharmaceuticals (USA) Inc., Zydus Worldwide DMCC, Zydus Lifesciences Limited (formerly known as Cadila Healthcare Limited d/bdd /a Zydus Cadila) and Zydus Healthcare (USA) LLC (entity dismissed), collectively, “Zydus”. We also filed suit in the U.S. District Court forff tal Pharmatech Co., Ltd., collectively, “Crystal”, (iv) Sandoz Inc., Sandoz International GmbH (entity the District of New Jersey during 2021, 2022 and 2023 against Zydus. In 2023 we entered into settlement agreements resolving the foregoing litigation with each of (i) Sandoz and Crystal, collectively, the “Sandoz Parties”, (ii) Teva, (iii) Lupin and (iv) Zydus. Pursuant to the terms of the respective agreements with the Sandoz Parties, Teva, Lupin, and Zydus, each of Teva, the Sandoz Parties, Lupiu n, and Zydus has the right to sell generic versions of INGREZZA in the United States beginning March 1, 2038, or earlier under certain circumstances. The settlements with Teva, the Sandoz Parties, Lupiu n and Zydus resolve all patent litigation brought by us against the companies that fileff d ANDAs cases have been dismissed. oval to market generic INGREZZA, and all seeking appr AA a From time to time, we may also become subju ect to other legal proceedings or claims arising in the ordinary course of our business. We currently believe that none of the claims or actions pending against us is likely to have, individually or in the aggregate, a material adverse effecff t on our business, financial condition or results of operations. Given the unpredictabia lity inherent in litigation, however, we cannot predict the outcome of these matters. 91 Item 9. Changes and Disaii gra eements withii Accountantt Discii a Not appl losure icable. ts on Accountintt g and Finaii ncial ls and ProPP cedures Item 9A. Contrott We maintain disclosure controls and procedurd es that are designed to ensure that inforff mation required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the timelines specified in the SEC’s rulr es and forms, and that such inforff mation is accumulated and communicated to our management, including our Chief Executive Offiff cer and Chief Financial Offiff cer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedurd es, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonabla e assurance of achieving the desired control objectives, and in reaching a reasonabla e level of assurance, management necessarily relationship of possible controls and procedurd es. was required to appl y its judgment in evaluating the cost-benefitff a As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supeu rvision and with the participation of our management, including our Chief Executive Offiff cer and Chief Financial Offiff cer, of the effeff ctiveness of the design and operation of our disclosure controls and procedurd es as of the end of the year covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Offiff cer concluded that our disclosure controls and procedures were effeff ctive at the reasonabla e assurance level. 92 Management’s Report on Internal Control Over Financial Reporting Internal control over finff ancial reporting referff s to the process designed by, or under the supeu rvision of, our Chief Executive Officer and Chief Financial Offiff cer, and effected by our board of directors, management and other personnel, to provide reasonabla e assurance regarding the reliabia lity of financial reporting and the preparation of financial statements forff those policies and procedurd es that: es in accordance with generally accepted accounting principles, and includes external purpos r (1) (2) (3) Pertain to the maintenance of records that in reasonabla e detail accurately and faiff rly refleff ct the transactions and dispositions of our assets; Provide reasonabla e assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and Provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effeff ct on the finff ancial statements. Internal control over finff ancial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over finff ancial reporting is a process that involves human diligence and compliance and is subju ect to lapses in judgment and breakdowns resulting froff m human failures. Internal control over finff ancial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on urt es of a timely basis by internal control over finff ancial reporting. However, these inherent limitations are known feat the finff ancial reporting process. Thereforff e, it is possible to design into the process safegff uards to reducd e, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. ff th in the report entitled Internal Control-Integrated Framework Management has used the framework set forff (2013 framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effecff Based on this assessment, management has concluded that our internal control over finff ancial reporting was effeff ctive as of December 31, 2023. Ernst & Young, LLP, our independent registered public accounting firff m, has issued an attestation report on our internal control over finff ancial reporting as of December 31, 2023, which is included herein. tiveness of our internal control over finff ancial reporting. There has been no change in our internal control over finff ancial reporting durd ing our most recent fisff cal quarter that has materially affeff cted, or is reasonabla y likely to materially affect, our internal control over finff ancial reporting. 93 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Neurocrine Biosciences, Inc. Opinion on Internal Control Over Financial Reporting We have audited Neurocrine Biosciences, Inc.’s internal control over finff ancial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Neurocrine Biosciences, Inc. (the Company) maintained, in all material respects, effective internal control over finff ancial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, stockholders‘ equity and cash floff ws for each of the three years in the period ended December 31, 2023, and the related notes and our report dated Februar expressed an unqualifieff d opinion thereon. ry 9, 2024 Basis forff Opinion The Company’s management is responsible for maintaining effeff ctive internal control over finff ancial reporting and for its assessment of the effeff ctiveness of internal control over finff ancial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over finff ancial reporting based on our audit. We are a public accounting firff m registered with the PCAOB and are required to be independent with respect to the Company in accordance with the icable rules and regulations of the Securities and Exchange Commission and U.S. federal securities laws and the appl the PCAOB. a We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonabla e assurance about was maintained in all material respects. whether effective internal control over finff ancial reporting a Our audit included obtaining an understanding of internal control over finff ancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedurd es as we considered necessary in the circumstances. We believe that our audit provides a reasonabla e basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over finff ancial reporting is a process designed to provide reasonabla e assurance regarding the reliability of financial reporting and the preparation of finff ancial statements for external purpos es in accordance with generally accepted accounting principles. A company’s internal control over finff ancial reporting includes those policies and procedurd es that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and faiff assurance that transactions are recorded as necessary to permit preparation of finff ancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the finff ancial statements. rly refleff ct the transactions and dispositions of the assets of the company; (2) provide reasonabla e rr Because of its inherent limitations, internal control over finff ancial reporting may not prevent or detect misstatements. Also, projeo ctions of any evaluation of effectiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedurd es may deteriorate. /s/ Ernst & Young LLP San Diego, Califorff nia Februar ry 9, 2024 94 r InfII orff marr Item 9B. Othett During the period froff m October 1, 2023, to December 31, 2023, our executive offiff cers and directors adopted or terminated contracts, instructions or written plans for the purchase or sale of our securities as noted below: tion Action Date Rule 10b5-1* Non-Rule 10b5-1** Trading Arrangement Adopt 12/14/2023 Name and Title George Morrow (Director) Terminate (1) Eric Benevich (Chief Commercial Officer) Adopt Ingrid Delaet Adopt (Chief Regulatory Orr fficer) Leslie Norwalk (Director) Shalini Sharp (Director) Richard Pops (Director) Adopt Adopt Adopt 11/30/2023 11/29/2023 11/29/2023 11/28/2023 11/27/2023 11/21/2023 X X X X X X X Total Shares Authorized to be Sold Expiration Date 40,000 11/15/2024 131,341 12/31/2023 169,818 11/27/2024 30,000 9/7/2025 9,106 11/28/2024 1 ,106 5/31/2024 42,100 11/30/2024 ______________ * Intended to satisfy the affirmative defenff se of Rule 10b5-1(c) ** Not intended to satisfy the affirmative defenff se of Rule 10b5-1(c) (1) On November 30, 2023, Eric Benevich, Chief Commercial Offiff cer, terminated a trading arrangement that was intended to satisfy the affirmative defenff se of Rule 10b5-1 (the “Benevich 10b5-1 Plan”). The Benevich 10b5-1 Plan was entered into on Februarr ry 23, 2022, with an expiration date of December 31, 2023. Item 9C. Discii None. losure Regar e dingii Foreign Jgg urJJ isdictiott ns that Prevent InsII pes ctiott ns 95 PART III s,rr Executive OffiO cers arr Item 10. Direii ctortt Information required by this item will be contained in our Definitive Proxy Statement forff our 2024 Annual Meeting of Stockholders, to be filff ed pursuant to Regulation 14A with the SEC within 120 days of December 31, 2023. Such information is incorpor ated herein by reference. nd Corporate Gtt ovG ernance rr We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, and to all of our other officff ers, directors, employees and agents. The code of ethics is availabla e at the Corporate Governance section of the Investors page on our website at www.neurocrine.com. We intend to disclose futff urt e amendments to, or waivers froff m, certain provisions of our code of ethics on the above lowing the date of such amendment or waiver. Information found not incorporated into, this Annual Report on Form 10-K. website within four business days folff on, or accessible through, our website is not part of, aff nd is a ff Item 11. Executive ComCC pem nsatiott n Information required by this item will be contained in our Definitive Proxy Statement forff our 2024 Annual Meeting of Stockholders, to be filff ed pursuant to Regulation 14A with the SEC within 120 days of December 31, 2023. Such information is incorpor ated herein by reference. rr r MatMM tett rs Item 12. Securityii Ownership of Certaitt n Bii Stoctt kholdell Information required by this item will be contained in our Definitive Proxy Statement forff our 2024 Annual Meeting of Stockholders, to be filff ed pursuant to Regulation 14A with the SEC within 120 days of December 31, 2023. Such information is incorpor nd Managea ment and Relatll edtt ated herein by reference. ial Owners arr eneficff rr elatll iott nshipsii and Relatll edtt Transactiott ns, as nd Direii ctortt Item 13. Certaitt n Rii Indepeee ndendd our 2024 Annual Meeting Information required by this item will be contained in our Definitive Proxy Statement forff of Stockholders, to be filff ed pursuant to Regulation 14A with the SEC within 120 days of December 31, 2023. Such information is incorpor ated herein by reference. ce rr ii Accountintt g FeesFF Item 14. Principal Information required by this item will be contained in our Definitive Proxy Statement forff our 2024 Annual Meeting of Stockholders, to be filff ed pursuant to Regulation 14A with the SEC within 120 days of December 31, 2023. Such information is incorpor ated herein by reference. and SerSS vices rr 96 PART IV inFF ancial Stattt emtt , Fs Item 15. Exhibitsii (a) Documents filed as part of this report. ent SchSS edulesll 1. List of Financial Statements. The folff Report of Independent Registered Publu ic Accounting Firm Consolidated Balance Sheets as of December 31, 2023 and 2022 lowing are included in Item 8 of this report: Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Cash Flows forff the years ended December 31, 2023, 2022 and 2021 Notes to the Consolidated Financial Statements 2. List of all Financial Statement scheduld es. All schedules are omitted because they are not applicable, or the required inforff mation is shown in the Financial Statements or notes thereto. 3. List of Exhibits required by Item 601 of Regulation S-K. See part (b) below. (b) Exhibits. The folff lowing exhibits are filff ed as part of, off r r incorpor ated by reference into, this report: Exhibit 3.1 Description: Certificate of Incorporation, as amended ference: Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q fileff November 5, 2018 d on 3.2 4.1 Description: Bylaws, as amended Reference: Incorporated by reference to Exhibit 3.2 of the Company's Quarterly Report on Form 10-Q fileff August 1, 2023 d on Description: Form of Common Stock Certificate Reference: Incorporated by reference to the Company’s Registration Statement on Form S-1 (Registration No. 333-03172) 4.2 Description: Reference: Indenture, dated as of May 2, 2017, by and between the Company and U.S. Bank National Association, as Trustee Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on May 2, 2017 4.3 Description: First Supplemental Indenture, dated as of December 22, 2021, by and between the Company and Reference: U.S. Bank National Association, as Trustee Incorporated by reference to Exhibit 4.3 of the Company’s Annual Report on Form 10-K fileff Februarr ry 11, 2022 d on 4.4 Description: Form of Note representing the Company’s 2.25% Convertible Notes due 2024 Reference: Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on May 2, 2017 4.5 Description: Description of Common Stock of the Company ference: Incorporated by reference to Exhibit 4.4 of the Company’s Annual Report on Form 10-K fileff Februarr ry 7, 2020 d on 21.1 23.1 31.1 Description: Subsidiaries of the Company Description: Consent of Independent Registered Public Accounting Firm Description: Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934 31.2 Description: Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934 32*** Description: Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97 97+ Description: Neurocrine Biosciences, Inc. Clawback Policy 101.INS Description: Inline XBRL Instance Document. – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Description: Inline XBRL Taxonomy Extension Schema Document. 101.CAL Description: Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Description: Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Description: Inline XBRL Taxonomy Extension Labea l Linkbase Document. 101.PRE Description: Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Description: Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension : Collaboration and License Agregg ements g information contained in Exhibit 101) 10.1** Description: Collaboration Agreement dated June 15, 2010, by and between Abbott International Luxembourg Reference: S.a.r.l. and the Company as amended on August 31, 2011 Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q fileff May 5, 2021 d on 10.2** Description: First Amendment to Collaboration and License Agreement Dated August 31, 2011 between the Reference: Company and Abbott International Luxemburg S.a.r.l. Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q fileff May 5, 2021 d on 10.3** Description: Collaboration and License Agreement dated March 31, 2015 between Mitsubishi Tanabe Pharma Reference: Corporation and the Company Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q fileff May 5, 2021 d on 10.4* Description: Collaboration and License Agreement dated January 28, 2019 between Voyager Therapeutics, Inc. Reference: and the Company Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K fileff Februarr ry 7, 2019 d on 10.5 Description: Stock Purchase Agreement dated January 28, 2019 between Voyager Therapeutics, Inc. and the Reference: Company Incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K fileff Februarr ry 7, 2019 d on 10.6 Description: Amendment No. 1 to Collaboration and License Agreement dated June 14, 2019 between Voyager Reference: Therapeutics, Inc. and the Company Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on July 29, 2019 10.7** Description: Exclusive License Agreement dated June 12, 2020 between Takeda Pharmaceutical Company Reference: Limited and the Company Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q fileff d on August 3, 2020 10.8** Description: Collaboration and License Agreement dated November 22, 2021 between Heptares Therapeutics Reference: Limited and the Company Incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K fileff Februarr ry 11, 2022 d on 10.9** Description: Collaboration and License Agreement dated January 8, 2023 between Voyager Therapeutics, Inc. and Reference: the Company Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q fileff d on May 3, 2023 10.10 Description: Stock Purchase Agreement dated January 8, 2023 between Voyager Therapeutics, Inc. and the Reference: Company Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q fileff d on May 3, 2023 98 10.11 Description: Amended and Restated Investor Agreement dated January 8, 2023 between Voyager Therapeutics, Reference: Inc. and the Company Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q fileff d on May 3, 2023 Equity Plans and Related Agreements : g q y 10.12+ Description: Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan, as amended Reference: Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on May 30, 2018 10.13+ Description: Form of Stock Option Grant Notice and Option Agreement for use under the Neurocrine Biosciences, Reference: Inc. 2011 Equity Incentive Plan, and Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement for use under the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on June 1, 2015 10.14+ 10.15+ 10.16+ 10.17+ 10.18+ Description: Neurocrine Biosciences, Inc. Inducement Plan, as amended Reference: Incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K fileff Februarr ry 13, 2018 d on Description: Form of Stock Option Grant Notice and Option Agreement for use under the Neurocrine Biosciences, Reference: Inc. Inducement Plan, and Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement for use under the Neurocrine Biosciences, Inc. Inducement Plan Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on July 29, 2015 Description: Neurocrine Biosciences, Inc. 2018 Employee Stock Purchase Plan, as amended and restated Reference: Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q fileff d on August 4, 2022 Description: Form of Stock Option Grant Notice and Option Agreement for use under the Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan, and Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement for use under the Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan Incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K fileff Februarr ry 11, 2022 d on Reference: Description: Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan, as amended and restated Reference: Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on August 1, 2023 : nd Directorsrr ers arr ffff Agregg ements with Officff g 10.19+ Description: Amended and Restated Employment Agreement effective August 1, 2007 between the Company and Reference: Kevin C. Gorman, Ph.D. Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q fileff d on August 3, 2007 10.20+ Description: Form of Amendment to Employment Agreement for executive officers, effective as of December 15, Reference: 2010 Incorporated by reference to Exhibit 10.32 of the Company’s Annual Report on Form 10-K fileff Februarr ry 11, 2008 d on 10.21+ 10.22+ 10.23+ Description: Employment Agreement dated October 28, 2014 between the Company and Darin Lippoldt Reference: Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on May 3, 2023 Description: Employment Agreement dated May 26, 2015 between the Company and Eric Benevich Reference: Incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K fileff Februarr ry 14, 2017 d on Description: Employment Agreement effective November 29, 2017 between the Company and Matthew C. ference: Abernethy Incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K fileff Februarr ry 13, 2018 d on 10.24+ Description: Form of Indemnity Agreement entered into between the Company and its officers and directors ference: Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on November 1, 2017 99 10.25+ 10.26+ Description: Employment Agreement dated January 8, 2018 between the Company and Eiry W. Roberts, M.D. Reference: Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q fileff d on July 29, 2019 Description: Employment Agreement dated November 29, 2021 between the Company and Jude Onyia Reference: Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on August 4, 2022 y: Agregg ements Related to Real Propeo rtytt g p 10.27 Description: Amended and Restated Lease dated November 1, 2011 between the Company and Kilroy Realty, ference: L.P. Incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on January 18, 2012 10.28 Description: First Amendment to Amended and Restated Lease between the Company and Kilroy Realty, L.P., Reference: dated June 5, 2017 Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on August 3, 2017 10.29 Description: Second Amendment to Amended and Restated Lease between the Company and Kilroy Realty, L.P., Reference: dated October 12, 2017 Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q fileff d on November 1, 2017 10.30 Description: Third Amendment to Amended and Restated Lease between the Company and Kilroy Realty, L.P. Reference: dated August 7, 2019 Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on November 4, 2019 10.31 Description: Commercial Lease dated February 8, 2022, by and between the Company and Gemdale Aperture Reference: Phase I, LLC Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q fileff d on May 4, 2022 + * ** *** Management contract or compensatory plan or arrangement. Confidff ential treatment has been granted with respect to certain portions of the exhibit. Certain inforff mation in this exhibit has been omitted pursuant to Item 601 of Regulation S-K. These certifications are being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350 and are not being filff ed for purpos es of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of Neurocrine Biosciences, Inc., whether made beforff e or afteff r the date hereof, rff egardless of any general incorpor ration language in such filing. r Except as specifically noted above, the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K have a Commission File Number of 000-22705. (c) Fc inFF ancial Stattt emtt ent SchSS edulesll . . See Item 15(a)(2) above a 100 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duld y authorized. SIGNATURES NEUROCRINE BIOSCIENCES, INC. (Registrant) By: /s/ Kevin C. GCC orman Kevin C. Gorman Chief Executive Officer Date: Februarr ry 9, 2024 By: /s/ Matthett w C. ACC bernethytt Matthew C. Abernethy Chief Financial Offiff cer Date: Februarr ry 9, 2024 101 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin C. Gorman and Matthew C. Abernethy, and each of them, as his or her truer and lawful attorneys-in- fact and agents, with full power of subsu titution forff sign any and all amendments to this Annual Report on Form 10-K, and to fileff other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, fulff thing requisite and necessary to be done therewith, as fully to all intents and purpos in person, hereby ratifyiff ng and confirff ming all that said attorneys-in-fact and agents, and any of them, his or her subsu titute or subsu titutt es, may lawfulff him or her, and in his or her name in any and all capacities, to the same, with exhibits thereto and l power of authority to do and perform each and every act and ly do or cause to be done by virtuet es as he or she might or could do hereof.ff rr Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated as of February 9rr , 2024: Signature gg /s/ Kevin C. GCC orman Kevin C. Gorman, Ph.D. /s/ MatMM thew C. Abernethyh Matthew C. Abernethy /s/ William H. RHH astetter William H. Rastetter, Ph.D. /s/ Gary A. Lyons Gary A. Lyons /s/ Johanna Mercier Johanna Mercier /s/ Georger George J. Morrow J. Morrow /s/ Leslie V. Norwalkll Leslie V. Norwalk ine A. Poon /s/ Christii Christine A. Poon /s/ Richard F. PFF ops Richard F. Pops /s/ Shalini Shar pr Shalini Sharp SS /s/ Stephen A. SheSS rwin Stephen A. Sherwin, M.D. Title Chief Executive Officff er and Director (Principal Executive OfficO er)r Chief Financial Offiff cer (Principal Financial and Accounting OfficO er)r Chairman of the Board of Directors Director Director Director Director Director Director Director Director 102 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] Neurocrine Biosciences Corporate Information CORPORATE MANAGEMENT Kevin C. Gorman, Ph.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:696)(cid:747)(cid:728)(cid:726)(cid:744)(cid:743)(cid:732)(cid:745)(cid:728)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Ingrid Delaet, Ph.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:709)(cid:728)(cid:730)(cid:744)(cid:735)(cid:724)(cid:743)(cid:738)(cid:741)(cid:748)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Matthew C. Abernethy (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:697)(cid:732)(cid:737)(cid:724)(cid:737)(cid:726)(cid:732)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Eric Benevich (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:694)(cid:738)(cid:736)(cid:736)(cid:728)(cid:741)(cid:726)(cid:732)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) David W. Boyer (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:694)(cid:738)(cid:741)(cid:739)(cid:738)(cid:741)(cid:724)(cid:743)(cid:728)(cid:3)(cid:692)(cid:729)(cid:729)(cid:724)(cid:732)(cid:741)(cid:742)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Julie S. Cooke (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:699)(cid:744)(cid:736)(cid:724)(cid:737)(cid:3)(cid:709)(cid:728)(cid:742)(cid:738)(cid:744)(cid:741)(cid:726)(cid:728)(cid:742)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Kyle W. Gano, Ph.D. Chief Business Development (cid:724)(cid:737)(cid:727)(cid:3)(cid:710)(cid:743)(cid:741)(cid:724)(cid:743)(cid:728)(cid:730)(cid:748)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:3) Darin M. Lippoldt, J.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:703)(cid:728)(cid:730)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Jude Onyia, Ph.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:710)(cid:726)(cid:732)(cid:728)(cid:737)(cid:743)(cid:732)(cid:1027)(cid:726)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) Eiry W. Roberts, M.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:704)(cid:728)(cid:727)(cid:732)(cid:726)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741) BOARD OF DIRECTORS William H. Rastetter, Ph.D. Chairman of the Board, Neurocrine Biosciences, Inc. and Fate Therapeutics Kevin C. Gorman, Ph.D. (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:696)(cid:747)(cid:728)(cid:726)(cid:744)(cid:743)(cid:732)(cid:745)(cid:728)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:671) Neurocrine Biosciences, Inc. Gary A. Lyons Former President and Chief (cid:696)(cid:747)(cid:728)(cid:726)(cid:744)(cid:743)(cid:732)(cid:745)(cid:728)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:671)(cid:3)(cid:705)(cid:728)(cid:744)(cid:741)(cid:738)(cid:726)(cid:741)(cid:732)(cid:737)(cid:728)(cid:3) Biosciences, Inc. Johanna Mercier (cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:694)(cid:738)(cid:736)(cid:736)(cid:728)(cid:741)(cid:726)(cid:732)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:671) Gilead Sciences George J. Morrow Former Executive Vice President, Global Commercial Operations, Amgen Inc. Leslie V. Norwalk Former Acting Administrator for the Centers for Medicare & Medicaid Services Christine A. Poon Former Vice Chair and Worldwide Chair of Pharmaceuticals at Johnson & Johnson Richard F. Pops Chairman of the Board (cid:724)(cid:737)(cid:727)(cid:3)(cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:696)(cid:747)(cid:728)(cid:726)(cid:744)(cid:743)(cid:732)(cid:745)(cid:728)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:671) Alkermes plc Shalini Sharp (cid:697)(cid:738)(cid:741)(cid:736)(cid:728)(cid:741)(cid:3)(cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:697)(cid:732)(cid:737)(cid:724)(cid:737)(cid:726)(cid:732)(cid:724)(cid:735)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:3)(cid:724)(cid:737)(cid:727)(cid:3) Executive Vice President of Ultragenyx Stephen A. Sherwin, M.D. Former Chairman of the Board (cid:724)(cid:737)(cid:727)(cid:3)(cid:694)(cid:731)(cid:732)(cid:728)(cid:729)(cid:3)(cid:696)(cid:747)(cid:728)(cid:726)(cid:744)(cid:743)(cid:732)(cid:745)(cid:728)(cid:3)(cid:706)(cid:729)(cid:1027)(cid:726)(cid:728)(cid:741)(cid:671) Cell Genesys, Inc. STOCKHOLDER INFORMATION Transfer Agent Equiniti Trust Company Auditors Ernst & Young LLP Corporate Counsel Cooley LLP Neurocrine Biosciences is a leading neuroscience- focused, biopharmaceutical company with a simple purpose: to relieve suffering for people with great needs, but few options. We are dedicated to discovering and developing life-changing treatments for patients with under-addressed neurological, neuroendocrine, and neuropsychiatric disorders. The company’s diverse portfolio includes FDA-approved treatments for tardive dyskinesia, chorea associated with Huntington’s disease, (cid:728)(cid:737)(cid:727)(cid:738)(cid:736)(cid:728)(cid:743)(cid:741)(cid:732)(cid:738)(cid:742)(cid:732)(cid:742)(cid:669)(cid:3)(cid:724)(cid:737)(cid:727)(cid:3)(cid:744)(cid:743)(cid:728)(cid:741)(cid:732)(cid:737)(cid:728)(cid:3)(cid:1027)(cid:725)(cid:741)(cid:738)(cid:732)(cid:727)(cid:742)(cid:669)(cid:671)(cid:3) as well as a robust pipeline including multiple compounds in mid-to-late- phase clinical development across our core therapeutic areas. For three decades, we have applied our unique insight into neuroscience and the interconnections between brain and body systems to treat complex conditions. We relentlessly pursue medicines to ease the burden of debilitating diseases and disorders, because you deserve brave science. For more information, visit neurocrine.com, and follow the company on LinkedIn, X (Formerly Twitter) and Facebook. *in collaboration with AbbVie 6027 EDGEWOOD BEND COURT SAN DIEGO, CA 92130 (858) 617-7600 WWW.NEUROCRINE.COM

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