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What changed in BIOMARIN PHARMACEUTICAL INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BIOMARIN PHARMACEUTICAL INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+456 added−451 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-26)

Top changes in BIOMARIN PHARMACEUTICAL INC's 2024 10-K

456 paragraphs added · 451 removed · 325 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

113 edited+37 added−28 removed215 unchanged
Biggest changeSimilarly, in the EU, stringent rules have been introduced to fight medicine falsifications and to ensure that the trade in medicines is subject to rigorous controls. Measures required to ensure that include: a unique identifier and an anti-tampering device on the outer packaging of drugs, stringent rules on import of active pharmaceutical ingredients and record-keeping requirements for wholesale distributors.
Biggest changeMeasures required to ensure that include: a unique identifier and an anti-tampering device on the outer packaging of drugs, stringent rules on import of active pharmaceutical ingredients and record-keeping requirements for wholesale distributors. 17 Approval Regulation Outside of the U.S. and the EU For marketing outside the U.S. and the EU, we are subject to non-U.S. regulatory requirements governing human clinical testing and marketing approval for our products.
Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn are used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
Several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn are used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
The FDA and other regulatory agencies around the world conduct regular, periodic visits to reinspect our equipment, facilities, laboratories and processes following an initial approval. Combination Products and Companion Diagnostics Combination products are defined by the FDA as products composed of two or more regulated components (e.g., a biologic and/or drug and a device).
The FDA and other regulatory agencies around the world conduct regular, periodic visits to reinspect our equipment, facilities, laboratories and processes following an initial approval. 16 Combination Products and Companion Diagnostics Combination products are defined by the FDA as products composed of two or more regulated components (e.g., a biologic and/or drug and a device).
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks posed by the REMS program. BRINEURA BRINEURA is a recombinant human tripeptidyl peptidase 1 (TPP1) for the treatment of patients with CLN2, a form of Batten disease.
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks posed by the REMS program. 6 BRINEURA BRINEURA is a recombinant human tripeptidyl peptidase 1 (TPP1) for the treatment of patients with CLN2, a form of Batten disease.
Governments may regulate access to, prices of or reimbursement levels for our products to control costs or to affect levels of use of our products, and private insurers may be influenced by government reimbursement methodologies. Third-party payers carefully review and increasingly challenge the prices charged for drugs, examine their medical necessity, and review their cost effectiveness.
Governments may regulate access to, prices of or reimbursement levels for our products to control costs or to affect levels of use of our products, and private insurers may be influenced by government reimbursement methodologies. 20 Third-party payers carefully review and increasingly challenge the prices charged for drugs, examine their medical necessity, and review their cost effectiveness.
For non-innovator products, generally generic drugs marketed under abbreviated new drug applications (referred to as ANDAs), the rebate amount is 13% of the average manufacturer price (AMP) for the quarter. The AMP is the weighted average of prices paid to the manufacturer (1) directly by retail community pharmacies and (2) by wholesalers for drugs distributed to retail community pharmacies.
For non-innovator products, generally generic drugs marketed under abbreviated new drug applications (referred to as ANDAs), the minimum rebate amount is 13% of the average manufacturer price (AMP) for the quarter. The AMP is the weighted average of prices paid to the manufacturer (1) directly by retail community pharmacies and (2) by wholesalers for drugs distributed to retail community pharmacies.
The table below lists our active patents and patent applications of primary importance for our products other than ALDURAZYME and NAGLAZYME by territory, general subject matter (including composition, methods of treatment and approved use, methods of production and purification, pharmaceutical compositions and clinical formulations) and latest expiry date.
The table below lists our active patents and patent applications of primary importance for our products other than ALDURAZYME, NAGLAZYME and KUVAN by territory, general subject matter (including composition, methods of treatment and approved use, methods of production and purification, pharmaceutical compositions and clinical formulations) and latest expiry date.
In such cases, we attempt to prevent disruption of supplies through supply agreements, maintaining safety stock and other appropriate strategies. Raw Materials Raw materials and supplies required to produce our products and product candidates are available in some instances from one supplier and in other instances from multiple suppliers.
In such cases, we attempt to prevent disruption of supplies through supply agreements, maintaining safety stock and other appropriate strategies. 8 Raw Materials Raw materials and supplies required to produce our products and product candidates are available in some instances from one supplier and in other instances from multiple suppliers.
We continue to pursue additional patents and patent term extensions in the U.S. and other territories covering various aspects of our products that may, if issued, extend patent exclusivity beyond the expiration dates listed in the table below. Product Territory Patent No(s).
We continue to pursue additional patents and patent term extensions in the U.S. and other 11 territories covering various aspects of our products that may, if issued, extend patent exclusivity beyond the expiration dates listed in the table below. Product Territory Patent No(s).
Their products may outcompete ours due to one or more factors, including faster progress through preclinical and clinical development, lower manufacturing costs, superior safety and efficacy, lower pricing, stronger patent protection, and better marketing, sales, and distribution capabilities.
Their products may outcompete ours due to one or more factors, including faster progress through preclinical 9 and clinical development, lower manufacturing costs, superior safety and efficacy, lower pricing, stronger patent protection, and better marketing, sales, and distribution capabilities.
Under the fast track program and the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
Under the FDA’s accelerated approval regulations, the FDA may approve a drug, including a fast track drug, for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
The BPCIA provides sponsors of BLAs an additional six-month extension for all unexpired non-patent market exclusivity on all forms of the biological containing the active moiety pursuant to the BPCA if the conditions under the BPCA are met.
The BPCA provides sponsors of BLAs an additional six-month extension for all unexpired non-patent market exclusivity on all forms of the biological containing the active moiety pursuant to the BPCA if the conditions under the BPCA are met.
FDORA enables the FDA to initiate enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.
FDORA enables the FDA to initiate enforcement action for 15 the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.
(6) We applied for SPCs for this patent, and we have to date received SPC to extend the patent expiration to April 30, 2029 in certain European countries, including Austria, Belgium, Bulgaria, Cypress, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
(5) We applied for SPCs for this patent, and we have to date received SPC to extend the patent expiration to April 30, 2029 in certain European countries, including Austria, Belgium, Bulgaria, Cypress, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
The overall ten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. 17 Table of Contents Orphan Drug Designation Orphan drug designation is granted by the FDA and the EC to drugs intended to treat a rare disease or condition, which in the U.S. is defined as having a prevalence of less than 200,000 individuals in the U.S. or as a condition that affects more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the costs of development of said drug will be recovered from sales in the U.S.
The overall ten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. 18 Orphan Drug Designation Orphan drug designation is granted by the FDA and the EC to drugs intended to treat a rare disease or condition, which in the U.S. is defined as having a prevalence of less than 200,000 individuals in the U.S. or as a condition that affects more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the costs of development of said drug will be recovered from sales in the U.S.
In the European Economic Area (i.e., the EU as well as Iceland, Liechtenstein and Norway) (the EEA), there are two types of marketing authorizations (MA), namely: (i) the “Union” MA, which is issued by the EC through the so-called “centralized procedure”, based on the positive opinion of the EMA’s Committee for Medicinal Products for Human Use (CHMP), and results in a single marketing authorization that is valid across the EEA; and (ii) “National MAs,” which are issued by the competent NCAs and only 13 Table of Contents cover their respective territory.
In the European Economic Area (i.e., the EU as well as Iceland, Liechtenstein and Norway) (the EEA), there are two types of marketing authorizations (MA), namely: (i) the “Union” MA, which is issued by the EC through the so-called “centralized procedure”, based on the positive opinion of the EMA’s Committee for Medicinal Products for Human Use (CHMP), and results in a single marketing authorization that is valid across the EEA; and (ii) “National MAs,” which are issued by the competent NCAs and only cover their respective territory.
Regulatory inspections of this new drug product filling facility are planned and/or anticipated over the coming months. We contract with third parties to manufacture KUVAN API. Additionally, most of our drug product manufacturing (which includes vials, syringes, tablets, and powder) is performed externally by contract manufacturers.
Additional regulatory inspections of this new drug product filling facility are planned and/or anticipated over the coming months. We contract with third parties to manufacture PALYNZIQ and KUVAN API. Additionally, most of our drug product manufacturing (which includes vials, syringes, tablets, and powder) is performed externally by contract manufacturers.
We also sell our products (other than ALDURAZYME) to our authorized distributors and to certain larger pharmaceutical wholesalers globally, which act as intermediaries between us and end-users and generally do not stock significant quantities of our products. However, in certain countries, governments place large periodic orders for NAGLAZYME and VIMIZIM.
We also sell our products (other than ALDURAZYME) to our authorized distributors and to certain larger pharmaceutical wholesalers globally, which act as intermediaries between us and end-users and generally do not stock significant quantities of our products. However, in certain countries, governments place large periodic orders for our products.
FSS pricing to those four federal agencies for covered drugs must be no more than the Federal Ceiling Price (FCP), which is at least 24% below the Non-Federal Average Manufacturer Price (Non-FAMP) for the prior year. The Non-FAMP is the average price for covered drugs sold to wholesalers or other middlemen, net of any price reductions.
FSS pricing to those four federal agencies for covered drugs must be no more than the Federal Ceiling Price (FCP), which is at least 24% below the Non-Federal Average Manufacturer Price (Non-FAMP) for the prior government fiscal year. The Non-FAMP is the average price for covered drugs sold to wholesalers or other middlemen, net of any price reductions.
The revisions may, however, have a significant impact on our activities in the long term. Other Regulatory Requirements In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain business and marketing practices in the pharmaceutical industry in recent years.
The revisions may, however, have a significant impact on our activities in the long term. Other Regulatory Requirements In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain business and marketing practices in the pharmaceutical industry.
For innovator products (i.e., drugs that are marketed under NDAs or BLAs), the rebate amount is the greater of 23.1% of the AMP for the quarter or the difference between such AMP and the best price for that same quarter. The best price is essentially the lowest price available to non-governmental entities.
For innovator products (i.e., drugs that are marketed under NDAs or BLAs), the minimum rebate amount is generally the greater of 23.1% of the AMP for the quarter or the difference between such AMP and the best price for that same quarter. The best price is essentially the lowest price available to non-governmental entities.
Failure to comply with applicable U.S. and foreign requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending New Drug Applications (NDAs) or Biologics License Applications (BLAs), warning or untitled letters, 12 Table of Contents investigations, product recalls, product seizures, total or partial suspension or withdrawal of marketing, production or distribution authorizations, injunctions, fines, civil penalties, and criminal prosecution.
Failure to comply with applicable U.S. and foreign requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending New Drug Applications (NDAs) or Biologics License Applications (BLAs), warning or untitled letters, investigations, product recalls, product seizures, total or partial suspension or withdrawal of marketing, production or distribution authorizations, injunctions, fines, civil penalties, and criminal prosecution.
For the FDA, the review period for standard review applications for new molecular entities is typically ten months from the date the FDA files the application and, for priority review of drugs, that is, drugs that the FDA determines address a significant unmet need and represent a significant improvement over existing therapy, the review period is typically six months from the date the FDA files the application.
For the FDA, the review period for standard review applications for new molecular 14 entities is typically ten months from the date the company files the application and, for priority review of drugs, that is, drugs that the FDA determines address a significant unmet need and represent a significant improvement over existing therapy, the review period is typically six months from the date the company files the application.
Furthermore we seek to protect our ownership of know-how, trade secrets and trademarks through an active program of legal mechanisms including registrations, assignments, confidentiality agreements, material transfer agreements, research collaborations and licenses. 10 Table of Contents U.S. patents, as well as most foreign patents, are generally effective for 20 years from the date the earliest application was filed.
Furthermore, we seek to protect our ownership of know-how, trade secrets and trademarks through an active program of legal mechanisms including registrations, assignments, confidentiality agreements, material transfer agreements, research collaborations and licenses. U.S. patents, as well as most foreign patents, are generally effective for 20 years from the date the earliest application was filed.
An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of the marketing approval for a product. Commercial products may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.
An unsuccessful post-marketing study or failure to complete such a study with due diligence could result in the withdrawal of the marketing approval for a product. Commercial products may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.
These symptoms include: inhibited growth, spinal cord compression, enlarged liver and spleen, joint deformities and reduced range of motion, skeletal deformities, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance. 5 Table of Contents NAGLAZYME is approved for marketing in the U.S., the EU and other international markets.
These symptoms include: inhibited growth, spinal cord compression, enlarged liver and spleen, joint deformities and reduced range of motion, skeletal deformities, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance. NAGLAZYME is approved for marketing in the U.S., the EU and other international markets.
These symptoms include: inhibited growth, delayed and regressed mental development (in the severe form of the disease), enlarged liver and spleen, joint deformities and reduced range of motion, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance. 6 Table of Contents We developed ALDURAZYME through collaboration with Sanofi.
These symptoms include: inhibited growth, delayed and regressed mental development (in the severe form of the disease), enlarged liver and spleen, joint deformities and reduced range of motion, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance. We developed ALDURAZYME through collaboration with Sanofi.
Our total rewards compensation package includes market-competitive salary, the potential to earn bonuses or sales commissions, equity, healthcare benefits, retirement savings plans, paid time off and family leave, wellness programs such as subsidized access to fitness centers and onsite fitness facilities, free flu vaccinations and an Employee Assistance Program and other mental health services.
Our total rewards compensation package includes market-competitive salary, the potential to earn bonuses or sales commissions, equity, healthcare benefits, retirement savings plans, paid time off and family leave, wellness programs such as subsidized access to fitness centers and onsite fitness facilities, an Employee Assistance Program and other mental health services.
(4) We filed for a PTE for these patents, and if granted, we expect the patents’ expirations will extend to June 29, 2037 for the 9,504,762 patent and November 21, 2036 for the 11,406,690 patent.
(3) We filed for a PTE for these patents, and if granted, we expect the patents’ expirations will extend to June 29, 2037 for the 9,504,762 patent and November 21, 2036 for the 11,406,690 patent.
On January 31, 2022, Regulation EU No 536/2014 (CTR) became fully applicable in the EU.
On January 31, 2022, Regulation EU No 536/2014 (CTR) became fully 13 applicable in the EU.
There must be no differences in conditions of use, route of administration, dosage form, and strength to rely on a given reference product, and there can be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency.
There must be no differences in route of administration, dosage form, and strength to rely on a given reference product, and there can be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency.
An NDA/BLA or MAA supplement for a new indication typically requires clinical data similar to that in the original application, and similar procedures and actions in reviewing NDA/BLA or MAA supplements as in reviewing NDAs/BLAs and MAAs. Adverse event reporting and submission of periodic reports is required following marketing approval.
An NDA/BLA, PMA, or MAA supplement for a new indication typically requires clinical data similar to that in the original application, and similar procedures and actions apply in reviewing NDA/BLA, PMA, or MAA supplements as in reviewing NDAs/BLAs, PMAs, and MAAs. Adverse event reporting and submission of periodic reports is required following marketing approval.
Our products and product candidates have potential competition from products under development either using similar technology to 9 Table of Contents our programs or different treatment strategies. The following is a summary of some of the primary possible future competitors for our products and product candidates, but the information below may not include all potential competition.
Our products and product candidates have potential competition from products under development either using similar technology to our programs or different treatment strategies. The following is a summary of some of the primary possible future competitors for our products and product candidates, but the information below may not include all potential competition.
In addition to patent protection, certain of our products are entitled to regulatory exclusivity in the U.S. and the EU through the dates set forth below: Commercial Products United States Orphan Drug Exclusivity Expiration (1) United States Biologic Exclusivity Expiration (2) European Union Orphan Drug Exclusivity Expiration (1) BRINEURA 2024 2029 2027 PALYNZIQ 2025 2030 2029 ROCTAVIAN 2030 2035 2032 VIMIZIM Expired 2026 2024 VOXZOGO 2028 Not Applicable 2031 (1) See “Government Regulation—Other Regulation—Orphan Drug Designation” in this Annual Report on Form 10-K for further discussion.
In addition to patent protection, certain of our products are entitled to regulatory exclusivity in the U.S. and the EU through the dates set forth below: Commercial Products United States Orphan Drug Exclusivity Expiration (1) United States Biologic Exclusivity Expiration (2) European Union Orphan Drug Exclusivity Expiration (1) BRINEURA 2031 (3) 2029 2029 PALYNZIQ 2025 2030 2029 ROCTAVIAN 2030 2035 2032 VIMIZIM Expired 2026 2026 VOXZOGO 2030 (4) Not Applicable 2031 (1) See “Government Regulation—Other Regulation—Orphan Drug Designation” in this Annual Report on Form 10-K for further discussion.
Obtaining coverage and adequate reimbursement for our products may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. A payer’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.
Obtaining coverage and adequate reimbursement for our products may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. A payer’s decision to provide coverage for a product does not necessarily mean that an adequate reimbursement rate will be approved.
In addition, quality control as well as the manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval. Drug and biological product manufacturers and certain of their subcontractors are subject to periodic unannounced inspections by the FDA, the EMA/NCAs, during which the inspectors audit manufacturing facilities to assess 16 Table of Contents compliance with cGMPs.
In addition, quality control as well as the manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval. Drug, device, and biological product manufacturers and certain of their subcontractors are subject to periodic unannounced inspections by the FDA, the EMA/NCAs, during which the inspectors audit manufacturing facilities to assess compliance with cGMPs.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more 14 Table of Contents rapidly than clinical endpoints.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.
In the U.S., PALYNZIQ is only available through the PALYNZIQ Risk Evaluation and Mitigation Strategy (REMS) program, which is required by the FDA to mitigate the risk of anaphylaxis while using the product.
In the U.S., PALYNZIQ is only available through the PALYNZIQ Risk Evaluation and Mitigation Strategy (REMS) program, which is required by the U.S. Food and Drug Administration (FDA) to mitigate the risk of anaphylaxis while using the product.
Our products require approval from the FDA, the EC (on the basis of the scientific opinions issued by the EMA) and corresponding agencies in other countries before they can be marketed.
Our products require approval from the FDA, the EC (on the basis of the scientific opinions issued by the European Medicines Agency (EMA)) and corresponding agencies in other countries before they can be marketed.
Biosimilars are licensed based on FDA’s findings of safety, purity, and potency for a prior FDA-licensed product called a reference product.
Biosimilars are licensed based on FDA’s findings of safety, purity, and potency for a previously FDA-licensed product called a reference product.
ALDURAZYME is approved for marketing in the U.S., the EU and other international markets. VOXZOGO VOXZOGO is a once daily injection analog of C-type Natriuretic Peptide (CNP) for the treatment of achondroplasia, the most common form of disproportionate short stature in humans.
VIMIZIM is approved for marketing in the U.S., the European Union (EU) and other international markets. VOXZOGO VOXZOGO is a once daily injection analog of C-type Natriuretic Peptide (CNP) for the treatment of achondroplasia, the most common form of disproportionate short stature in humans.
Reimbursement rates from private companies vary depending on the third-party 19 Table of Contents payer, the insurance plan and other factors. One payer’s determination to provide coverage for a product does not assure that other payers will also provide coverage for the product.
Reimbursement rates from private companies vary depending on the third-party payer, the insurance plan and other factors. One payer’s determination to provide coverage for a product does not assure that other payers will also provide coverage for the product.
Such reports and other information may be accessed through the SEC’s website at www.sec.gov. Information contained in our website is not part of this or any other report that we file with or furnish to the SEC. 24 Table of Contents
Such reports and other information may be accessed through the SEC’s website at www.sec.gov. Information contained in our website is not part of this or any other report that we file with or furnish to the SEC. 25
BRINEURA is approved for marketing in the U.S. (for ages three and older) and in the EU (for all ages from birth) and in other international markets. ALDURAZYME ALDURAZYME is a highly purified protein that is designed to be identical to a naturally occurring form of the human enzyme alpha-L-iduronidase, a lysosomal enzyme normally required for the breakdown of GAGs.
BRINEURA is approved for marketing in the U.S. and in the EU for children of all ages and in other international markets. ALDURAZYME ALDURAZYME is a highly purified protein that is designed to be identical to a naturally occurring form of the human enzyme alpha-L-iduronidase, a lysosomal enzyme normally required for the breakdown of GAGs.
In those cases where raw materials are only available through one supplier, such supplier may be either a sole source (the only recognized supply source available to us) or a single source (the only 8 Table of Contents approved supply source for us among other sources).
In those cases where raw materials are only available through one supplier, such supplier may be either a sole source (the only recognized supply source available to us) or a single source (the only approved supply source for us among other sources).
Our Novato and Shanbally facilities have been inspected and have demonstrated compliance with current Good Manufacturing Practice (cGMP) to the satisfaction of the FDA, the EC and health agencies in other countries. We also have installed aseptic filling and drug product packaging capabilities at the Shanbally site.
Our Novato and Shanbally facilities have been inspected and have demonstrated compliance with current Good Manufacturing Practice (cGMP) to the satisfaction of the FDA, the EC and health agencies in other countries. We also have installed aseptic filling and drug product packaging capabilities at the Shanbally site, which received EU approval in 2024.
General Subject Matter Patent Expiration BRINEURA U.S. 8,029,781 Method of treatment March 7, 2023 (1) 9,044,473 Method of treatment by administration into the cerebrospinal fluid February 18, 2032 10,279,015 Formulation; kit May 5, 2036 EU 1673104 Pharmaceutical composition August 30, 2024 EP3294345 Formulation May 5, 2036 PALYNZIQ U.S. 7,534,595 Composition; method of treating May 24, 2032 (2) 10,221,408 Purification February 3, 2031 9,557,340 Antibody detection assay July 30, 2029 11,505,790 Regimen February 3, 2031 EU 2152868 Composition; pharmaceutical composition May 23, 2028 / May 23, 2033 (3) 2531209; 3025728 Formulation; purification February 3, 2031 ROCTAVIAN US 9,504,762; 10,463,718; 11,406,690 Compositions, Methods of Treatment, Production September 10, 2034 (4) 10,512,675; 11,690,898 Formulation, Clinical Methods of Treatment April 10, 2037 December 19, 2038 EU 3044231 Compositions, Methods of Treatment September 10, 2034 (5) VIMIZIM U.S. 8,128,925 Compositions; methods of treatment April 10, 2030 8,765,437 Purification; formulation; methods of treatment January 10, 2032 EU 2245145 Composition; use for treating April 30, 2029 (6) 2595650 Purification; composition; use for treating; formulation July 22, 2031 VOXZOGO U.S. 8,198,242 Compositions, Methods of Treatment June 11, 2030 (7) 9,907,834 Formulation August 1, 2036 10,646,550 Clinical methods of treatment August 1, 2036 EU 2432489 Compositions, Methods of Treatment May 20, 2030 (8) (1) Date of expiry includes patent term extension (PTE).
General Subject Matter Patent Expiration BRINEURA U.S. 9,044,473 Method of treatment by administration into the cerebrospinal fluid February 18, 2031 10,279,015 Formulation; kit May 5, 2036 EU EP3294345 Formulation May 5, 2036 PALYNZIQ U.S. 7,534,595 Composition; method of treating May 24, 2032 (1) 10,221,408 Purification February 3, 2031 9,557,340 Antibody detection assay July 30, 2029 11,505,790 Regimen February 3, 2031 11,919,633 Method of treating adolescent subjects May 18, 2042 EU 2152868 Composition; pharmaceutical composition May 23, 2028 / May 23, 2033 (2) 2531209; 3025728 Formulation; purification February 3, 2031 ROCTAVIAN US 9,504,762; 10,463,718; 11,406,690 Compositions, Methods of Treatment, Production September 10, 2034 (3) 10,512,675; 11,690,898 Formulation, Clinical Methods of Treatment April 10, 2037 December 19, 2038 EU 3044231 Compositions, Methods of Treatment September 10, 2034 (4) VIMIZIM U.S. 8,128,925 Compositions; methods of treatment April 10, 2030 8,765,437 Purification; formulation; methods of treatment January 10, 2032 EU 2245145 Composition; use for treating April 30, 2029 (5) 2595650 Purification; composition; use for treating; formulation July 22, 2031 3219795 Method of producing January 16, 2029 VOXZOGO U.S. 8,198,242 Compositions, Methods of Treatment June 11, 2030 (6) 9,907,834 Formulation August 1, 2036 10,646,550 Clinical methods of treatment August 1, 2036 EU 2432489 Compositions, Methods of Treatment May 20, 2030 (7) 3328416 Formulation, Use August 1, 2036 (1) Date of expiry includes the granted patent term extension (PTE).
Also, the CCPA provides for 22 Table of Contents civil penalties and a private right of action for data breaches which may include an award of statutory damages. In addition, the CPRA, effective January 1, 2023, expanded the CCPA.
Also, the CCPA provides for 23 civil penalties and a private right of action for data breaches which may include an award of statutory damages. In addition, the CPRA, effective January 1, 2023, expanded the CCPA.
The timing of these orders can be inconsistent and can create significant quarter to quarter variation in our revenue. PALYNZIQ is currently distributed in the U.S. pursuant to the REMS program through a limited number of certified specialty pharmacies. During 2023, 36% of our net product revenue was generated by three customers.
The timing of these orders can be inconsistent and can create significant quarter to quarter variation in our revenue. PALYNZIQ is currently distributed in the U.S. pursuant to the REMS program through a limited number of certified specialty pharmacies. During 2024, 25% of our net product revenue was generated by two customers.
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks posed by generic versions of KUVAN in the U.S. and international markets. PALYNZIQ and KUVAN also have potential competition from clinical stage product candidates from Jnana Therapeutics Inc., Nestle Health Science, S.A., Sanofi, S.A., PTC Therapeutics, Inc.
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks posed by generic versions of KUVAN in the U.S. and international markets. PALYNZIQ and KUVAN also have potential competition from clinical stage product candidates from Agios Pharmaceuticals Inc., Jnana Therapeutics Inc.
Moreover, the process for determining whether a third-party payer will provide coverage for a product may be separate from the process for setting the price of a product or for establishing the reimbursement rate that such a payer will pay for the product.
Moreover, the process for determining whether a third-party payer will provide coverage for a product may be separate from the process for establishing the reimbursement rate that such a payer will pay for the product.
The FDA and European authorities closely regulate the post-approval marketing and promotion of commercial products, including standards and regulations for direct-to-consumer advertising (which is prohibited in the EU for prescription products such as our products), off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.
The FDA and European authorities closely regulate the post-approval marketing and promotion of commercial products, including standards and regulations for direct-to-consumer advertising (which is prohibited in the EU for prescription products such as our products), off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet. For further detail, please see "Post-Approval Regulatory Requirements" below.
A significant portion of our employee base in the U.S. and Ireland works onsite supporting manufacturing and laboratory operations. Diversity, Equity and Inclusion At BioMarin, prejudice, racism and intolerance are unacceptable. We are committed to diversity, equity and inclusion (DEI) across all aspects of our organization, including hiring, promotion and development practices.
A significant portion of our employee base in the U.S. and Ireland works onsite supporting manufacturing and laboratory operations. Diversity, Equity and Inclusion At BioMarin, prejudice, racism and intolerance are unacceptable. We are committed to removing barriers to employment and embedding fairness and opportunity across all aspects of our organization, including hiring, promotion and development practices.
(2) Date of expiry includes the granted PTE. 11 Table of Contents (3) We applied for SPCs for this patent, and we have to date received SPC to extend the patent expiration to May 23, 2033 in certain European countries, including Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland France, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Spain, Slovakia, Slovenia, Sweden, and United Kingdom.
(2) We applied for SPCs for this patent, and we have to date received SPC to extend the patent expiration to May 23, 2033 in certain European countries, including Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Spain, Slovakia, Slovenia, Sweden, and United Kingdom.
ROCTAVIAN ROCTAVIAN, a gene therapy for the treatment of adults with severe hemophilia A, has potential competition from marketed recombinant factor VIII replacement therapies, including products marketed by Sanofi S.A., Takeda Pharmaceutical Company Limited, Bayer AG, Novo Nordisk A/S, CSL Behring, and Pfizer, Inc., a novel bispecific antibody marketed by the Roche Group, and clinical stage programs, including gene therapy product candidates under development by ASC Therapeutics, Inc., Pfizer, Inc., and the Roche Group.
ROCTAVIAN ROCTAVIAN, a gene therapy for the treatment of adults with severe hemophilia A, has potential competition from marketed recombinant factor VIII replacement therapies, including products marketed by Bayer AG, CSL Behring, Novo Nordisk A/S, Pfizer, Inc., Sanofi S.A., and Takeda Pharmaceutical Company Limited, and a novel bispecific antibody marketed by the Roche Group.
Under the Inflation Reduction Act (IRA), manufacturers are also required to provide quarterly rebates for certain single-source drugs and biologics (including biosimilars) covered under Medicare Part B with prices that increase faster than the rate of inflation.
Under the Inflation Reduction Act (IRA), manufacturers are also required to provide quarterly rebates for certain single-source drugs and biologics (including biosimilars) covered under Medicare Part B with prices that increase faster than the rate of inflation, and in November 2024, CMS finalized regulations pertaining to the Medicare Part B inflation rebates.
To date, the rebate amount for a drug has been capped at 100% of the AMP; however, effective January 1, 2024, this cap was eliminated, which means that a manufacturer could pay a rebate amount on a unit of the drug that is greater than the average price the manufacturer receives for the drug.
For many years, the total rebate amount for a unit of a drug was capped at 100% of the AMP; however, effective January 1, 2024, this cap was eliminated, which means that a manufacturer could pay a rebate amount on a unit of the drug that is greater than the average price the manufacturer receives for the drug.
Department of Health and Human Services (HHS) to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D.
Department of Health and Human Services (HHS) to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D. The negotiated price may not exceed a statutory ceiling price.
The IRA also requires manufacturers to provide annual Medicare Part D rebates for single-source drugs and biological products with prices that increase faster than the rate of inflation. The IRA also allows the U.S.
The IRA also requires manufacturers to provide annual Medicare Part D rebates for single-source drugs and biological products with prices that increase faster than the rate of inflation, and in November 2024, CMS finalized regulations pertaining to Medicare Part D inflation rebates. The IRA also allows the U.S.
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks related to ROCTAVIAN in the U.S. and international markets.
Please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of the risks related to the commercialization of ROCTAVIAN.
This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and 18 Table of Contents prescribers, purchasers and formulary managers on the other.
This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and 19 prescribers, purchasers and formulary managers on the other.
At the direction of BioMarin's senior leadership team, our human resources department has implemented policies and programs to foster DEI at all levels of the organization.
At the direction of BioMarin's senior leadership team, our human resources department has implemented policies, processes, and programs to improve inclusion at all levels of the organization.
The law also requires manufacturers to offer deeply discounted FSS contract pricing for purchases of their covered drugs by the Department of Veterans Affairs, the Department of Defense, the Coast Guard, and the Public Health Service (including the Indian Health Service) in order for federal funding to be available for reimbursement or purchase of the manufacturer’s drugs under certain federal programs.
The law also requires manufacturers to offer deeply discounted FSS contract pricing for purchases of their covered drugs by the Department of Veterans Affairs, the Department of Defense, the Coast Guard, and the Public Health Service (including the Indian Health Service) in order for the manufacturer’s covered drugs to be eligible for purchase by these agencies and also in order for federal funding to be available for reimbursement of the manufacturer’s drugs under Medicaid and Medicare Part B.
Each manufacturer of drugs approved under NDAs or BLAs is required to enter into a Medicare Part D coverage gap discount agreement and provide a 70% discount on those drugs dispensed to Medicare Part D enrollees in the coverage gap, in order for its drugs to be reimbursed by Medicare Part D.
Each manufacturer of drugs approved under NDAs or BLAs, in order for these drugs to be reimbursed by Medicare Part D, is required to enter into a Medicare Part D manufacturer discount agreement with HHS and provide a discount on those drugs dispensed to Medicare Part D enrollees.
VOXZOGO VOXZOGO, for the treatment of achondroplasia, could have competition from clinical stage products under development by Ascendis Pharma A/S, Pfizer, Inc., QED Therapeutics, Inc. (a subsidiary of BridgeBio Pharma, Inc.), Ribomic Inc. and Sanofi and preclinical product candidates from other companies, including Astellas Pharma Inc., Tyra Biosciences, Inc., Abbisko Therapeutics Co Ltd, SiSaf Ltd, Peptron Inc., and Immunoforge, Co.
VOXZOGO VOXZOGO, for the treatment of achondroplasia, could have competition from clinical stage products under development by Ascendis Pharma A/S, QED Therapeutics, Inc. (a subsidiary of BridgeBio Pharma, Inc.), Ribomic Inc., Tyra Biosciences Inc., and preclinical product candidates from other companies, including Abbisko Therapeutics Co Ltd, C-Biomex Co., Ltd, Changchun GeneScience Pharmaceuticals Co., Ltd., Immunoforge, Co.
Several states now require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to individual physicians in these states while other states prohibit various other marketing-related activities. Other states require submission or disclosure of certain pricing information.
Several states now require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to individual physicians in these states while other states prohibit various other marketing-related activities. Other states require submission or disclosure of certain pricing information and/or notifications and information about price increases that exceed a specified threshold.
(5) We applied for SPCs for this patent and we have to date received SPC to extend the patent expiration to August 25, 2037 in certain European countries, including Austria, Cyprus, Denmark, Estonia, Finland, Hungary, Italy, Lithuania, Luxembourg, Latvia, Malta, Netherlands, and Portugal.
(4) We applied for SPCs for this patent and we have to date received SPC to extend the patent expiration to August 25, 2037 in certain European countries, including Austria, Bulgaria, Cyprus, Denmark, Estonia, France, Hungary, Italy, Latvia, Malta, Netherlands, Portugal, Spain and Sweden.
There is ongoing litigation that may restrict the number of third-party contract pharmacies that can dispense drugs that manufacturers sell to 340B covered entities and who qualifies as patients of these 340B covered entities.
There is ongoing litigation that may restrict the number of third-party contract pharmacies that can dispense drugs that manufacturers sell to 340B covered entities and who qualifies as patients of these 340B covered entities. The outcome of this litigation may change the scope of the 340B program in coming years.
A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of a Phase 4 or post-approval clinical trial to confirm the effect on the clinical endpoint.
A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of a Phase 4 or post-approval clinical trial to verify and describe the clinical benefit of the drug.
U.S. Federal Contracting and Pricing Requirements Manufacturers are also required to make their covered drugs, which are generally drugs approved under NDAs or BLAs, available to authorized users of the Federal Supply Schedule (FSS) of the General Services Administration.
U.S. Federal Contracting and Pricing Requirements Manufacturers are also required to make their covered drugs, which are generally drugs approved under NDAs or BLAs, available to authorized users of the Federal Supply Schedule (FSS), which is administered by the Department of Veterans Affairs.
Among the remedies available to the government for any failure to properly disclose commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions. 21 Table of Contents Disclosure of Clinical Trial Information Sponsors of clinical trials of FDA-regulated products, including drugs and biologics, are required to register and disclose certain clinical trial information.
Among the remedies available to the government for any failure to properly disclose commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions, and civil penalties under the Federal False Claims Act if such failures are knowing. 22 Disclosure of Clinical Trial Information Sponsors of clinical trials of FDA-regulated products, including drugs and biologics, are required to register and disclose certain clinical trial information.
Recent Developments In 2023, we achieved $2.4 billion in total revenues, including a significant contribution from our ongoing expansion of VOXZOGO, and we continued making important advancements in our product development pipeline. Our key business developments in 2023 include U.S.
Recent Developments In 2024, we achieved $2.9 billion in total revenues, including a significant contribution from our ongoing expansion of VOXZOGO, and we continued making important advancements in our product development pipeline.
In patients with achondroplasia, endochondral bone growth, an essential process by which bone tissue is created, is negatively regulated due to a gain of function mutation in fibroblast growth factor receptor 3 gene (FGFR3). VOXZOGO acts as a positive regulator of the signaling pathway downstream of FGFR3 to promote endochondral bone growth.
In patients with achondroplasia, endochondral bone growth, an essential process by which bone tissue is created, is negatively regulated due to a gain of function mutation in fibroblast growth factor receptor 3 gene (FGFR3).
(7) We filed for a PTE for this patent, and if granted, we expect the patent expiration will extend to May 20, 2035. (8) We applied for SPCs for this patent and have been granted SPCs so far in Greece, Estonia, Hungary, Sweden, France, Italy, Austria, Japan, and Australia, extending the patent expiration to May 20, 2035.
(6) We filed for a PTE for this patent, and if granted, we expect the patent expiration will extend to May 20, 2035. 12 (7) We applied for SPCs for this patent and have been granted SPCs so far in Greece, Great Britain, Croatia, Estonia, Finland, Hungary, Sweden, France, Italy, Portugal, Norway, Czech Republic, Japan, and Australia, extending the patent expiration to May 20, 2035.
The Food and Drug Omnibus Reform Act (FDORA) added provisions related to the accelerated approval pathway. Pursuant to FDORA, the FDA is authorized to require a post-approval study to be underway prior to approval or within a specified time period following approval.
All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA. The Food and Drug Omnibus Reform Act (FDORA) added provisions related to the accelerated approval pathway. Pursuant to FDORA, the FDA is authorized to require a post-approval study to be underway prior to approval or within a specified time period following approval.
For further detail, please see "Post-Approval Regulatory Requirements" below. 15 Table of Contents Regulation of Manufacturing Standards The FDA as well as other regulatory agencies around the world, regulate and inspect the equipment, facilities, laboratories and processes used in the manufacturing and testing of products prior to granting approval to market products.
Regulation of Manufacturing Standards The FDA as well as other regulatory agencies around the world, regulate and inspect the equipment, facilities, laboratories and processes used in the manufacturing and testing of products prior to granting approval to market products.
Of the 3,401 employees as of December 31, 2023, 2,282 employees were in the U.S. and Canada, and 1,119 employees were in outside of North America, including 902 in Europe and the Middle East, 141 in Latin America and 76 in Asia Pacific. We also leverage temporary workers to fill short-term positions for our business and manufacturing needs.
Of the 3,040 employees as of December 31, 2024, 1,917 employees were in the U.S. and Canada, and 1,123 employees were outside of North America, including 920 in Europe and the Middle East, 131 in Latin America and 72 in Asia Pacific. We also leverage temporary workers to fill short-term positions for our business and manufacturing needs.
Dollars) Enzyme Products: VIMIZIM (elosulfase alpha) Mucopolysaccharidosis (MPS) IVA $ 701.0 NAGLAZYME (galsulfase) MPS VI $ 420.3 PALYNZIQ (pegvaliase-pqpz) Phenylketonuria (PKU) $ 303.9 BRINEURA (cerliponase alfa) Neuronal ceroid lipofuscinosis type 2 (CLN2) $ 161.9 ALDURAZYME (laronidase) MPS I $ 131.2 Other Products: VOXZOGO (vosoritide) Achondroplasia $ 469.9 KUVAN (sapropterin dihydrochloride) PKU $ 180.8 ROCTAVIAN (valoctocogene roxaparvovec) Severe Hemophilia A $ 3.5 VIMIZIM VIMIZIM is an enzyme replacement therapy for the treatment of MPS IVA, a lysosomal storage disorder.
Dollars) VIMIZIM (elosulfase alpha) Mucopolysaccharidosis (MPS) IVA $ 739.8 VOXZOGO (vosoritide) Achondroplasia $ 735.1 NAGLAZYME (galsulfase) MPS VI $ 479.6 PALYNZIQ (pegvaliase-pqpz) Phenylketonuria (PKU) $ 355.0 ALDURAZYME (laronidase) MPS I $ 183.9 BRINEURA (cerliponase alfa) Neuronal ceroid lipofuscinosis type 2 (CLN2) $ 169.1 KUVAN (sapropterin dihydrochloride) PKU $ 120.9 ROCTAVIAN (valoctocogene roxaparvovec) Severe Hemophilia A $ 26.0 VIMIZIM VIMIZIM is an enzyme replacement therapy for the treatment of MPS IVA, a lysosomal storage disorder.
Manufacturing We manufacture the active pharmaceutical ingredients (API) for ALDURAZYME, NAGLAZYME, PALYNZIQ, VOXZOGO, and ROCTAVIAN in our production facilities located in Novato, California. Our commercial-scale gene therapy manufacturing facility, located in Novato, California, also supports our clinical development activities.
Manufacturing We manufacture the active pharmaceutical ingredients (API) for ALDURAZYME, NAGLAZYME, PALYNZIQ, VOXZOGO, and ROCTAVIAN in our production facilities located in Novato, California. We also have a commercial-scale gene therapy manufacturing facility, located in Novato, California. We manufacture the API for BRINEURA and VIMIZIM in our manufacturing facility in Shanbally, Cork, Ireland.
VOXZOGO is approved for marketing for the treatment of achondroplasia in children with open growth plates of all ages in the U.S. and Japan, children with open growth plates aged four months and older in the EU, and patients in various age ranges for other markets, including Australia and Brazil.
VOXZOGO acts as a positive regulator of the signaling pathway downstream of FGFR3 to promote endochondral bone growth. 5 VOXZOGO is approved for marketing in the U.S. and Japan for the treatment of achondroplasia in children with open growth plates of all ages, in the EU for the treatment of children with open growth plates aged four months and older, and in other markets, including Australia and Brazil, for patients in various age ranges.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny interruption in the supply of finished products could hinder our ability to distribute finished products to meet commercial demand and adversely affect our financial results and financial condition. 39 Table of Contents With respect to our product candidates, production of product is necessary to perform clinical trials and successful registration batches are necessary to file for approval to commercially market and sell product candidates.
Biggest changeWith respect to our product candidates, production of product is necessary to perform clinical trials and successful registration batches are necessary to file for approval to commercially market and sell product candidates. Delays in obtaining clinical material or registration batches could adversely impact our clinical trials and delay regulatory approval for our product candidates.
Among other changes, the Tax Cuts and Jobs Act amended the Code to require that, for tax years beginning after December 31, 2021, certain research and experimental expenditures be capitalized and amortized over five years if incurred in the United States or fifteen years if incurred in foreign jurisdictions for tax years beginning after December 31, 2021. Although the U.S.
Among other changes, the Tax Cuts and Jobs Act amended the Code to require that, for tax years beginning after December 31, 2021, certain research and experimental expenditures be capitalized and amortized over five years if incurred in the United States or fifteen years if incurred in foreign jurisdictions. Although the U.S.
The information and data processed and stored in our technology systems, and those of our research collaborators, CROs, contract manufacturers, suppliers, distributors, or other third parties on whom we depend to operate our business, may be vulnerable to loss, damage, denial-of-service, unauthorized access or misappropriation.
The information and data processed and stored in our technology systems, and those of our research collaborators, CROs, contract manufacturers, suppliers, distributors, or other third parties on whom we depend on to operate our business, may be vulnerable to loss, damage, denial-of-service, unauthorized access or misappropriation.
In the U.S., the federal Anti-Kickback Statute makes it illegal for any person or entity, including a pharmaceutical company, to knowingly and willfully offer, solicit, pay or receive any remuneration, directly or indirectly, in exchange for or to induce the referral of business, including the purchase, order or prescription of a particular drug, for which payment may be made under federal healthcare programs, such as Medicare and Medicaid.
In the U.S., the federal Anti-Kickback Statute makes it illegal for any person or entity, including a pharmaceutical company, to knowingly and willfully offer, solicit, pay or receive any remuneration, directly or indirectly, in exchange for or to induce the referral of business, including the purchase, order or prescription of a particular drug, for which payment may be made under federal healthcare programs, such as Medicare and 48 Medicaid.
Numerous factors could cause interruptions in the supply or manufacture of our products and product candidates, including: • timing, scheduling and prioritization of production by our contract manufacturers or a breach of our agreements by our contract manufacturers; • labor interruptions; • changes in our sources for manufacturing; • the timing and delivery of shipments; • our failure to locate and obtain replacement suppliers and manufacturers as needed on a timely basis; and • conditions affecting the cost and availability of raw materials, including inflation.
Numerous factors could cause interruptions in the supply or manufacture of our products and product candidates, including: • timing, scheduling and prioritization of production by our contract manufacturers or a breach of our agreements by our contract manufacturers; • labor interruptions; • changes in our sources for manufacturing; 39 • the timing and delivery of shipments; • our failure to locate and obtain replacement suppliers and manufacturers as needed on a timely basis; and • conditions affecting the cost and availability of raw materials, including inflation.
Although the FDA and other comparable international and national regulatory authorities do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued.
Although the FDA and other comparable international and national regulatory 31 authorities do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued.
In addition, individual states in the U.S. have also increasingly enacted laws and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, price disclosure and reporting requirements, 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.
In addition, individual states in the U.S. have also increasingly enacted laws and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, price and price increase disclosure and reporting requirements, 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.
In the U.S., there have been several recent congressional inquiries, proposed and enacted federal and state legislation and executive action designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
In the U.S., there have been several congressional inquiries, proposed and enacted federal and state legislation and executive action designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
For example, the U.S. federal government has shut down repeatedly since 1980, including for a period of 35 days beginning on December 22, 2018. During a shutdown, certain regulatory authorities and agencies, such as the FDA, have had to furlough key personnel and stop critical activities.
For example, the U.S. federal government has shut down repeatedly since 1980, including for a period of 35 days beginning on December 22, 2018. During a shutdown, certain regulatory authorities and agencies, such as the 36 FDA, have had to furlough key personnel and stop critical activities.
If we are unable to successfully develop and maintain manufacturing processes for our product candidates to produce sufficient quantities at acceptable costs, we may be unable to support a clinical trial or be forced to terminate a program, or if we are unable to produce sufficient quantities of our products at acceptable costs, we may be unable to meet commercial demand, lose potential revenue, have reduced margins or be forced to terminate a program.
If we are unable to successfully develop and maintain manufacturing processes for our product candidates to produce sufficient quantities at acceptable costs, we may be unable to support a clinical trial or be forced to terminate a 38 program, or if we are unable to produce sufficient quantities of our products at acceptable costs, we may be unable to meet commercial demand, lose potential revenue, have reduced margins or be forced to terminate a program.
If we must spend significant time and money protecting or enforcing our patents, designing around patents held by others or licensing, potentially for large fees, patents or other proprietary rights held by others, our business and financial prospects may be harmed. The patent positions of biopharmaceutical products are complex and uncertain.
If we must spend significant time and money protecting or enforcing our patents, designing around patents held by others or licensing, potentially for large fees, patents or other proprietary rights held by others, our business and financial prospects may be harmed. 43 The patent positions of biopharmaceutical products are complex and uncertain.
Increasingly, third-party payers are requiring that drug companies provide them with predetermined discounts from list prices as a condition of coverage, are using restrictive formularies and preferred drug lists to leverage greater discounts in competitive classes, and are challenging the prices charged for medical products.
Increasingly, third-party payers are requiring that drug companies provide them with predetermined discounts from list prices as a condition of coverage, 27 are using restrictive formularies and preferred drug lists to leverage greater discounts in competitive classes, and are challenging the prices charged for medical products.
For example, the OECD, which represents a coalition of member countries including the U.S. and other countries in which we have operations, is working on proposals, commonly referred to as “BEPS 2.0”, which, if and to the extent implemented, would make important changes to the international tax system.
For example, the OECD, which represents a coalition of member countries including the U.S. and other countries in which we have operations, is working on proposals, commonly referred to as “BEPS 2.0”, which, to the extent implemented, would make important changes to the international tax system.
For example, we may have to pay substantial royalties or grant cross licenses to our patents and patent applications. • We may need to redesign our product so it does not infringe the intellectual property rights of others. • Redesigning our product so it does not infringe the intellectual property rights of competitors may not be possible or could require substantial funds and time.
For example, we may have to pay substantial royalties or grant cross licenses to our patents and patent applications. • We may need to redesign our product so it does not infringe the intellectual property rights of others. • Redesigning our product so it does not infringe the intellectual property rights of others may not be possible or could require substantial funds and time.
Specifically, there have been several recent U.S. congressional inquiries and proposed bills and enacted legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.
Specifically, there have been several U.S. congressional inquiries and proposed bills and enacted legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.
These programs are not well defined in some countries and are subject to changes in requirements, funding levels, unmet medical need and classification of the disease treated by our product. Any change to these programs could adversely affect our ability to sell our products in those countries and delay sales.
These programs are not well defined in some countries and are subject to changes in requirements, funding levels, unmet medical need and classification of the disease treated by our product. Any change to these programs could adversely affect our 41 ability to sell our products in those countries and delay sales.
Delaware law also prohibits corporations from engaging in a business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, our Board of Directors approves the transaction.
Delaware law also prohibits corporations from engaging in a 46 business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, our Board of Directors approves the transaction.
Discovery after approval of previously unknown problems with any of our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as: • the issuance of safety alerts, press releases or other communications containing warnings about related products; • modifications to promotional materials or corrective information to healthcare professionals; • restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials; • suspensions or restrictions on our operations, including product manufacturing processes; • restrictions on the marketing of a product; • restrictions on product distribution; • requirements to conduct post-marketing clinical trials; • untitled or warning letters or other adverse publicity; • withdrawal of the products from the market • suspended or withdrawn regulatory approvals; 31 Table of Contents • refusal or delays to approve pending applications or supplements to approved applications that we submit; • recall of products; • refusal to permit the import or export of our products; • product seizure; • fines, restitution or disgorgement of profits or revenue; • injunctions; or • imposition of civil or criminal penalties.
Discovery after approval of previously unknown problems with any of our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as: • the issuance of safety alerts, press releases or other communications containing warnings about related products; • modifications to promotional materials or corrective information to healthcare professionals; • restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials; • suspensions or restrictions on our operations, including product manufacturing processes; • restrictions on the marketing of a product; • restrictions on product distribution; • requirements to conduct post-marketing clinical trials; • untitled or warning letters or other adverse publicity; • withdrawal of the products from the market; • suspended or withdrawn regulatory approvals; • refusal or delays to approve pending applications or supplements to approved applications that we submit; • recall of products; • refusal to permit the import or export of our products; • product seizure; • fines, restitution or disgorgement of profits or revenue; • injunctions; or • imposition of civil or criminal penalties.
Current government regulations and possible future legislation regarding healthcare may affect coverage and reimbursement for medical treatment by third-party payers, which may render our products not commercially viable or may adversely affect our future revenues and gross margins.
Current government regulations and possible future legislation regarding healthcare may affect coverage and reimbursement for medical 33 treatment by third-party payers, which may render our products not commercially viable or may adversely affect our future revenues and gross margins.
We may require additional financing to fund the repayment of the Notes, future milestone payments and our future operations, including the commercialization of our products and product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions.
We may require additional financing to fund the repayment of the 2027 Notes, future milestone payments and our future operations, including the commercialization of our products and product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions.
Also, we may be required to demonstrate product comparability between a biological product made after a manufacturing change and the product made before implementation of the change through additional types of analytical and functional testing or may have to complete additional clinical studies.
Also, we may be required to demonstrate product comparability between a biological product made after a manufacturing change and the product made before implementation of the change through additional types of analytical and functional testing or may have to complete additional nonclinical or clinical studies.
The insurance that we carry, the inventory that we maintain and our risk mitigation plans may not be adequate to cover our losses resulting from disasters or other business interruptions. Our business is affected by macroeconomic conditions.
The insurance that we carry, the inventory that we maintain and our risk mitigation plans may not be adequate to cover our losses resulting from disasters or other business interruptions. 53 Our business is affected by macroeconomic conditions.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the 2027 Notes may encourage short selling by market participants because the conversion of the 2027 Notes could be used to satisfy short positions, or anticipated conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock.
To the extent macroeconomic conditions continue to adversely affect our business and financial results, they may also have the effect of heightening many of the other risks described in this Risk Factors section, such as those relating to our conducting a significant amount of our sales and operations outside of the U.S., exposure to changes in foreign exchange rates, our need to generate sufficient cash flows to service our indebtedness and finance our operations and the volatility of our stock price. 52 Item 1B.
To the extent macroeconomic conditions continue to adversely affect our business and financial results, they may also have the effect of heightening many of the other risks described in this Risk Factors section, such as those relating to our conducting a significant amount of our sales and operations outside of the U.S., exposure to changes in foreign exchange rates, our need to generate sufficient cash flows to service our indebtedness and finance our operations and the volatility of our stock price. 54 Item 1B.
If we are unable to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.
If we are unable to compete successfully with respect to acquisitions, joint venture 26 and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.
The number of preclinical studies and clinical trials that regulatory authorities require varies depending on the product candidate, the disease or condition the drug is being developed to address and regulations applicable to the particular drug.
The number of preclinical studies and clinical 32 trials that regulatory authorities require varies depending on the product candidate, the disease or condition the drug is being developed to address and regulations applicable to the particular drug.
Additional factors that can cause delay or termination of our clinical trials include: • slow or insufficient patient enrollment; • slow recruitment of, and completion of necessary institutional approvals at, clinical sites; • budgetary constraints or prohibitively high clinical trial costs; • longer treatment time required to demonstrate efficacy; • lack of sufficient supplies of the product candidate; 32 Table of Contents • adverse medical events or side effects in treated patients, including immune reactions; • lack of effectiveness of the product candidate being tested; • availability of competitive therapies to treat the same indication as our product candidates; • regulatory requests for additional clinical trials or preclinical studies; • deviations in standards for Good Clinical Practice (GCP); and • disputes with or disruptions in our relationships with clinical trial partners, including CROs, clinical laboratories, clinical sites, and principal investigators.
Additional factors that can cause delay or termination of our clinical trials include: • slow or insufficient patient enrollment; • slow recruitment of, and completion of necessary institutional approvals at, clinical sites; • budgetary constraints or prohibitively high clinical trial costs; • longer treatment time required to demonstrate efficacy; • lack of sufficient supplies of the product candidate; • adverse medical events or side effects in treated patients, including immune reactions; • lack of effectiveness of the product candidate being tested; • availability of competitive therapies to treat the same indication as our product candidates; • regulatory requests for additional clinical trials or preclinical studies; • deviations in standards for Good Clinical Practice (GCP); and • disputes with or disruptions in our relationships with clinical trial partners, including CROs, clinical laboratories, clinical sites, and principal investigators.
Conversion of the Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes, or may otherwise depress the price of our common stock. The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders.
Conversion of the 2027 Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their 2027 Notes, or may otherwise depress the price of our common stock. The conversion of some or all of the 2027 Notes will dilute the ownership interests of existing stockholders.
We will need cash not only to pay the ongoing interest due on the Notes during their term, but also to repay the principal amount of the Notes if not converted.
We will need cash not only to pay the ongoing interest due on the 2027 Notes during their term, but also to repay the principal amount of the 2027 Notes if not converted.
Moreover, some EU Member States require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies.
Moreover, some EU Member States may require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies.
In the EU, pursuant to the Regulation (EC) No. 141/2000 (the Orphan Regulation), as implemented by Regulation (EC) No. 847/2000, orphan drug designation is available if a sponsor can establish that: (1) the medicine is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting no more than five in 10,000 people in the EU at the time the application is made, or, (2) that it is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the EU and that 34 Table of Contents without incentives derived from the orphan status, it is unlikely that the marketing of the medicine in the EU would generate sufficient return to justify the necessary investment.
In the EU, pursuant to the Regulation (EC) No. 141/2000 (the Orphan Regulation), as implemented by Regulation (EC) No. 847/2000, orphan drug designation is available if a sponsor can establish that: (1) the medicine is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting no more than five in 10,000 people in the EU at the time the application is made, or, (2) that it is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives derived from the orphan status, it is unlikely that the marketing of the medicine in the EU would generate sufficient return to justify the necessary investment.
The move toward public disclosure of such development 43 Table of Contents information could adversely affect our business in many ways, including, for example, resulting in the disclosure of our confidential methodologies for development of our products, preventing us from obtaining intellectual property right protection for innovations, requiring us to allocate significant resources to prevent other companies from violating our intellectual property rights, adding even more complexity to processing health data from clinical trials consistent with applicable data privacy regulations, increasing scrutiny of our product candidates and products, and enabling competitors to use our clinical trial information and data to gain approvals for their own products.
The move toward public disclosure of such development information could adversely affect our business in many ways, including, for example, resulting in the disclosure of our confidential methodologies for development of our products, preventing us from obtaining intellectual property right protection for innovations, requiring us to allocate significant resources to prevent other companies from violating our intellectual property rights, adding even more complexity to processing health data from clinical trials consistent with applicable data privacy regulations, increasing scrutiny of our product candidates and products, and enabling competitors to use our clinical trial information and data to gain approvals for their own products.
If we do not obtain orphan drug designation and related regulatory exclusivity for our products that do not have broad patent protection or if a competing product is determined to be "clinically superior" to any of our products that has secured orphan drug exclusivity, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.
If we do not obtain orphan drug designation and related regulatory exclusivity for our products that do not have broad patent protection or if a competing product is determined to be, for example, "clinically superior" to any of our 35 products that has secured orphan drug exclusivity, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.
The amount of capital we will need depends on many factors, including: • our ability to successfully market and sell our products; 36 Table of Contents • the time and cost necessary to develop commercial manufacturing processes, including quality systems, and to build or acquire manufacturing capabilities the progress and success of our preclinical studies and clinical trials (including studies and the manufacture of materials); • the timing, number, size and scope of our preclinical studies and clinical trials; • the time and cost necessary to obtain regulatory approvals and the costs of post-marketing studies which may be required by regulatory authorities; • the progress of research programs carried out by us; • any changes made to, or new developments in, our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish; • Sanofi’s ability to continue to successfully commercialize ALDURAZYME; and • whether our convertible debt is converted to common stock in the future.
The amount of capital we will need depends on many factors, including: • our ability to successfully market, protect, and sell our products; • the time and cost necessary to develop commercial manufacturing processes, including quality systems, and to build or acquire manufacturing capabilities the progress and success of our preclinical studies and clinical trials (including studies and the manufacture of materials); • the timing, number, size and scope of our preclinical studies and clinical trials; • the time and cost necessary to obtain regulatory approvals and the costs of post-marketing studies which may be required by regulatory authorities; • the progress of research programs carried out by us; • any changes made to, or new developments in, our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish; • Sanofi’s ability to continue to successfully commercialize ALDURAZYME; and • whether our convertible debt is converted to common stock in the future.
Reimbursement in the European Union (EU) and many other territories must be negotiated on a country-by-country basis and in many countries the product cannot be commercially launched until pricing and/or reimbursement is approved. The timing to complete the negotiation process in each country is highly uncertain, and in some countries, we expect that it will exceed 12 months.
Reimbursement in the EU and many other territories must be negotiated on a country-by-country basis and in many countries the product cannot be commercially launched until pricing and/or reimbursement is approved. The timing to complete the negotiation process in each country is highly uncertain, and in some countries, we expect that it will exceed 12 months.
For example, in the U.S., the 49 Table of Contents PPACA, through the Physician Payments Sunshine Act, requires certain drug, biologicals and medical supply manufacturers to collect and report to CMS information on payments or transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physicians assistants and nurse practitioners), and teaching hospitals, as well as investment and ownership interests held by such physicians and their immediate family members during the preceding calendar year.
For example, in the U.S., the PPACA, through the Physician Payments Sunshine Act, requires certain drug, biologicals and medical supply manufacturers to collect and report to CMS information on payments or transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physicians assistants and nurse practitioners), and teaching hospitals, as well as investment and ownership interests held by such physicians and their immediate family members during the preceding calendar year.
From time to time, we have and may in the future publish or report preliminary, initial or interim data from our clinical trials.
From time to time, we have published and may in the future publish or report preliminary, initial or interim data from our clinical trials.
Our ALDURAZYME, BRINEURA, NAGLAZYME, PALYNZIQ, ROCTAVIAN and VIMIZIM products are regulated by the FDA as biologics under the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act (the PHS Act). Biologics require the submission of a BLA and licensure by the FDA prior to being marketed in the U.S.
Our ALDURAZYME, BRINEURA, NAGLAZYME, PALYNZIQ, ROCTAVIAN and VIMIZIM products are regulated by the FDA as biologics under the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act (the PHS Act). Biologics require the submission of a Biologics License Application (BLA) and licensure by the FDA prior to being marketed in the U.S.
If we fail to retain employees and effectively manage our hiring needs, our efficiency, ability to meet forecasts, employee morale, productivity, and the success of our strategic plans could suffer, which may have an adverse effect on our business, financial condition, and operating results. Our success depends on our ability to manage our growth.
If we fail to retain employees and effectively manage our hiring needs, our efficiency, ability to meet forecasts, employee morale, productivity, and the success of our strategic plans could suffer, which may have an adverse effect on our business, financial condition, and operating results.
Notable requirements of our REMS program include the following: • prescribers must be certified by enrolling in the REMS program and completing training; • prescribers must prescribe auto-injectable epinephrine with PALYNZIQ; • pharmacies must be certified with the REMS program and must dispense PALYNZIQ only to patients who are authorized to receive it; 30 Table of Contents • patients must enroll in the REMS program and be educated about the risk of anaphylaxis by a certified prescriber to ensure they understand the risks and benefits of treatment with PALYNZIQ; and • patients must have auto-injectable epinephrine available at all times while taking PALYNZIQ.
Notable requirements of our REMS program include the following: • prescribers must be certified by enrolling in the REMS program and completing training; • prescribers must prescribe auto-injectable epinephrine with PALYNZIQ; • pharmacies must be certified with the REMS program and must dispense PALYNZIQ only to patients who are authorized to receive it; • patients must enroll in the REMS program and be educated about the risk of anaphylaxis by a certified prescriber to ensure they understand the risks and benefits of treatment with PALYNZIQ; and • patients must have auto-injectable epinephrine available at all times while taking PALYNZIQ.
Any disruptions, delays or deficiencies in the design or implementation of the new ERP system or related internal controls, or in the performance of legacy information technology systems, could result in potentially much higher costs than 50 Table of Contents we had incurred and adversely affect our ability to effectively fulfill contractual obligations, file related government reports in a timely manner, operate and manage our business or otherwise affect our controls environment.
Any disruptions, delays or deficiencies in the design or implementation of the new ERP system or related internal controls, or in the performance of legacy information technology systems, could result in potentially much higher costs than we had incurred and adversely affect our ability to effectively fulfill contractual obligations, file related government reports in a timely manner, operate and manage our business or otherwise affect our controls environment.
The IRA's provisions are taking effect progressively starting in 2023, although they may be subject to legal challenges. Thus, while it is unclear how the IRA will be implemented, it will likely have a significant impact on the pharmaceutical industry.
The IRA's provisions began taking effect progressively starting in 2023, although they may be subject to legal challenges. Thus, while it is unclear how the IRA will be implemented, it will likely have a significant impact on the pharmaceutical industry.
There has also been enhanced scrutiny by governments on reimbursement support offerings, clinical education programs and promotional speaker programs. If we, our third-party agents or donation recipients are deemed to have failed to comply with laws, 42 Table of Contents regulations or government guidance in any of these areas, we could be subject to criminal or civil sanctions.
There has also been enhanced scrutiny by governments on reimbursement support offerings, clinical education programs and promotional speaker programs. If we, our third-party agents or donation recipients are deemed to have failed to comply with laws, regulations or government guidance in any of these areas, we could be subject to criminal or civil sanctions.
In addition, there has been a recent trend of increased state regulation of payments made to physicians.
In addition, there has been a trend of increased state regulation of payments made to physicians.
If we fail to obtain the capital necessary to fund our operations, our financial results and financial condition will be adversely affected and we will have to delay or terminate some or all of our product development programs.
Financial and Financing Risks If we fail to obtain the capital necessary to fund our operations, our financial results and financial condition will be adversely affected and we will have to delay or terminate some or all of our product development programs.
The fundamental change repurchase feature of the Notes may delay or prevent an otherwise beneficial attempt to take us over. The terms of the Notes require us to offer to repurchase the Notes in the event of a fundamental change (as defined in each indenture governing the Notes).
The fundamental change repurchase feature of the 2027 Notes may delay or prevent an otherwise beneficial attempt to take us over. The terms of the 2027 Notes require us to offer to repurchase the 2027 Notes in the event of a fundamental change (as defined in the indenture governing the 2027 Notes).
Cybersecurity incidents resulting in the failure of our enterprise resource planning system, production management or other systems to operate effectively or to integrate with other systems, or a breach in security or other unauthorized access or unavailability of these systems or those of any third parties in our supply chain or on whom we otherwise depend, have occurred in the past and may affect our ability in the future to manage and maintain our operations, inventory and internal reports, and result in delays in product fulfillment and reduced efficiency of our operations.
Cybersecurity incidents resulting in the failure of our ERP system, production management or other systems to operate effectively or to integrate with other systems, or a breach in security or other unauthorized access or unavailability of these systems or those of any third parties in our supply chain or on whom we otherwise depend, have occurred in the past and may affect our ability in the future to manage and maintain our operations, inventory and internal reports, and result in delays in product fulfillment and reduced efficiency of our operations.
Even if our product candidates are approved, if doctors elect a course of treatment which does not include our products, this decision would reduce demand for our products and adversely affect revenues.
Even if our product candidates are approved, if doctors were to elect a course of treatment which does not include our products, this decision would reduce demand for our products and adversely affect revenues.
If this happened, not only would our product revenues decrease, but our share price would also decline. Risks Related to International Operations We conduct a significant amount of our sales and operations outside of the U.S., which subjects us to additional business risks that could adversely affect our revenues and results of operations.
If this happened, not only would our product revenues decrease, but our share price would also decline. Risks Related to International Operations 40 We conduct a significant amount of our operations and generate a significant percentage of our sales outside of the U.S., which subjects us to additional business risks that could adversely affect our revenues and results of operations.
Our amended and restated bylaws further provide that any person or entity that acquires any interest in shares of our capital stock will be deemed to have notice of and consented to the provisions of such provisions. 46 Table of Contents General Risk Factors We depend upon our key personnel and our ability to attract and retain qualified employees.
Our amended and restated bylaws further provide that any person or entity that acquires any interest in shares of our capital stock will be deemed to have notice of and consented to the provisions of such provisions. General Risk Factors We depend upon our key personnel and our ability to attract and retain qualified employees.
Moreover, changes in the tax laws of jurisdictions in which we conduct business could arise, including as a result of the base erosion and profit shifting (BEPS) project that is being led by the Organization for Economic Co-operation and Development 47 Table of Contents (OECD), and other initiatives led by the OECD or the EC.
Moreover, changes in the tax laws of jurisdictions in which we conduct business could arise, including as a result of the base erosion and profit shifting (BEPS) project that is being led by the Organization for Economic Co-operation and Development (OECD), and other initiatives led by the OECD or the EC.
Business and Operational Risks If we fail to obtain and maintain an adequate level of coverage and reimbursement for our products by third-party payers, the sales of our products would be adversely affected or there may be no commercially viable markets for our products. The course of treatment for patients using our products is expensive.
If we fail to obtain and maintain an adequate level of coverage and reimbursement for our products by third-party payers, the sales of our products would be adversely affected or there may be no commercially viable markets for our products. The course of treatment for patients using our products is expensive.
If we are found in violation of healthcare laws or privacy and data protection laws, we may be required to pay penalties, be subjected to scrutiny by regulators or governmental entities, or be suspended from participation in government healthcare programs, which may adversely affect our business, reputation, financial condition and results of operations.
If we are found in violation of healthcare laws, we may be required to pay penalties, be subjected to scrutiny by regulators or governmental entities, or be suspended from participation in government healthcare programs, which may adversely affect our business, reputation, financial condition and results of operations.
We may not be successful in engaging constructively with one or more investors in the future despite our efforts to maintain constructive and ongoing communications with all investors, including Elliott.
We may not be successful in engaging constructively with one or more investors in the future despite our efforts to maintain constructive and ongoing communications with all investors.
The market price of our common stock have, and in the future could, fluctuate due to factors including: 44 Table of Contents • product sales and profitability of our products; • manufacturing, supply or distribution of our product candidates and products • progress of our product candidates through the regulatory process and our ability to successfully commercialize any such products that receive regulatory approval; • results of clinical trials, announcements of technological innovations or new products by us or our competitors; • generic competition to KUVAN tablets and powder described above in this Risk Factors section or potential generic competition from future competitors; • government regulatory action affecting our product candidates, our products or our competitors’ product candidates and products in both the U.S. and non-U.S. countries; • developments or disputes concerning patent or proprietary rights; • general market conditions and fluctuations for the emerging growth and pharmaceutical market sectors; • economic conditions in the U.S. or abroad; • negative publicity about us or the pharmaceutical industry; • changes in the structure of healthcare payment systems; • cybersecurity incidents experienced by us or others in our industry; • broad market fluctuations in the U.S., the EU or in other parts of the world; • actual or anticipated fluctuations in our operating results, including due to timing of large periodic orders for our products by governments in certain countries; • changes in company assessments or financial estimates by securities analysts; • certain actions by activist investors that may be threatened or commenced against us; • acquisitions of products, businesses, or other assets; and • sales of our shares of stock by us, our significant stockholders, or members of our management or Board of Directors.
The market price of our common stock has fluctuated, and in the future could fluctuate, due to factors including: • product sales and profitability of our products; • manufacturing, supply or distribution of our product candidates and products; • progress of our product candidates through the regulatory process and our ability to successfully commercialize any such products that receive regulatory approval; • results of clinical trials, announcements of technological innovations or new products by us or our competitors; • generic competition to KUVAN tablets and powder described above in this Risk Factors section or potential generic competition from future competitors; • government regulatory action affecting our product candidates, our products or our competitors’ product candidates and products in both the U.S. and non-U.S. countries; • developments or disputes concerning patent or proprietary rights; • general market conditions and fluctuations for the emerging growth and pharmaceutical market sectors; 45 • economic conditions in the U.S. or abroad; • negative publicity about us or the pharmaceutical industry; • changes in the structure of healthcare payment systems; • cybersecurity incidents experienced by us or others in our industry; • broad market fluctuations in the U.S., the EU or in other parts of the world; • actual or anticipated fluctuations in our operating results, including due to timing of large periodic orders for our products by governments in certain countries; • changes in company assessments or financial estimates by securities analysts; • certain actions by activist investors that may be threatened or commenced against us; • acquisitions of products, businesses, or other assets; • industry, financial analyst, or investor reaction to public announcements by us or our competitors; and • sales of our shares of stock by us, our significant stockholders, or members of our management or Board of Directors.
In addition, because our financial statements are reported in USD, changes in currency exchange rates between the 41 Table of Contents USD and other currencies have had, and will continue to have, an impact on our results of operations. Therefore, significant changes in foreign exchange rates can impact our results and our financial guidance.
In addition, because our financial statements are reported in USD, changes in currency exchange rates between the USD and other currencies have had, and will continue to have, an impact on our results of operations. Therefore, significant changes in foreign exchange rates can impact our results and our financial guidance.
In the EU, a ten-year period of market exclusivity for the approved therapeutic indication (extendable to twelve years for orphan drugs that have complied with an agreed Pediatric Investigation Plan (PIP) pursuant to Regulation 1901/2006), during which the EMA cannot accept another marketing authorization application or accept an application to extend existing authorizations for similar medicinal products for the same indication and no related marketing authorization (MA) can be granted.
In the EU, a ten-year period of market exclusivity for the approved therapeutic indication (extendable to twelve years for orphan drugs that have complied with an agreed Pediatric Investigation Plan (PIP) pursuant to Regulation 1901/2006), during which the EC and EU Member States cannot accept another marketing authorization (MA) application or accept an application to extend existing authorizations for similar medicinal products for the same indication and no MA can be granted.
The occurrence of an earthquake or other catastrophic disaster could cause damage to our facility and equipment, or that of our third-party manufacturers or single-source suppliers, which could materially impair the ability for us or our third-party manufacturers to manufacture our products and product candidates.
The occurrence of an earthquake, wildfire, or other catastrophic disaster could cause damage to our facilities and equipment, or that of our third-party manufacturers or single-source suppliers, which could materially impair the ability for us or our third-party manufacturers to manufacture our products and product candidates.
Our product candidates intended for use with separately regulated devices, such as companion diagnostics, or expanded indications that we may seek for our 29 Table of Contents products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals, clearances, or certifications.
Our product candidates intended for use with separately regulated devices, such as companion diagnostics, or expanded indications that we may seek for our products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals, clearances, or certifications.
As a result of such inventory constraints, we have and could continue to lose potential VOXZOGO revenues that may never be recouped and our VOXZOGO development program could be adversely impacted. The development of commercially viable manufacturing processes typically is very difficult to achieve and is often very expensive and may require extended periods of time.
As a result of such inventory constraints, we have lost, and may in the future lose, potential VOXZOGO revenues that may never be recouped and our VOXZOGO development program could be adversely impacted. The development of commercially viable manufacturing processes typically is very difficult to achieve and is often very expensive and may require extended periods of time.
If we do not meet development milestones as publicly announced, the commercialization of our 27 Table of Contents products may be delayed or never occur and the credibility of our management may be adversely affected and, as a result, our stock price may decline.
If we do not meet development milestones as publicly announced, the commercialization of our products may be delayed or never occur and the credibility of our management may be adversely affected and, as a result, our stock price may decline.
Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates, or foreign currency exchange rates, natural disasters, geopolitical instability resulting from war, terrorism and other violence, such as the instability caused by Russia's invasion of Ukraine, effects of potential global public health threats and overall economic conditions and uncertainties, including those resulting from the current and future conditions in the global financial markets and volatility and disruptions in the equity and debt markets.
Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates, or foreign currency exchange rates, natural disasters, geopolitical instability resulting from war, terrorism and other violence, such as the instability caused by Russia's invasion of Ukraine and the conflicts in the Middle East, tariffs and trade tensions, effects of potential global public health threats and overall economic conditions and uncertainties, including those resulting from the current and future conditions in the global financial markets and volatility and disruptions in the equity and debt markets.
The specifics of the programs vary from country to country. Generally, special approval must be obtained to initiate such programs, and in some cases, special approval must be obtained for each patient. The approval normally requires an application to national competent authorities in which the product is intended to be supplied or a lawsuit accompanied by evidence of medical need.
Generally, special approval must be obtained to initiate such programs, and in some cases, special approval must be obtained for each patient. The approval normally requires an application to national competent authorities in which the product is intended to be supplied or a lawsuit accompanied by evidence of medical need.
However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The non-U.S. regulatory approval process may include all of the risks associated with obtaining FDA or EC approval. We may not obtain non-U.S. 28 Table of Contents regulatory approvals on a timely basis, if at all.
However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The non-U.S. regulatory approval process may include all of the risks associated with obtaining FDA or EC approval. We may not obtain non-U.S. 29 regulatory approvals on a timely basis, if at all.
Due to the breadth of the healthcare and privacy and data protection laws described above, the narrowness of available statutory and regulatory exceptions and safe harbors and the increased focus by law enforcement authorities in enforcing such laws, our business activities could be subject to challenge under one or more of such laws.
Due to the breadth of the healthcare laws described above, the narrowness of available statutory and regulatory exceptions and safe harbors and the increased focus by law enforcement authorities in enforcing such laws, our business activities 49 could be subject to challenge under one or more of such laws.
Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payers. Recently, several healthcare reform initiatives culminated in the enactment of the Inflation Reduction 33 Table of Contents Act (IRA) in August 2022, which allows, among other things, U.S.
Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payers. Several healthcare reform initiatives culminated in the enactment of the Inflation Reduction Act (IRA) in August 2022, which allows, among other things, U.S.
Due to the amount of intellectual property in our field of technology, we cannot be certain that we do not infringe intellectual property rights of competitors or that we will not infringe intellectual property rights of competitors granted or created in the future.
Due to the amount of intellectual property in our field of technology, we cannot be certain that we do not infringe intellectual property rights of competitors or other third parties or that we will not infringe intellectual property rights of competitors or other third parties granted or created in the future.
For all our products except ROCTAVIAN, we expect patients to need treatment for extended periods, and for some products throughout the lifetimes of the patients. We expect that most families of patients will not be capable of paying for this treatment themselves. There will be no commercially viable market for our products without coverage and reimbursement from third-party payers.
We expect that most families of patients will not be capable of paying for our treatments themselves. For most of our products, we expect patients to need treatment for extended periods, and for some products throughout the lifetimes of the patients. There will be no commercially viable market for our products without coverage and reimbursement from third-party payers.
Negative public opinion or more restrictive government regulations could have a negative effect on our business and financial condition and may delay or impair the successful commercialization of, and demand for, ROCTAVIAN or future gene therapy products.
Negative public opinion or more restrictive government regulations could have a negative effect on our business and financial condition and may delay or impair the successful commercialization of, and demand for, ROCTAVIAN.
International operations inherently subject us to a number of risks and uncertainties, including: • the increased complexity and costs inherent in managing international operations; • diverse regulatory and compliance requirements, and changes in those requirements that could restrict our ability to manufacture, market and sell our products; • geopolitical and economic instability, such as the instability caused by Russia’s invasion of Ukraine; • diminished protection of intellectual property in some countries outside of the U.S.; • trade protection measures and import or export licensing requirements; • difficulty in staffing and managing international operations; 40 Table of Contents • differing labor regulations and business practices; • potentially negative consequences from changes in or interpretations of tax laws; • changes in international medical reimbursement policies and programs; • financial risks such as longer payment cycles, difficulty collecting accounts receivable, exposure to fluctuations in foreign currency exchange rates and potential currency controls imposed by non-U.S. governments; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ and service providers’ activities that may fall within the purview of the Foreign Corrupt Practices Act (the FCPA); and • rapidly evolving global laws and regulations relating to data protection and the privacy and security of commercial and personal information.
International operations inherently subject us to a number of risks and uncertainties, including: • the increased complexity and costs inherent in managing international operations; • diverse regulatory and compliance requirements, and changes in those requirements that could restrict our ability to manufacture, market and sell our products; • geopolitical and economic instability, such as the instability caused by Russia’s invasion of Ukraine and the conflicts in the Middle East; • diminished protection of intellectual property in some countries outside of the U.S.; • trade protection measures and import or export licensing requirements; • difficulty in staffing and managing international operations; • differing labor regulations and business practices; • parallel trade in our products, such as importation of our products, whether legally or illegally, from countries where our products are sold at lower prices into countries where the products are sold at higher prices; • potentially negative consequences from changes in or interpretations of tax laws; • changes in international medical reimbursement policies and programs; • financial risks such as longer payment cycles, difficulty collecting accounts receivable, exposure to fluctuations in foreign currency exchange rates and potential currency controls imposed by non-U.S. governments; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ and service providers’ activities that may fall within the purview of the Foreign Corrupt Practices Act (the FCPA); and • rapidly evolving global laws and regulations relating to data protection and the privacy and security of commercial and personal information.
Public prosecutors, industry associations, healthcare professionals and other members of the public closely scrutinize advertising and promotion of any product in the EU.
Public prosecutors, industry associations, healthcare professionals and other authorities and members of the public, including competitors, closely scrutinize advertising and promotion of any product in the EU.
A takeover of us would trigger options by the respective holders of the applicable Notes to 45 Table of Contents require us to repurchase such Notes. This may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to our stockholders or investors in the Notes.
A takeover of us would trigger options by the respective holders of the 2027 Notes to require us to repurchase such 2027 Notes. This may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to our stockholders or investors in the 2027 Notes.
Potential problems and interruptions associated with the implementation of new or upgraded technology systems or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations and expose us to greater risk of security breaches.
Potential problems or interruptions associated with the implementation of new or upgraded technology systems or with maintenance or adequate support of existing systems could disrupt or reduce, and has in the past disrupted or reduced, the efficiency of our operations and expose us to greater risk of security breaches.
The BPCIA establishes a period of 12 years of data exclusivity for reference products but such data exclusivity only blocks licensure of 35 Table of Contents biosimilars relying on the product as a reference product; it will not prevent the licensure of the same product for the same or different indications that does not seek to rely on reference product data.
Even though the BPCIA establishes a period of 12 years of data exclusivity for reference products, such data exclusivity only blocks licensure of biosimilars relying on the product as a reference product; it will not prevent the licensure of the same product for the same or different indications that does not seek to rely on reference product data.
A number of countries in which we conduct business have enacted with effect from January 1, 2024, or are in the process of enacting, core elements of Pillar Two rules. The OECD has issued administrative guidance providing transition and safe harbor rules around the implementation of Pillar Two.
A number of countries in which we conduct business have enacted, or are in the process of enacting, core elements of Pillar Two rules. The OECD has issued administrative guidance providing transition and safe harbor rules around the implementation of Pillar Two.
Our two newest products, VOXZOGO and ROCTAVIAN, address potentially larger patient populations than most of our other products, and product candidates that we are currently developing or may license or acquire in the future may be intended for similarly larger patient populations than we have historically targeted.
VOXZOGO addresses larger patient populations than most of our other products, and product candidates that we are currently developing or may license or acquire in the future may be intended for similarly larger patient populations than we have historically targeted.
For example, in the U.S., we must obtain FDA approval for each product candidate that we intend to commercialize, and in the EU, we must obtain approval from the EC, based on the opinion of the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA).
Food and Drug Administration (FDA) for each product candidate that we intend to commercialize, and in the EU, we must obtain approval from the European Commission (EC), based on the opinion of the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA).
Our outstanding indebtedness consists primarily of the 2024 Notes and 2027 Notes, which, if not converted, will be required to be repaid in cash at maturity in August 2024 and May 2027, respectively.
Our outstanding indebtedness consists of the 2027 Notes, which, if not converted, will be required to be repaid in cash at maturity in May 2027.
Prior to the IRA, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the PPACA) is a sweeping measure intended to, among other things, expand healthcare coverage within the U.S., primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program.
Prior to the IRA, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the PPACA), expanded healthcare coverage within the U.S., primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program.
Among the significant changes are switching from a “first-to-invent” system to a “first-to-file” system, and the implementation of new procedures that permit competitors to challenge our patents in the U.S. Patent and Trademark Office after grant. It is also unclear whether our trade secrets are adequately protected.
Among the significant changes are switching from a “first-to-invent” system to a “first-to-file” system, and the implementation of new procedures that permit competitors to challenge our patents in the U.S. Patent and Trademark Office after grant.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board satisfies its responsibility to oversee cybersecurity risk through full reports by the Chair of the Audit Committee chair regarding such committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of risks.
Biggest changeThe Board satisfies its responsibility to oversee cybersecurity risk through full reports by the Chair of the Audit Committee regarding such committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of risks. The Audit Committee is responsible for overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
In addition, the CRC provides guidance to senior management on risk appetite, risk profile and approves the effectiveness of the Company’s enterprise-wide cybersecurity risk framework and such other duties as directed by the Board. The CRC also assists in the oversight of decisions that affect cybersecurity compliance with applicable laws, regulations, and corporate policies.
In addition, the CRC provides guidance to senior management on risk appetite and risk profile and approves the effectiveness of the Company’s enterprise-wide cybersecurity risk framework and such other duties as directed by the Board. The CRC also assists in the oversight of decisions that affect cybersecurity compliance with applicable laws, regulations, and corporate policies.
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K, including “We rely significantly on information technology systems and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively and have a material adverse effect on our business, reputation, financial condition, and results of operations." Governance Our Board has ultimate oversight of cybersecurity risk, which it manages as part of its general risk oversight function.
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, please see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K, including “We, and the third parties with whom we work, rely significantly on information technology systems and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively and have a material adverse effect on our business, reputation, financial condition, and results of operations." Governance Our Board has ultimate oversight of cybersecurity risk, which it manages as part of its general risk oversight function.
Our Global Head of Cybersecurity has over 25 years of cybersecurity and privacy experience, including serving in similar roles leading and overseeing cybersecurity programs at other public companies.
Our Global Head of Cybersecurity has over 20 years of cybersecurity and privacy experience, including serving in similar roles leading and overseeing cybersecurity programs at public companies.
The Board and the Audit Committee receives periodic reports, summaries, and presentations from our senior management, including the Chief Information Officer and Global Head of Cybersecurity, concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to address them. 53 We recently established the Executive Cybersecurity Committee (ECC), which is comprised of our Chief Financial Officer, Chief Information Officer, Chief Legal Officer, Chief Accounting Officer, and Global Head of Cybersecurity, with the goal of providing oversight of the Company’s cybersecurity program.
The Board and the Audit Committee receive periodic reports, summaries, and presentations from our senior management, including the Chief Information Officer and Global Head of Cybersecurity, concerning our significant cybersecurity threats and risk and the processes the Company has implemented to address them. 55 We have an Executive Cybersecurity Committee (ECC), which is comprised of our Chief Financial Officer (CFO), Chief Information Officer, Chief Legal Officer, Chief Accounting Officer, and Global Head of Cybersecurity, with the goal of providing oversight of the Company’s cybersecurity program.
Removed
The Audit Committee is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table contains information about our significant owned and leased properties as of December 31, 2023: Location Approximate Square Feet Use Lease Expiration Date San Rafael facility, San Rafael, California 407,300 Corporate headquarters, laboratory and office Owned property Several facilities in Novato, California 293,300 Clinical and commercial manufacturing, laboratory and office Owned property Several leased facilities in Novato, California 158,600 Office and warehouse 2027 Shanbally facility, Cork, Ireland 260,700 Manufacturing, laboratory and office Owned property We expect that these properties, together with our other smaller leased office facilities in various countries, will be adequate for our operations for the foreseeable future.
Biggest changeProperties The following table contains information about our significant owned and leased properties as of December 31, 2024: Location Approximate Square Feet Use Lease Expiration Date San Rafael facility, San Rafael, California 407,300 Corporate headquarters, laboratory and office Owned property Several facilities in Novato, California 293,300 Clinical and commercial manufacturing, laboratory and office Owned property Several leased facilities in Novato, California 158,600 Office and warehouse 2027 Shanbally facility, Cork, Ireland 260,700 Manufacturing, laboratory and office Owned property We expect that these properties, together with our other smaller leased office facilities in various countries, will be adequate for our operations for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe parties in the derivative lawsuits have entered into a stipulation of settlement, that, subject to final approval by the Court of Chancery, will resolve the derivative lawsuits. Item 4. Mine Safety Disclosures Not applicable. 55 Table of Contents Part II
Biggest changeThe derivative complaints seek unspecified monetary damages, internal governance reforms by the Company, attorneys’ fees and costs, and any other relief the court may deem just and proper. The parties in the derivative lawsuits have entered into a stipulation of settlement, that, subject to final approval by the Court of Chancery, will resolve the derivative lawsuits.
On February 15, 2024, the United States Court of Appeals for the Ninth Circuit affirmed the district court's dismissal. On January 19, 2023 and May 30, 2023, certain of our officers and directors were named as defendants in two shareholder derivative actions filed in the Delaware Court of Chancery.
Item 3. Legal Proceedings On January 19, 2023 and May 30, 2023, certain of our officers and directors were named as defendants in two shareholder derivative actions filed in the Delaware Court of Chancery.
The complaints assert, inter alia, breach of fiduciary duty claims arising from the facts underlying the securities class action related to ROCTAVIAN. The complaints seek unspecified monetary damages, internal governance reforms by the Company, attorneys fees and costs, and any other relief the court may deem just and proper.
The complaints assert, inter alia, breach of fiduciary duty claims arising from the facts underlying a securities class action related to ROCTAVIAN that was previously settled in the United States District Court for the Northern District of California.
Removed
Legal Proceedings On September 25, 2020, a purported shareholder class action lawsuit was filed against us, our Chief Executive Officer, our President of Worldwide Research and Development and our Chief Financial Officer in the United States District Court in the Northern District of California, alleging violations under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as amended (the Exchange Act).
Added
The Court of Chancery held a final approval hearing on July 23, 2024 and did not approve the settlement. Instead, it instructed the plaintiffs to voluntarily dismiss the case or brief a motion to dismiss.
Removed
The complaint alleges that we made materially false or misleading statements regarding the clinical trials and Biologics License Application (BLA) for ROCTAVIAN (formerly known as valoctocogene roxaparvovec) by purportedly failing to disclose that differences between the Company’s Phase 1/2 and Phase 3 clinical studies limited the ability of the Phase 1/2 study to support ROCTAVIAN’s durability of effect and, as a result, that it was foreseeable that the Food and Drug Administration (FDA) would not approve the BLA without additional data.
Added
On February 13, 2025 and February 14, 2025 the plaintiffs filed stipulations to voluntarily dismiss their cases without prejudice, which the Court granted. 56 Item 4. Mine Safety Disclosures Not applicable. 57 Table of Contents Part II
Removed
The complaint seeks an unspecified amount of damages, prejudgment and post-judgment interest, attorneys’ fees, expert fees, and other costs. The lead plaintiff filed an amended complaint in February 2021, dropping our Chief Financial Officer as a defendant, and asserting that the Company misled investors about the progress of the FDA's review of our BLA for ROCTAVIAN.
Removed
On April 22, 2021, we moved to dismiss the amended complaint. On January 6, 2022, the court denied our motion to dismiss. We answered the amended complaint on February 15, 2022. Plaintiff filed a motion for class certification on October 17, 2022. We filed an opposition to plaintiff’s motion for class certification on January 27, 2023.
Removed
On March 21, 2023, the Court entered an order staying all proceedings and vacating all deadlines because the parties 54 agreed to settle the case through a binding term sheet. The Court preliminarily approved the settlement on June 8, 2023. On November 14, 2023, the court granted final approval of the settlement and entered final judgment.
Removed
On October 22, 2021, a purported securities class action lawsuit was filed against us, our Chief Executive Officer, our current and prior Chief Financial Officers, and our President of Worldwide Research & Development in the United States District Court for the Northern District of California, alleging violations under Sections 10(b) and 20(a) of the Exchange Act.
Removed
The complaint alleges that we made materially false or misleading statements regarding BMN 307 by purportedly failing to disclose information about BMN 307’s safety profile, and by purportedly overstating BMN 307’s clinical and commercial prospects. The complaint seeks an unspecified amount of damages, pre-judgment and post-judgment interest, attorneys’ fees, expert fees, and other costs.
Removed
The Court appointed lead plaintiffs and lead counsel on January 10, 2022. Lead plaintiffs filed an amended complaint on March 25, 2022. We filed a motion to dismiss the amended complaint on May 25, 2022. On January 19, 2023, the Court granted our motion to dismiss the complaint without prejudice.
Removed
On February 21, 2023, the court dismissed the complaint with prejudice at plaintiffs’ request. Plaintiffs appealed the court’s January 19, 2023 order to the United State Court of Appeals for the Ninth Circuit and filed their opening brief on June 23, 2023. We filed our answering brief on August 23, 2023. Plaintiffs filed their reply brief on October 13, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons shown in the graph are based upon historical data and we caution that the stock price performance shown in the graph is not indicative of, nor intended to forecast, the potential future performance of our stock. * $100 invested on December 31, 2018 in stock or index, including reinvestment of dividends 2018 2019 2020 2021 2022 2023 BioMarin Pharmaceutical Inc. $ 100.00 $ 99.30 $ 102.98 $ 103.76 $ 121.54 $ 113.24 Nasdaq Composite Index $ 100.00 $ 136.69 $ 198.10 $ 242.03 $ 163.28 $ 236.17 Nasdaq Biotechnology $ 100.00 $ 125.11 $ 158.17 $ 158.20 $ 142.19 $ 148.72 SPDR S&P Biotech ETF $ 100.00 $ 132.56 $ 196.63 $ 156.42 $ 115.96 $ 124.77 Item 6. [Reserved] 57
Biggest changeThe comparisons shown in the graph are based upon historical data and we caution that the stock price performance shown in the graph is not indicative of, nor intended to forecast, the potential future performance of our stock. * $100 invested on December 31, 2019 in stock or index, including reinvestment of dividends 2019 2020 2021 2022 2023 2024 BioMarin Pharmaceutical Inc. $ 100.00 $ 103.71 $ 104.49 $ 122.40 $ 114.04 $ 77.74 Nasdaq Composite Index $ 100.00 $ 144.92 $ 177.06 $ 119.45 $ 172.77 $ 223.87 Nasdaq Biotechnology $ 100.00 $ 126.42 $ 126.45 $ 113.65 $ 118.87 $ 118.20 SPDR S&P Biotech ETF $ 100.00 $ 148.33 $ 118.00 $ 87.48 $ 94.12 $ 95.07 59 Table of Contents Item 6. [Reserved] 60
Holders As of February 16, 2024, there were 34 holders of record of 188,675,622 outstanding shares of our common stock. 56 Table of Contents Performance Graph The following is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing we make under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.
Holders As of February 18, 2025, there were 34 holders of record of 190,777,052 outstanding shares of our common stock. 58 Table of Contents Performance Graph The following is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing we make under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDollars, except as otherwise disclosed) Results of Operations Net Product Revenues Net Product Revenues consisted of the following: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Enzyme products: VIMIZIM $ 701.0 $ 663.8 $ 623.1 $ 37.2 $ 40.7 NAGLAZYME 420.3 443.8 380.4 (23.5) 63.4 PALYNZIQ 303.9 255.0 237.5 48.9 17.5 BRINEURA 161.9 154.3 128.0 7.6 26.3 ALDURAZYME 131.2 128.4 122.8 2.8 5.6 Total enzyme product revenues $ 1,718.3 $ 1,645.3 $ 1,491.8 $ 73.0 $ 153.5 Other products: VOXZOGO 469.9 169.1 5.9 300.8 163.2 KUVAN 180.8 227.6 285.8 (46.8) (58.2) ROCTAVIAN 3.5 — — 3.5 — Total net product revenues $ 2,372.5 $ 2,042.0 $ 1,783.5 $ 330.5 $ 258.5 The increase in Net Product Revenues in 2023 as compared to 2022 was primarily attributed to the following: • VOXZOGO: higher sales volume due to new patients initiating therapy across all regions; • PALYNZIQ: higher sales volume from new patients initiating therapy, particularly in the U.S.; and • VIMIZIM: higher sales volume primarily due to new patients initiating therapy, particularly in the U.S. and Europe, timing of orders in countries that place large government orders, particularly in the Middle East and Latin America; partially offset by • KUVAN: lower sales primarily attributed to increasing generic competition as a result of the loss of exclusivity in the U.S. that occurred in October 2020 and • NAGLAZYME: lower sales volume primarily due to timing of orders in countries that place large government orders, particularly in the Middle East.
Biggest changeResults of Operations Net Product Revenues Net Product Revenues consisted of the following: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 VIMIZIM $ 739.8 $ 701.0 $ 663.8 $ 38.8 $ 37.2 VOXZOGO 735.1 469.9 169.1 265.2 300.8 NAGLAZYME 479.6 420.3 443.8 59.3 (23.5) PALYNZIQ 355.0 303.9 255.0 51.1 48.9 ALDURAZYME 183.9 131.2 128.4 52.7 2.8 BRINEURA 169.1 161.9 154.3 7.2 7.6 KUVAN 120.9 180.8 227.6 (59.9) (46.8) ROCTAVIAN 26.0 3.5 — 22.5 3.5 Total net product revenues $ 2,809.4 $ 2,372.5 $ 2,042.0 $ 436.9 $ 330.5 The increase in Net Product Revenues in 2024 as compared to 2023 was primarily attributed to the following: • VOXZOGO: higher sales volume from new patients initiating therapy across all regions; 62 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Research and Development We group all of our R&D activities and related expense into three categories: (i) research and early pipeline, (ii) later-stage clinical programs and (iii) marketed products as follows: Category Description Research and early pipeline R&D expense incurred in activities substantially in support of early research through the completion of phase 2 clinical trials, including drug discovery, toxicology, pharmacokinetics and drug metabolism and process development.
We group all of our R&D activities and related expense into three categories: (i) Research and early pipeline, (ii) Later-stage clinical programs and (iii) Marketed products as follows: Category Description Research and early pipeline R&D expense incurred in activities substantially in support of early research through the completion of phase 2 clinical trials, including drug discovery, toxicology, pharmacokinetics and drug metabolism and process development.
If the related product candidate's marketing application is rejected by the applicable regulators and the likelihood of future revenues for a product candidate become uncertain, the related manufacturing costs are expensed as R&D expenses. 62 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
If the related product candidate's marketing application is rejected by the applicable regulators and the likelihood of future revenues for a product candidate become uncertain, the related manufacturing costs are expensed as R&D expenses. 64 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
See the risk factor, “Our business is affected by macroeconomic conditions.” described in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Business Developments We continued to grow our commercial business and advance our product candidate pipeline during 2023.
See the risk factor, “Our business is affected by macroeconomic conditions.” described in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Business Developments We continued to grow our commercial business and advance our product candidate pipeline during 2024.
If actual results vary from our estimates, we will make adjustments, which would affect Net Product Revenues and earnings in the period such variances become known. 67 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
If actual results vary from our estimates, we will make adjustments, which would affect Net Product Revenues and earnings in the period such variances become known. 69 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Our purchase obligations are primarily related to firm purchase commitments entered into in the normal course of business to procure active pharmaceutical ingredients, certain inventory-related items, certain third-party R&D services, production services and facility construction services. The amount also includes hosting fees and other ERP system implementation costs for which we are committed.
Our purchase obligations are primarily related to firm purchase commitments entered into in the normal course of business to procure active pharmaceutical ingredients, certain inventory-related items, certain third-party R&D services, production services and facility construction services. The amount also includes hosting fees and other enterprise resource planning (ERP) system implementation costs for which we are committed.
For ALDURAZYME revenues, we receive a payment ranging from 39.5% to 50% on worldwide net ALDURAZYME sales by Sanofi depending on sales volume, which is included in Net Product Revenues in our Consolidated Statements of Operations.
For ALDURAZYME revenues, we receive a payment ranging from 39.5% to 50% on worldwide net ALDURAZYME sales by Sanofi depending on sales volume, which is included in Net Product Revenues in our Consolidated Statements of Income.
For example, we may require additional financing to fund the repayment of our convertible debt, future milestone payments and our future operations, including the commercialization of our products and product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions.
For example, we may require additional financing to fund the repayment of our convertible debt due in 2027, future milestone payments and our future operations, including the commercialization of our products and product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions.
We do not expect the adoption of the Pillar Two framework to have a material impact on our effective tax rate and we plan to continue evaluating additional guidance released by the OECD, along with the pending legislative adoption by additional individual countries.
The adoption of the Pillar Two framework did not have a material impact on our effective tax rate and we plan to continue evaluating additional guidance released by the OECD, along with the pending legislative adoption by additional individual countries.
Recent Accounting Pronouncements See Note 1 to our accompanying Consolidated Financial Statements for a full description of recent accounting pronouncements and our expectation of their impact on our results of operations and financial condition. 68 69 Table of Contents
Recent Accounting Pronouncements See Note 1 to our accompanying Consolidated Financial Statements for a full description of recent accounting pronouncements and our expectation of their impact on our results of operations and financial condition. 70 Table of Contents
Management is not aware of any potential changes that would have a material effect on our Consolidated Financial Statements. See Note 15 to our accompanying Consolidated Financial Statements for additional discussion.
Management is not aware of any potential changes that would have a material effect on our Consolidated Financial Statements. See Note 1 6 to our accompanying Consolidated Financial Statements for additional discussion.
Our Provision for income taxes in 2023 and 2022 consisted of state, federal and foreign current tax expense which was offset by tax benefits related to stock option exercises, foreign tax credits, and deferred tax benefits from federal orphan drug credits and federal R&D credits. See Note 15 to our accompanying Consolidated Financial Statements for additional information.
Our Provision for income taxes in 2024 and 2023 consisted of state, federal and foreign current tax expense which was offset by tax benefits related to stock option exercises, foreign tax credits, and deferred tax benefits from federal orphan drug credits and federal R&D credits. See Note 1 6 to our accompanying Consolidated Financial Statements for additional information.
We are mindful that conditions in the current macroeconomic environment, such as inflation, changes in interest and foreign currency exchange rates, natural disasters, and supply chain disruptions, could affect our ability to achieve our goals. In addition, we sell our products in certain countries that face economic volatility and weakness.
We are mindful that conditions in the current macroeconomic environment, such as inflation, changes in interest and foreign currency exchange rates, natural disasters, geopolitical instability, tariffs and trade tensions, and supply chain disruptions could affect our ability to achieve our goals. In addition, we sell our products in certain countries that face economic volatility and weakness.
Results of Operations 2022 Compared to 2021 For a discussion of our results of operations pertaining to 2022 as compared to 2021 see Item 7 , "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022 (filed with the Securities and Exchange Commission (SEC) on February 27, 2023). 65 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Results of Operations 2023 Compared to 2022 For a discussion of our results of operations pertaining to 2023 as compared to 2022 see Item 7 , "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 (filed with the Securities and Exchange Commission (SEC) on February 26, 2024). 67 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Cost of Sales also includes royalties payable to third parties based on sales of our products and charges for inventory valuation reserves.
Cost of Sales also includes royalties payable to third parties based on sales of our products, idle plant costs and charges for inventory valuation reserves.
We expect Interest Expense to decrease over the next 12 months due to the settlement of our convertible debt that matures in August 2024. See Note 10 to our accompanying Consolidated Financial Statements for additional information regarding our convertible debt. 64 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
We expect Interest Expense to decrease over the next 12 months due to the settlement of our 2024 Notes. See Note 10 to our accompanying Consolidated Financial Statements for additional information regarding our debt. 66 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Contingent Obligations As of December 31, 2023, we were subject to contingent payments considered reasonably possible of $763.3 million, of this amount we may pay up to $30.1 million in 2024 if certain contingencies are met. See Note 18 to our accompanying Consolidated Financial Statements for additional discussion on our contingent obligations.
Contingent Obligations As of December 31, 2024, we were subject to contingent payments considered reasonably possible of $258.1 million, of this amount we may pay up to $3.1 million in 2025 if certain contingencies are met. See Note 1 9 to our accompanying Consolidated Financial Statements for additional discussion on our contingent obligations.
The following table summarizes the consolidated activities and ending balances of all our gross-to-net sales adjustments: Balance at Beginning of Year Provision for Current Period Sales Payments Balance at End of Year Year ended December 31, 2023 $ 115.0 $ 370.7 $ (333.6) $ 152.1 Year ended December 31, 2022 $ 85.6 $ 282.5 $ (253.1) $ 115.0 Year ended December 31, 2021 $ 104.4 $ 252.9 $ (271.7) $ 85.6 Income Taxes We calculate and provide for income taxes in each of the tax jurisdictions in which we operate.
The following table summarizes the consolidated activities and ending balances of all our gross-to-net sales adjustments: Balance at Beginning of Year Provision for Current Period Sales Payments Balance at End of Year Year ended December 31, 2024 $ 152.1 $ 435.1 $ (392.2) $ 195.0 Year ended December 31, 2023 $ 115.0 $ 370.7 $ (333.6) $ 152.1 Year ended December 31, 2022 $ 85.6 $ 282.5 $ (253.1) $ 115.0 Income Taxes We calculate and provide for income taxes in each of the tax jurisdictions in which we operate.
Financing and Credit Facilities Our $1.1 billion (undiscounted) of total convertible debt as of December 31, 2023 will impact our liquidity due to the semi-annual cash interest payments as well as the repayment of the principal amount, if not converted.
Financing and Credit Facilities Our $600.0 million (undiscounted) of total convertible debt as of December 31, 2024 will impact our liquidity due to the semi-annual cash interest payments as well as the repayment of the principal amount, if not converted.
We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash and investments balances. We will need to raise additional funds from equity or debt securities, loans or collaborative agreements if we are unable to satisfy our liquidity requirements.
We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash and long-term investment balances. We will need to raise additional funds by issuing equity, debt or convertible securities, taking loans or entering into collaborative or other agreements if we are unable to satisfy our liquidity requirements.
See “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of this Annual Report on Form 10-K and the risk factor “Our international operations pose currency risks, which may adversely affect our operating and net income” in “Risk Factors” included in Part I, Item 1A of this Annual Report for information on currency exchange rate risk related to our Net Product Revenues.
See “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of this Annual Report on Form 10-K and the risk factor “Our international operations pose currency risks, which may adversely affect our operating results and net income” in “Risk Factors” included in Part I, Item 1A of this Annual Report for information on currency exchange rate risk related to our Net Product Revenues. 63 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
We are actively monitoring and managing our response and assessing actual and potential impacts to our operating results and financial condition, as well as developments in our business, which could further impact the developments, trends and expectations described below.
The extent and duration of such effects remain uncertain and difficult to predict. We are actively monitoring and managing our response and assessing actual and potential impacts to our operating results and financial condition, as well as developments in our business, which could further impact the developments, trends and expectations described below.
In certain countries, governments place large periodic orders for our products. We expect that the timing of these large government orders will continue to be inconsistent, which has created and may continue to create significant period to period variation in our revenues.
We expect that the timing of these large government orders will continue to be inconsistent, which has created in the past and may continue to create significant period to period variation in our revenues.
GAAP and pursuant to the rules and regulations promulgated by the SEC, we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures.
Critical Accounting Estimates In preparing our Consolidated Financial Statements in accordance with U.S. GAAP and pursuant to the rules and regulations promulgated by the SEC, we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures.
As of December 31, 2023, we had lease payment obligations of $58.7 million, of which $11.4 million is payable in 2024. See Note 9 to our accompanying Consolidated Financial Statements for details on our lease liabilities.
As of December 31, 2024, we had lease payment obligations of $48.0 million, of which $9.5 million is payable in 2025. See Note 9 to our accompanying Consolidated Financial Statements for details on our lease liabilities.
The following table shows our Net Product Revenues denominated in USD and foreign currencies: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Sales denominated in USD $ 1,137.8 $ 1,008.8 $ 961.1 $ 129.0 $ 47.7 Sales denominated in foreign currencies 1,234.7 1,033.2 822.4 201.5 210.8 Total net product revenues $ 2,372.5 $ 2,042.0 $ 1,783.5 $ 330.5 $ 258.5 Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Favorable (unfavorable) impact of foreign currency exchange rates on product sales denominated in currencies other than USD $ (100.0) $ (59.0) $ 2.3 $ (41.0) $ (61.3) The unfavorable impact of foreign currency exchange rates on USD reported results in 2023 was primarily driven by the Argentine Peso, Euro, Japanese Yen and Russian Ruble.
The following table shows our Net Product Revenues denominated in USD and foreign currencies: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Sales denominated in USD $ 1,366.0 $ 1,137.8 $ 1,008.8 $ 228.2 $ 129.0 Sales denominated in foreign currencies 1,443.4 1,234.7 1,033.2 208.7 201.5 Total net product revenues $ 2,809.4 $ 2,372.5 $ 2,042.0 $ 436.9 $ 330.5 Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Unfavorable impact of foreign currency exchange rates on product sales denominated in currencies other than USD $ (107.8) $ (100.0) $ (59.0) $ (7.8) $ (41.0) The unfavorable impact of foreign currency exchange rates on USD reported results in 2024 was primarily driven by the weakening of the Argentine Peso and Japanese Yen.
Dollars, except as otherwise disclosed) Financial Condition, Liquidity and Capital Resources Our cash, cash equivalents, and investments were as follows: December 31, 2023 December 31, 2022 Change Cash and cash equivalents $ 755.1 $ 724.5 $ 30.6 Short-term investments 318.7 567.0 (248.3) Long-term investments 611.1 333.9 277.2 Total cash, cash equivalents and investments $ 1,684.9 $ 1,625.4 $ 59.5 We believe our cash generated from sales of our commercial products, in addition to our cash, cash equivalents and investments, will be sufficient to satisfy our liquidity requirements for at least the next 12 months.
Dollars, except as otherwise disclosed) Financial Condition, Liquidity and Capital Resources Our cash, cash equivalents, and investments as of December 31, 2024 and 2023 were as follows: 2024 2023 2024 vs. 2023 Cash and cash equivalents $ 942.8 $ 755.1 $ 187.7 Short-term investments 194.9 318.7 (123.8) Long-term investments 521.2 611.1 (89.9) Total cash, cash equivalents and investments $ 1,658.9 $ 1,684.9 $ (26.0) We believe cash generated from sales of our commercial products, in addition to our cash, cash equivalents and short-term investments will be sufficient to satisfy our liquidity requirements for at least the next 12 months.
Uncertainty Relating to Macroeconomic Environment Conditions in the current macroeconomic environment, such as inflation, changes in interest and foreign currency exchange rates, natural disasters, and supply chain disruptions, could impact our global revenue sources and our overall business operations. The extent and duration of such effects remain uncertain and difficult to predict.
Dollars, except as otherwise disclosed) Uncertainty Relating to Macroeconomic Environment Conditions in the current macroeconomic environment, such as inflation, changes in interest and foreign currency exchange rates, natural disasters, geopolitical instability, tariffs and tensions, and supply chain disruptions, could impact our global revenue sources and our overall business operations.
Unrecognized Tax Benefits As of December 31, 2023, our liability for unrecognized tax benefits was $277.5 million. Due to their nature, we cannot reasonably estimate the timing of future payments. See Note 15 to our accompanying Consolidated Financial Statements for a full discussion on our income taxes. Critical Accounting Estimates In preparing our Consolidated Financial Statements in accordance with U.S.
Unrecognized Tax Benefits As of December 31, 2024, our liability for unrecognized tax benefits was $325.0 million. Due to their nature, we cannot reasonably estimate the timing of future payments. See Note 1 6 to our accompanying Consolidated Financial Statements for a full discussion on our income taxes.
Dollars, except as otherwise disclosed) R&D expense consisted of the following: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Research and early pipeline $ 393.1 $ 313.9 $ 275.9 $ 79.2 $ 38.0 Later-stage clinical programs 62.6 119.0 244.4 (56.4) (125.4) Marketed Products 291.1 216.7 108.5 74.4 108.2 Total R&D expense $ 746.8 $ 649.6 $ 628.8 $ 97.2 $ 20.8 R&D expense increased for 2023 compared to 2022 primarily due to higher spend in research and early pipeline attributable to increased pre-clinical activities, including studies for planned clinical trial application submissions in the U.S. and EU.
Dollars, except as otherwise disclosed) R&D expense consisted of the following: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Research and early pipeline $ 434.0 $ 393.1 $ 313.9 $ 40.9 $ 79.2 Later-stage clinical programs 27.6 62.6 119.0 (35.0) (56.4) Marketed products 285.6 291.1 216.7 (5.5) 74.4 Total R&D expense $ 747.2 $ 746.8 $ 649.6 $ 0.4 $ 97.2 R&D expense marginally increased in 2024 compared to 2023 primarily due to higher spend in Research and early pipeline related to pre-clinical activities for new VOXZOGO indications and our prioritized pipeline.
In 2023, we achieved $2.4 billion in total revenues, including a significant contribution from our ongoing expansion of VOXZOGO, and we continued making important advancements in our product development pipeline. Our key business developments since the beginning of 2023 include U.S.
In 2024, we achieved $2.9 billion in total revenues, including a significant contribution from our ongoing expansion of VOXZOGO, and we continued making important advancements in our product development pipeline.
Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Interest income $ 58.3 $ 18.0 $ 10.5 $ 40.3 $ 7.5 The increase in Interest Income during 2023 compared to 2022 was primarily due to higher money market and available-for-sale debt securities balances and higher yields on our investment portfolio.
Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Interest income $ 74.9 $ 58.3 $ 18.0 $ 16.6 $ 40.3 The increase in Interest Income during 2024 compared to 2023 was primarily due to higher balances and higher yields on our cash equivalents and investment portfolio.
The following table summarizes our Cost of Sales and gross margin : Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Total revenues $ 2,419.2 $ 2,096.0 $ 1,846.3 $ 323.2 $ 249.7 Cost of sales $ 514.9 $ 483.7 $ 470.5 $ 31.2 $ 13.2 Gross margin 78.7 % 76.9 % 74.5 % 1.8 % 2.4 % Cost of Sales increased for 2023 compared to 2022 primarily due to higher sales volumes as noted above.
The following table summarizes our Cost of Sales and gross margin : Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Total revenues $ 2,853.9 $ 2,419.2 $ 2,096.0 $ 434.7 $ 323.2 Cost of sales $ 580.2 $ 532.1 $ 503.0 $ 48.1 $ 29.1 Gross margin 79.7 % 78.0 % 76.0 % 1.7 % 2.0 % Cost of Sales increased for 2024 compared to 2023 primarily due to higher sales volumes.
Intangible Asset Amortization and Contingent Consideration and Gain on Sale of Nonfinancial Assets Changes during the periods presented for Intangible Asset Amortization and Contingent Consideration and Gain on Sale of Nonfinancial Assets were as follows: Twelve Months Ended December 31, 2023 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Amortization of intangible assets $ 62.2 $ 62.8 $ 61.9 $ (0.6) $ 0.9 Changes in the fair value of contingent consideration — 4.4 8.0 (4.4) (3.6) Total intangible asset amortization and contingent consideration $ 62.2 $ 67.2 $ 69.9 $ (5.0) $ (2.7) Gain on sale of nonfinancial assets $ — $ 108.0 $ — $ (108.0) $ 108.0 Amortization of intangible assets : the expense in 2023 as compared to 2022 was relatively flat.
Dollars, except as otherwise disclosed) Intangible Asset Amortization and Gain on Sale of Nonfinancial Assets Changes during the periods presented for Intangible Asset Amortization and Gain on Sale of Nonfinancial Assets were as follows: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Amortization of intangible assets $ 43.3 $ 62.2 $ 62.8 $ (18.9) $ (0.6) Changes in the fair value of contingent consideration — — 4.4 — (4.4) Total intangible asset amortization and contingent consideration $ 43.3 $ 62.2 $ 67.2 $ (18.9) $ (5.0) Gain on sale of nonfinancial assets $ 10.0 $ — $ 108.0 $ 10.0 $ (108.0) Amortization of intangible assets : the decrease in expense for 2024 as compared to 2023 was due to the increase in the estimated useful life of an intangible asset as a result of the extension of a patent and an intangible asset becoming fully amortized during the fourth quarter of 2023.
Our Consolidated Financial Statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and are presented in U.S. Dollars (USD). Overview Founded in 1997, we are a global biotechnology company dedicated to transforming lives through genetic discovery. We develop and commercialize targeted therapies that address the root cause of genetic conditions.
Our Consolidated Financial Statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and are presented in U.S. Dollars (USD). Overview We are a global biotechnology company dedicated to translating the promise of genetic discovery into medicines that make a profound impact on the life of each patient.
As of December 31, 2023, our indebtedness consisted of our 1.250% senior subordinated convertible notes due in 2027 (the 2027 Notes) and our 0.599% senior subordinated convertible notes due in 2024 (the 2024 Notes and together with the 2027 Notes, the Notes), which, if not converted, will be required to be repaid in cash at maturity in May 2027 and August 2024, respectively.
As of December 31, 2024, our indebtedness consisted of our 1.250% senior subordinated convertible notes due in 2027 (the 2027 Notes), which, if not converted, will be required to be repaid in cash at maturity in May 2027. 68 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
Provision for (Benefit from) Income Taxes Provision for (Benefit from) Income Taxes for the periods presented was as follows: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Provision for (benefit from) income taxes $ 20.9 $ 8.0 $ (11.3) $ 12.9 $ 19.3 Provision for income taxes in 2023 increased compared to 2022, primarily due to taxes on higher earnings and foreign-source income taxed in the U.S. partially offset by an additional benefit from an increase in R&D credits and the release of a valuation allowance related to future royalty earnings.
Provision for Income Taxes Provision for Income Taxes for the periods presented was as follows: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Provision for income taxes $ 114.9 $ 20.9 $ 8.0 $ 94.0 $ 12.9 Provision for income taxes in 2024 increased compared to 2023, primarily due to taxes on higher earnings and foreign-source income taxed in the U.S.
Interest Expense for the periods presented was as follows: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Interest expense $ 17.3 $ 16.0 $ 15.3 $ 1.3 $ 0.7 Interest Expense in 2023 as compared to 2022 was relatively flat.
Interest Expense for the periods presented was as follows: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Interest expense $ 12.7 $ 17.3 $ 16.0 $ (4.6) $ 1.3 The decrease in Interest Expense in 2024 as compared to 2023 was primarily due to the August 1, 2024 maturity of our convertible debt (the 2024 Notes).
Our cash flows for each of the years ended December 31, 2023 and 2022 were as follows: 2023 2022 2023 vs. 2022 Net cash provided by operating activities $ 159.3 $ 175.9 $ (16.6) Net cash used in investing activities $ (111.2) $ (20.0) $ (91.2) Net cash used in financing activities $ (18.7) $ (18.7) $ — The decrease in net cash provided by operating activities in 2023 compared to 2022 was primarily attributed to the timing of cash receipts from our customers and increased payments for inventory purchases, income taxes and increased payments related to implementation of our ERP system, partially offset by timing of cash payments to other vendors.
Our cash flows for each of the years ended December 31, 2024 and 2023 were as follows: 2024 2023 2024 vs. 2023 Net cash provided by operating activities $ 572.8 $ 159.3 $ 413.5 Net cash provided by (used in) investing activities $ 136.5 $ (111.2) $ 247.7 Net cash used in financing activities $ (526.4) $ (18.7) $ (507.7) The increase in net cash provided by operating activities in 2024 compared to 2023 was primarily attributed to the improved operating performance and timing of cash receipts from our customers, partially offset by the timing of payments to vendors, increased personnel-related payments resulting from our ongoing organizational redesign efforts and payments of income taxes.
See "Risk Factors" in Part I, Item 1A of this Annual Report for additional information on risk factors that could impact our business and operations.
With respect to VOXZOGO, see also the risk factor “Our success depends on our ability to manage our growth and execute our corporate strategy.” in "Risk Factors" included in Part I, Item 1A of this Annual Report for additional information on risk factors that could impact our business and operations.
A summary of our commercial products, as of December 31, 2023, is provided below: Commercial Products Indication Enzyme products: VIMIZIM (elosulfase alpha) Mucopolysaccharidosis (MPS) IVA NAGLAZYME (galsulfase) MPS VI PALYNZIQ (pegvaliase-pqpz) Phenylketonuria (PKU) BRINEURA (cerliponase alfa) Neuronal ceroid lipofuscinosis type 2 (CLN2) ALDURAZYME (laronidase) MPS I Other products: VOXZOGO (vosoritide) Achondroplasia KUVAN (sapropterin dihydrochloride) PKU ROCTAVIAN (valoctocogene roxaparvovec) Severe Hemophilia A 58 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
A summary of our commercial products, as of December 31, 2024, is provided below: Commercial Products Indication VIMIZIM (elosulfase alpha) Mucopolysaccharidosis (MPS) IVA VOXZOGO (vosoritide) Achondroplasia NAGLAZYME (galsulfase) MPS VI PALYNZIQ (pegvaliase-pqpz) Phenylketonuria (PKU) ALDURAZYME (laronidase) MPS I BRINEURA (cerliponase alfa) Neuronal ceroid lipofuscinosis type 2 (CLN2) KUVAN (sapropterin dihydrochloride) PKU ROCTAVIAN (valoctocogene roxaparvovec) Severe Hemophilia A 2024 Financial Highlights Key components of our results of operations include the following: Twelve Months Ended December 31, 2024 2023 2022 Total revenues $ 2,853.9 $ 2,419.2 $ 2,096.0 Cost of sales $ 580.2 $ 532.1 $ 503.0 Research and development (R&D) $ 747.2 $ 746.8 $ 649.6 Selling, general and administrative (SG&A) $ 1,009.0 $ 892.4 $ 823.2 Net income $ 426.9 $ 167.6 $ 141.6 See “Results of Operations” below for discussion of our results for the periods presented. 61 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
SG&A expenses consisted of the following: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 S&M expense $ 488.4 $ 450.3 $ 405.1 $ 38.1 $ 45.2 G&A expense 448.9 403.7 354.3 45.2 49.4 Total SG&A expense $ 937.3 $ 854.0 $ 759.4 $ 83.3 $ 94.6 S&M expenses by product were as follows: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Enzyme Products $ 225.3 $ 225.7 $ 222.1 $ (0.4) $ 3.6 VOXZOGO 108.9 102.3 75.1 6.6 27.2 ROCTAVIAN 104.5 73.6 54.0 30.9 19.6 Other 49.7 48.7 53.9 1.0 (5.2) Total S&M expense $ 488.4 $ 450.3 $ 405.1 $ 38.1 $ 45.2 The increase in S&M expense for 2023 compared to 2022 was primarily a result of increased activities in support of the European and U.S. commercial launch of ROCTAVIAN.
SG&A expenses consisted of the following: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 S&M expense $ 476.7 $ 488.4 $ 450.3 $ (11.7) $ 38.1 G&A expense 532.3 404.0 372.9 128.3 31.1 Total SG&A expense $ 1,009.0 $ 892.4 $ 823.2 $ 116.6 $ 69.2 S&M expenses by product were as follows: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Enzyme Products $ 219.0 $ 225.3 $ 225.7 $ (6.3) $ (0.4) VOXZOGO 134.1 108.9 102.3 25.2 6.6 ROCTAVIAN 76.7 104.5 73.6 (27.8) 30.9 Other 46.9 49.7 48.7 (2.8) 1.0 Total S&M expense $ 476.7 $ 488.4 $ 450.3 $ (11.7) $ 38.1 The decrease in S&M expense for 2024 compared to 2023 was primarily due to reduced activities related to ROCTAVIAN as we focused commercial efforts in the U.S., Germany and Italy to align with our updated ROCTAVIAN strategy.
Dollars, except as otherwise disclosed) In October 2018, we entered into an unsecured revolving credit facility of up to $200.0 million that included a letter of credit subfacility and a swingline loan subfacility. The credit facility was intended to finance ongoing working capital needs and for other general corporate purposes.
Dollars, except as otherwise disclosed) In August 2024, we entered into an unsecured revolving credit facility providing for $600.0 million in revolving loan commitments. The credit facility is intended to finance ongoing working capital needs and for other general corporate purposes. The credit facility contains financial covenants including a maximum total net leverage ratio and a minimum interest coverage ratio.
Dollars, except as otherwise disclosed) We face exposure to movements in foreign currency exchange rates, which we expect to continue in future periods. We use foreign currency exchange forward contracts to hedge a percentage of our foreign currency exposure, primarily the Euro.
We face exposure to movements in foreign currency exchange rates, and use foreign currency exchange forward contracts to hedge a percentage of our foreign currency exposure, primarily the Euro. Certain currencies are not included in our hedging program, such as the Argentine Peso.
These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing 61 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S. Dollars, except as otherwise disclosed) costs, amortization of technology transfer intangible assets and internal and external final formulation and packaging costs.
Dollars, except as otherwise disclosed) Cost of Sales and Gross Margin Cost of Sales includes raw materials, personnel, facility and other costs associated with manufacturing our commercial products. These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, amortization of technology transfer intangible assets and internal and external final formulation and packaging costs.
See Note 10 to our accompanying Consolidated Financial Statements for additional discussion on our convertible debt and credit facility. Material Cash Requirements Purchase and Lease Obligations As of December 31, 2023, we had purchase obligations of approximately $354.1 million, of which $325.9 million is expected to be paid in 2024.
Material Cash Requirements Purchase and Lease Obligations As of December 31, 2024, we had purchase obligations of approximately $641.9 million, of which $482.0 million is expected to be paid in 2025.
The increase in net cash used in investing activities in 2023 compared to 2022 was primarily attributable to the absence of $110.0 million gross proceeds from the sale of PRV in 2022, partially offset by a decrease in purchases of fixed assets.
The increase in net cash provided by investing activities in 2024 compared to net cash used in investing activities in 2023 was primarily attributable to lower net purchases of investments, lower purchases of property, plant and equipment, and a $10.0 million milestone payment received in connection with the sale of previously sold intangible assets.
Gross margin for 2023 increased compared to 2022 primarily due to higher sales volume of products with higher margins, predominately related to VOXZOGO, and lower per unit manufacturing costs for our enzyme products.
Gross margin increased compared to 2023 primarily due to lower per unit manufacturing costs of our enzyme products driven by improved yields. Research and Development R&D expense includes costs associated with the research and development of product candidates and post-marketing research commitments related to our commercial products.
Higher spend on R&D activities related to our marketed products was partially offset by the decrease in later-stage clinical program spend due to the marketing approval of ROCTAVIAN in mid-2023. We expect R&D expense to increase in future periods compared to 2023, primarily due to higher spend on early pipeline and later-stage clinical programs.
This increase was partially offset by lower spend in Later-stage clinical programs related to ROCTAVIAN, which was moved to Marketed products following Food and Drug Administration approval in the second quarter of 2023.
See also the risk factor “The sale of generic versions of KUVAN by generic manufacturers has adversely affected and will continue to adversely affect our revenues and may cause a decline in KUVAN revenues faster than expected” in “Risk Factors” included in Part I, Item 1A of this Annual Report for additional information on risks we face. 60 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
With respect to KUVAN, see also the risk factor “If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product and our revenues could be adversely affected.” in “Risk Factors” included in Part I, Item 1A of this Annual Report for additional information on risks we face.
Dollars, except as otherwise disclosed) Other Income (Expense), Net Other Income (Expense), Net for the periods presented was as follows: Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Other income (expense), net $ (10.5) $ (2.1) $ 11.8 $ (8.4) $ (13.9) The change in Other Income (Expense), Net, in 2023 compared to 2022 was primarily due to impairment losses on an equity investment and a convertible note, partially offset by the gain on the fair value of assets held in our nonqualified deferred compensation plan and gains related to refundable tax credits recorded in 2023.
Dollars, except as otherwise disclosed) Other Expense, Net Other Expense, Net for the periods presented was as follows: Twelve Months Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Other expense, net $ 4.7 $ 38.2 $ 13.5 $ (33.5) $ 24.7 The decrease in Other Expense, Net, in 2024 compared to 2023 was primarily due to the lower foreign currency transaction losses and decreased loss on non-marketable securities.
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Our robust research and development capabilities have resulted in multiple innovative commercial therapies for patients with rare genetic disorders.
Added
Our San Rafael, California-based company, founded in 1997, has a proven track record of innovation with eight commercial therapies and a strong clinical and preclinical pipeline. Using a distinctive approach to drug discovery and development, we pursue treatments that offer new possibilities for patients and families around the world navigating rare or difficult to treat genetic conditions.
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Our distinctive approach to drug discovery has produced a diverse pipeline of commercial, clinical, and pre-clinical candidates that address a significant unmet medical need, have well-understood biology, and provide an opportunity to be first-to-market or offer a substantial benefit over existing treatment options.
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In the first half of 2024, we focused on value creation through working to accelerate growth, optimize efficiencies and drive operational excellence, including progress in executing on key strategic priorities first outlined in January 2024.
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Dollars, except as otherwise disclosed) 2023 Financial Highlights Key components of our results of operations include the following: Twelve Months Ended December 31, 2023 2022 2021 Total revenues $ 2,419.2 $ 2,096.0 $ 1,846.3 Cost of sales $ 514.9 $ 483.7 $ 470.5 Research and development (R&D) expense $ 746.8 $ 649.6 $ 628.8 Selling, general and administrative (SG&A) expense $ 937.3 $ 854.0 $ 759.4 Gain on sale of nonfinancial assets, net $ — $ 108.0 $ — Provision for (benefit from) income taxes $ 20.9 $ 8.0 $ (11.3) Net income (loss) $ 167.6 $ 141.6 $ (64.1) See “Results of Operations” below for discussion of our results for the periods presented.
Added
We also completed a strategic portfolio assessment of research and development programs to determine which we believe have the strongest combination of scientific merit, opportunity for commercial success and potential value creation for stockholders. In September 2024, we held an Investor Day, during which we provided an overview of our new corporate strategy focused on innovation, growth, and value commitment.
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Food and Drug Administration (FDA) approval of VOXZOGO for children with achondroplasia of all ages with open growth plates in the U.S., European Commission approval to expand the indication for VOXZOGO to treat children with achondroplasia aged four months and older with open growth plates in the European Union (EU), and FDA approval of ROCTAVIAN in the U.S.
Added
Our new strategy includes, among other things, our plans to expand VOXZOGO for the treatment of conditions beyond achondroplasia, our initiatives to drive sustained growth of the Enzyme Therapies portfolio (ALDURAZYME, BRINEURA, NAGLAZYME, PALYNZIQ and VIMIZIM), and our decision to focus on the U.S., Germany and Italy with respect to ROCTAVIAN.
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We also continued progress in our earlier stage clinical programs. Please see the disclosures in Part I Item I in this Annual Report on Form 10-K for further discussion of these recent developments. 59 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
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See the risk factor, “Our success depends on our ability to manage our growth and execute our corporate strategy.” described in “Risk Factors” in Part I, Item 1A of this Annual Report.
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Strong demand for VOXZOGO in certain markets has outpaced our projections in recent quarters, and we expect to face challenges meeting our current estimates of VOXZOGO demand through the first half of 2024. These demand challenges will result in modest reduction of our revenue growth for VOXZOGO during the supply-constrained period.
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Change in Presentation On January 1, 2024, we changed our presentation of foreign currency transaction gains and losses resulting from remeasurement and idle plant costs within our Consolidated Statements of Income. See Note 1 to our accompanying Consolidated Financial Statements for additional details.
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The projected temporary supply constraint could result in postponement of planned entry into additional markets or delayed clinical development activities until VOXZOGO inventory levels increase. When the expected increases in supply become available during 2024, while overall inventory and ability to supply the market will increase, if actual demand continues to exceed our estimates, the supply constraint could be prolonged.
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Dollars, except as otherwise disclosed) • NAGLAZYME: higher sales volume due to timing of orders in countries that place large government orders, particularly in the Middle East; • ALDURAZYME: higher sales volume due to timing of order fulfillment to Sanofi as we recognize ALDURAZYME revenues when the product is released and control is transferred to Sanofi; • PALYNZIQ: higher sales volume from new patients initiating therapy, primarily in the U.S.; • VIMIZIM: higher sales volume due to new patients initiating therapy in the U.S. and timing of orders in countries that place large government orders, particularly in Europe; and • ROCTAVIAN: higher sales volume from new patients treated in the U.S. and Europe.
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We are working to increase fill-finish capacity to meet this increased demand while also implementing actions to manage growth and minimize patient impact. For example, in 2023 we secured increased supply commitments beginning in mid-2024. We do not expect a material impact on our revenues if we successfully execute our manufacturing plans.
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These increases were partially offset by the following: • KUVAN: lower product revenues attributed to increasing generic competition as a result of the loss of market exclusivity. In certain countries, governments place large periodic orders for our products.
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Royalty and Other Revenues Royalty and Other Revenues include royalties earned on net sales of products sold by third parties, up-front licensing fees, milestones achieved by licensees or sublicensees and rental income associated with the tenants in our facilities.
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With respect to the risks posed by fluctuations of both hedged and unhedged currencies against the USD, see the risk factor “Our international operations pose currency risks, which may adversely affect our operating results and net income” in “Risk Factors” included in Part I, Item 1A of this Annual Report for additional information.
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Twelve Months Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Royalty and other revenues $ 46.7 $ 54.0 $ 62.8 $ (7.3) $ (8.8) The decrease in Royalty and Other Revenues in 2023 as compared to 2022 was primarily due to lower royalty revenues earned from third parties.
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R&D expense primarily includes preclinical and clinical studies, personnel and raw materials costs associated with manufacturing clinical product, quality control and assurance, other R&D activities, R&D facilities and regulatory costs.
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We expect to continue to earn royalties from third parties in the future. Cost of Sales and Gross Margin Cost of Sales includes raw materials, personnel, facility and other costs associated with manufacturing our commercial products.
Added
This decrease in S&M expense was partially offset by increased spending related to global expansion of VOXZOGO for achondroplasia.
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We expect gross margin to increase modestly in future periods as the product mix is expected to shift to reflect an increase of sales volumes for higher margin commercial products.
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The increase in G&A expense for 2024 compared to 2023 was primarily due to severance and restructuring costs associated with our portfolio strategy review and the associated organizational redesign efforts announced in 2024, and increased bad debt expense during the fourth quarter of 2024. 65 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.
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The increase in G&A expense was primarily due to increased costs related to costs associated with our enterprise resource planning (ERP) system and other strategic initiatives, an impairment charge recorded in 2023 and unfavorable fluctuations of unhedged currencies.
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Gain on Sale of Nonfinancial Assets : in the first quarter of 2024, we recognized a gain of $10.0 million due to a third party’s achievement of a regulatory approval milestone related to previously sold intangible assets.
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Partially offsetting the increases was a decrease in severance and employee termination benefits related to the 2022 reorganization plan that did not recur in 2023. In 2023, we decided to cease development of the first generation VOXZOGO pen device and impaired the related capitalized tooling and fixed assets that had not been placed in service.
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Tax expense in 2023 included additional benefits from a one-time valuation allowance release related to future royalty earnings and additional R&D credits generated.
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See Note 4 to our accompanying Consolidated Financial Statements for additional details. 63 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In millions of U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollars): Expected Maturity 2024 2025 2026 2027 2028 Total Available-for-sale debt securities $ 344.7 $ 291.4 $ 269.8 $ 45.5 $ 4.4 $ 955.8 Average interest rate 5.0 % 5.0 % 4.7 % 4.8 % 5.4 % 4.9 % Counterparty Credit Risks Our financial instruments, including derivatives, are subject to counterparty credit risk that we consider as part of the overall fair value measurement.
Biggest changeDollars): Expected Maturity 2025 2026 2027 2028 2029 Total Available-for-sale debt securities $ 194.8 $ 317.8 $ 172.4 $ 18.6 $ 7.9 $ 716.1 Average interest rate 4.6 % 4.5 % 4.6 % 4.7 % 4.6 % 4.6 % We have outstanding $600.0 million (undiscounted) of the 2027 Notes.
As of December 31, 2023, our investment portfolio did not include any investments with significant exposure to countries that face economic volatility and weakness.
As of December 31, 2024, our investment portfolio did not include any investments with significant exposure to countries that face economic volatility and weakness.
However, we will not recognize such gains or losses in our Consolidated Statements of Operations unless the investments are sold or we determine that the declines in the investment’s fair values below the cost basis are a result of a credit loss, which, if any, are reported in Other Income (Expense), Net in the current period through an allowance for credit losses.
However, we will not recognize such gains or losses in our Consolidated Statements of Income unless the 71 Table of Contents investments are sold or we determine that the declines in the investment’s fair values below the cost basis are a result of a credit loss, which, if any, are reported in Other Expense, Net in the current period through an allowance for credit losses.
The table below summarizes the expected maturities and average interest rates of our interest-generating investments as of December 31, 2023 (in millions of U.S.
The table below summarizes the expected maturities and average interest rates of our interest-generating investments as of December 31, 2024 (in millions of U.S.
The counterparties to these forward contracts are creditworthy multinational commercial banks, which minimizes the risk of counterparty nonperformance. We regularly review our hedging program and may, as part of this review, make changes to the program. As of December 31, 2023, we had open forward contracts with net notional amounts of $1.3 billion.
The counterparties to these forward contracts are creditworthy multinational commercial banks, which minimizes the risk of counterparty nonperformance. We regularly review our hedging program and may, as part of this review, make changes to the program. As of December 31, 2024, we had open forward contracts with net notional amounts of $1.4 billion.
A hypothetical 10% adverse movement in foreign currency exchange rates compared with the USD relative to exchange rates as of December 31, 2023 would have resulted in a reduction in the value received over the remaining life of these contracts by approximately $134.4 million on this date and, if realized, would negatively affect earnings during the remaining life of the contracts.
A hypothetical 10% adverse movement in foreign currency exchange rates compared with the USD relative to exchange rates as of December 31, 2024 would have resulted in a reduction in the value received over the remaining life of these contracts by approximately $129.6 million on this date and, if realized, would negatively affect earnings during the remaining life of the contracts.
Based on our overall foreign currency denominated exposures as of December 31, 2023, we believe that a near-term 10% fluctuation of the USD exchange rate could result in a potential change in the fair value of our net foreign currency denominated assets and liabilities, excluding our investments and open forward contracts, by approximately $27.4 million.
Based on our overall foreign currency denominated exposures as of December 31, 2024, we believe that a near-term 10% fluctuation of the USD exchange rate could result in a potential change in the fair value of our net foreign currency denominated assets and liabilities, excluding our investments and open forward contracts, by approximately $32.7 million.
Although not predictive in nature, based on our investment portfolio and interest rates 70 Table of Contents for the period ending December 31, 2023, we believe a 100 basis point increase in interest rates could result in a potential loss in fair value of our investment portfolio of approximately $10.8 million.
Although not predictive in nature, based on our investment portfolio and interest rates for the period ending December 31, 2024, we believe a 100 basis point increase in interest rates could result in a potential loss in fair value of our investment portfolio of approximately $8.5 million. Changes in interest rates may affect the fair value of our investment portfolio.
During 2023, approximately 52% of our net product sales were denominated in foreign currencies and 24% of our operating expenses, excluding Cost of Sales, were denominated in foreign currencies.
During 2024, approximately 51% of our net product sales were denominated in foreign currencies and 25% of our operating expenses, excluding Cost of Sales, were denominated in foreign currencies.
We have outstanding $495.0 million (undiscounted) of the 2024 Notes and $600.0 million (undiscounted) of the 2027 Notes. The interest rates on these notes are fixed and therefore they do not expose us to risk related to rising interest rates. As of December 31, 2023, the fair value of our convertible debt was $1.1 billion.
The interest rate on the 2027 Notes is fixed and therefore does not expose us to risk related to rising interest rates. As of December 31, 2024, the fair value of our convertible debt was $558.9 million.
Our financial risk management policy limits derivative transactions by requiring transactions to be with institutions with minimum credit ratings of A- or equivalent by Standards & Poor’s, Moody's or Fitch.
Counterparty Credit Risks Our financial instruments, including derivatives, are subject to counterparty credit risk that we consider as part of the overall fair value measurement. Our financial risk management policy limits derivative transactions by requiring transactions to be with institutions with minimum credit ratings of A- or equivalent by Standards & Poor’s, Moody's or Fitch.
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Changes in interest rates may affect the fair value of our investment portfolio.

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