INDEBTEDNESS

12 Months Ended

Dec. 31, 2024

Debt Disclosure [Abstract]

INDEBTEDNESS

13. INDEBTEDNESS

2027 Convertible Notes and Related Transactions

Issuance and Capped Call Transactions

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

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

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

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

stock at the conversion date and the strike price, multiplied by the number of shares of the Company’s common stock related to the capped calls being exercised. The Company paid $127.3 million for the 2022 Capped Calls.

Termination of 2019 Term Loan

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

2024 Convertible Notes and Related Transactions

Issuance and Capped Call Transactions

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

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

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

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

Repurchase and Capped Call Settlement

In September 2022, in connection with the issuance of the 2027 Notes, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding 2024 Notes (the “Repurchase”). The holders exchanged $150.6 million in aggregate principal value of 2024 Notes held by them for an aggregate payment of $248.6 million for full settlement of the principal value and accrued interest on such date. The repurchase was not pursuant to the conversion privileges included in the terms of the debt at issuance and therefore was accounted for as a debt extinguishment. Accordingly, on the repurchase date, the Company recorded $98.5 million of debt extinguishment expense which was included in the loss on debt extinguishment within the consolidated statements of comprehensive income (loss) for the year ended December 31, 2022. Corresponding to the Repurchase, the related 2017 Capped Calls were terminated. As a result, the Company received $26.3 million in cash.

Exchange and Capped Call Settlement

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

comprehensive income (loss) for the year ended December 31, 2023. Corresponding to the Exchange, the related 2017 Capped Calls were terminated. As a result, the Company received $80.6 million in cash.

Conversion and Capped Call Settlement in 2024

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

In May 2024, the Company informed holders of the 2024 Notes of its election to settle the 2024 Notes in shares, which, pursuant to the terms of the 2017 Capped Call agreements, would require the Company to settle the 2017 Capped Calls in shares. On September 16, 2024 (the “Effective Date”), the Company entered into supplements with each of the counterparties to modify the terms of each of the 2017 Capped Calls to require settlement in cash rather than in shares. As a result of the modification, the Company reclassified the fair value of the 2017 Capped Calls of $43.9 million on the Effective Date from stockholders’ equity to derivative assets. As a result of the conversion, the Company ultimately received $45.3 million in cash to settle the remaining 2017 Capped Calls on November 15, 2024. The change in the fair value of the derivative assets from the Effective Date to Maturity Date was a gain of $1.5 million and recorded to other income (expense), net in the consolidated statements of comprehensive income (loss). There were no derivative assets remaining as of December 31, 2024.

Total Debt Obligations

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

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

	As of December 31,
	2024			2023
	(in thousands)
Principal amount of the 2027 Notes	$	1,150,000		$	1,150,000
Principal amount of the 2024 Notes		—			105,847
Unamortized discount - debt issuance costs of 2027 Notes		(12,876	)		(17,485	)
Unamortized discount - debt issuance costs of 2024 Notes		—			(364	)
Total carrying value of debt instruments	$	1,137,124		$	1,237,998
Fair value of 2027 Notes	$	1,254,857		$	1,172,276
Fair value of 2024 Notes		—			144,833
Total fair value of debt instruments	$	1,254,857		$	1,317,109

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $20.6 million, $22.0 million and $53.2 million of interest expense, respectively. Total interest expense for the years ended December 31, 2024, 2023 and 2022 is inclusive of $5.0 million, $5.2 million and $7.5 million of amortization of debt discounts, respectively. The fair values of the 2027 Notes and 2024 Notes are based on open market trades and are classified as Level 1 in the fair value hierarchy.

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

	As of December 31, 2024
	Principal		Interest		Total Payments
	(in thousands)
2025	$	—	$	14,375	$	14,375
2026		—		14,375		14,375
2027		1,150,000		14,375		1,164,375
Total payments	$	1,150,000	$	43,125	$	1,193,125