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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2024
or
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☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number: 001-33500
JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
| | | | | |
Ireland | 98-1032470 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Fifth Floor, Waterloo Exchange,
Waterloo Road, Dublin 4, Ireland D04 E5W7
011-353-1-634-7800
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Ordinary shares, nominal value $0.0001 per share | JAZZ | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| | | | |
Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | | |
Emerging growth company | ☐ | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 31, 2024, 60,454,592 ordinary shares of the registrant, nominal value $0.0001 per share, were outstanding.
JAZZ PHARMACEUTICALS PLC
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024
INDEX
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Item 6. | | |
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We own or have rights to various copyrights, trademarks, and trade names used in our business in the U.S. and/or other countries, including the following: Jazz Pharmaceuticals®, Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, Xyrem® (sodium oxybate) oral solution, Epidiolex® (cannabidiol) oral solution, Epidyolex® (the trade name in Europe and other countries outside the U.S. for Epidiolex), Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn), Enrylaze® (the trade name in Europe and other countries outside the U.S. and Canada for Rylaze), Zepzelca® (lurbinectedin), Defitelio® (defibrotide sodium), Defitelio® (defibrotide), Vyxeos® (daunorubicin and cytarabine) liposome for injection, Vyxeos® liposomal 44 mg/100 mg powder for concentrate for solution for infusion, CombiPlex® and Sativex® (nabiximols) oral solution. This Quarterly Report on Form 10-Q also includes trademarks, service marks and trade names of other companies. Trademarks, service marks and trade names appearing in this Quarterly Report on Form 10‑Q are the property of their respective owners.
PART I – FINANCIAL INFORMATION
Item 1.Financial Statements
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 2,218,135 | | | $ | 1,506,310 | |
Investments | 400,000 | | | 120,000 | |
Accounts receivable, net of allowances | 723,639 | | | 705,794 | |
Inventories | 539,302 | | | 597,039 | |
Prepaid expenses | 155,132 | | | 185,476 | |
Other current assets | 354,215 | | | 320,809 | |
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Total current assets | 4,390,423 | | | 3,435,428 | |
Property, plant and equipment, net | 176,422 | | | 169,646 | |
Operating lease assets | 77,164 | | | 65,340 | |
Intangible assets, net | 5,144,217 | | | 5,418,039 | |
Goodwill | 1,804,646 | | | 1,753,130 | |
Deferred tax assets, net | 583,218 | | | 477,834 | |
Deferred financing costs | 4,395 | | | 6,478 | |
Other non-current assets | 75,231 | | | 67,464 | |
Total assets | $ | 12,255,716 | | | $ | 11,393,359 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 85,425 | | | $ | 102,750 | |
Accrued liabilities | 858,578 | | | 793,914 | |
Current portion of long-term debt | 31,000 | | | 604,954 | |
Income taxes payable | 54,974 | | | 35,074 | |
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| | | |
Total current liabilities | 1,029,977 | | | 1,536,692 | |
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Long-term debt, less current portion | 6,080,802 | | | 5,107,988 | |
Operating lease liabilities, less current portion | 71,115 | | | 59,225 | |
Deferred tax liabilities, net | 791,784 | | | 847,706 | |
Other non-current liabilities | 110,971 | | | 104,751 | |
Commitments and contingencies (Note 9) | | | |
Shareholders’ equity: | | | |
| | | |
Ordinary shares | 6 | | | 6 | |
Non-voting euro deferred shares | 55 | | | 55 | |
Capital redemption reserve | 473 | | | 473 | |
Additional paid-in capital | 3,837,698 | | | 3,699,954 | |
Accumulated other comprehensive loss | (603,397) | | | (842,147) | |
Retained earnings | 936,232 | | | 878,656 | |
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| | | |
Total shareholders’ equity | 4,171,067 | | | 3,736,997 | |
Total liabilities and shareholders’ equity | $ | 12,255,716 | | | $ | 11,393,359 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Revenues: | | | | | | | |
Product sales, net | $ | 989,707 | | | $ | 938,398 | | | $ | 2,795,953 | | | $ | 2,769,604 | |
Royalties and contract revenues | 65,262 | | | 33,742 | | | 184,824 | | | 52,665 | |
Total revenues | 1,054,969 | | | 972,140 | | | 2,980,777 | | | 2,822,269 | |
Operating expenses: | | | | | | | |
Cost of product sales (excluding amortization of acquired developed technologies) | 111,611 | | | 102,153 | | | 317,000 | | | 328,334 | |
Selling, general and administrative | 325,772 | | | 308,310 | | | 1,016,007 | | | 947,071 | |
Research and development | 199,919 | | | 234,402 | | | 643,500 | | | 633,050 | |
Intangible asset amortization | 157,457 | | | 154,883 | | | 468,410 | | | 456,731 | |
Acquired in-process research and development | — | | | — | | | 10,000 | | | 1,000 | |
| | | | | | | |
Total operating expenses | 794,759 | | | 799,748 | | | 2,454,917 | | | 2,366,186 | |
Income from operations | 260,210 | | | 172,392 | | | 525,860 | | | 456,083 | |
Interest expense, net | (58,702) | | | (71,497) | | | (186,841) | | | (219,114) | |
Foreign exchange loss | (701) | | | (1,377) | | | (1,887) | | | (566) | |
| | | | | | | |
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Income before income tax benefit and equity in loss (gain) of investees | 200,807 | | | 99,518 | | | 337,132 | | | 236,403 | |
Income tax benefit | (14,533) | | | (47,176) | | | (33,517) | | | (86,823) | |
Equity in loss (gain) of investees | 285 | | | (126) | | | 1,644 | | | 2,548 | |
| | | | | | | |
| | | | | | | |
Net income | $ | 215,055 | | | $ | 146,820 | | | $ | 369,005 | | | $ | 320,678 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Net income per ordinary share: | | | | | | | |
Basic | $ | 3.50 | | | $ | 2.33 | | | $ | 5.93 | | | $ | 5.05 | |
Diluted | $ | 3.42 | | | $ | 2.14 | | | $ | 5.63 | | | $ | 4.67 | |
Weighted-average ordinary shares used in per share calculations - basic | 61,414 | | | 63,114 | | | 62,275 | | | 63,532 | |
Weighted-average ordinary shares used in per share calculations - diluted | 63,174 | | | 71,293 | | | 67,511 | | | 72,866 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net income | $ | 215,055 | | | $ | 146,820 | | | $ | 369,005 | | | $ | 320,678 | |
Other comprehensive income (loss): | | | | | | | |
Foreign currency translation adjustments | 291,367 | | | (170,826) | | | 241,218 | | | 82,952 | |
| | | | | | | |
| | | | | | | |
Unrealized gain (loss) on cash flow hedging activities, net of income tax (benefit) expense of $(1,727), $1,176, $522 and $3,063 respectively | (5,197) | | | 3,539 | | | 1,572 | | | 9,218 | |
Gain on cash flow hedging activities reclassified from accumulated other comprehensive loss to interest expense, net of income tax expense of $445, $428, $1,342 and $684 respectively | (1,340) | | | (1,289) | | | (4,040) | | | (2,060) | |
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| | | | | | | |
Other comprehensive income (loss) | 284,830 | | | (168,576) | | | 238,750 | | | 90,110 | |
Total comprehensive income (loss) | $ | 499,885 | | | $ | (21,756) | | | $ | 607,755 | | | $ | 410,788 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary Shares | | Non-voting Euro Deferred | | Capital Redemption Reserve | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | | | | | Total Equity |
Shares | | Amount | | Shares | | Amount | | |
Balance at December 31, 2023 | 62,255 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,699,954 | | | $ | (842,147) | | | $ | 878,656 | | | | | | | $ | 3,736,997 | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with exercise of share options | 7 | | | — | | | — | | | — | | | — | | | 494 | | | — | | | — | | | | | | | 494 | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with vesting of restricted stock units | 686 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Issuance of ordinary shares in conjunction with vesting of performance-based restricted stock units | 80 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (49,296) | | | — | | | — | | | | | | | (49,296) | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 63,131 | | | — | | | — | | | | | | | 63,131 | |
| | | | | | | | | | | | | | | | | | | | | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (40,247) | | | — | | | | | | | (40,247) | |
Net loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (14,618) | | | | | | | (14,618) | |
Balance at March 31, 2024 | 63,028 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,714,283 | | | $ | (882,394) | | | $ | 864,038 | | | | | | | $ | 3,696,461 | |
| | | | | | | | | | | | | | | | | | | | | |
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Issuance of ordinary shares in conjunction with exercise of share options | 4 | | | — | | | — | | | — | | | — | | | 54 | | | — | | | — | | | | | | | 54 | |
Issuance of ordinary shares under employee stock purchase plan | 122 | | | — | | | — | | | — | | | — | | | 10,886 | | | — | | | — | | | | | | | 10,886 | |
Issuance of ordinary shares in conjunction with vesting of restricted stock units | 49 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (2,847) | | | — | | | — | | | | | | | (2,847) | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 56,738 | | | — | | | — | | | | | | | 56,738 | |
Shares repurchased | (1,458) | | | — | | | — | | | — | | | — | | | — | | | — | | | (161,428) | | | | | | | (161,428) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (5,833) | | | — | | | | | | | (5,833) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 168,568 | | | | | | | 168,568 | |
Balance at June 30, 2024 | 61,745 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,779,114 | | | $ | (888,227) | | | $ | 871,178 | | | | | | | $ | 3,762,599 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with exercise of share options | 1 | | | — | | | — | | | — | | | — | | | 17 | | | — | | | — | | | | | | | 17 | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with vesting of restricted stock units | 69 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (1,605) | | | — | | | — | | | | | | | (1,605) | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 60,172 | | | — | | | — | | | | | | | 60,172 | |
Shares repurchased | (1,372) | | | — | | | — | | | — | | | — | | | — | | | — | | | (150,001) | | | | | | | (150,001) | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | — | | | 284,830 | | | — | | | | | | | 284,830 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 215,055 | | | | | | | 215,055 | |
Balance at September 30, 2024 | 60,443 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,837,698 | | | $ | (603,397) | | | $ | 936,232 | | | | | | | $ | 4,171,067 | |
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary Shares | | Non-voting Euro Deferred | | Capital Redemption Reserve | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | | | | | Total Equity |
Shares | | Amount | | Shares | | Amount | | |
Balance at December 31, 2022 | 63,214 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 472 | | | $ | 3,477,124 | | | $ | (1,125,509) | | | $ | 733,586 | | | | | | | $ | 3,085,734 | |
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Issuance of ordinary shares in conjunction with exercise of share options | 188 | | | — | | | — | | | — | | | — | | | 21,228 | | | — | | | — | | | | | | | 21,228 | |
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Issuance of ordinary shares in conjunction with vesting of restricted stock units | 585 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (43,266) | | | — | | | — | | | | | | | (43,266) | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 56,646 | | | — | | | — | | | | | | | 56,646 | |
| | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | — | | | 145,279 | | | — | | | | | | | 145,279 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 69,420 | | | | | | | 69,420 | |
Balance at March 31, 2023 | 63,987 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 472 | | | $ | 3,511,732 | | | $ | (980,230) | | | $ | 803,006 | | | | | | | $ | 3,335,041 | |
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Issuance of ordinary shares in conjunction with exercise of share options | 28 | | | — | | | — | | | — | | | — | | | 2,003 | | | — | | | — | | | | | | | 2,003 | |
Issuance of ordinary shares under employee stock purchase plan | 81 | | | — | | | — | | | — | | | — | | | 8,863 | | | — | | | — | | | | | | | 8,863 | |
Issuance of ordinary shares in conjunction with vesting of restricted stock units | 58 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (4,188) | | | — | | | — | | | | | | | (4,188) | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 61,705 | | | — | | | — | | | | | | | 61,705 | |
Shares repurchased | (756) | | | — | | | — | | | — | | | 1 | | | — | | | — | | | (95,595) | | | | | | | (95,594) | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | — | | | 113,407 | | | — | | | | | | | 113,407 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 104,438 | | | | | | | 104,438 | |
Balance at June 30, 2023 | 63,398 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,580,115 | | | $ | (866,823) | | | $ | 811,849 | | | | | | | $ | 3,525,675 | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with exercise of share options | 50 | | | — | | | — | | | — | | | — | | | 5,512 | | | — | | | — | | | | | | | 5,512 | |
| | | | | | | | | | | | | | | | | | | | | |
Issuance of ordinary shares in conjunction with vesting of restricted stock units | 59 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | — | |
Shares withheld for payment of employee's withholding tax liability | — | | | — | | | — | | | — | | | — | | | (1,884) | | | — | | | — | | | | | | | (1,884) | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | 56,197 | | | — | | | — | | | | | | | 56,197 | |
Shares repurchased | (562) | | | — | | | — | | | — | | | — | | | — | | | — | | | (74,371) | | | | | | | (74,371) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (168,576) | | | — | | | | | | | (168,576) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 146,820 | | | | | | | 146,820 | |
Balance at September 30, 2023 | 62,945 | | | $ | 6 | | | 4,000 | | | $ | 55 | | | $ | 473 | | | $ | 3,639,940 | | | $ | (1,035,399) | | | $ | 884,298 | | | | | | | $ | 3,489,373 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2024 | | 2023 |
Operating activities | | | |
Net income | $ | 369,005 | | | $ | 320,678 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Intangible asset amortization | 468,410 | | | 456,731 | |
Share-based compensation | 177,855 | | | 173,900 | |
Acquisition accounting inventory fair value step-up adjustment | 97,220 | | | 119,094 | |
Depreciation | 23,240 | | | 22,764 | |
Non-cash interest expense | 18,877 | | | 16,255 | |
Provision for losses on accounts receivable and inventory | 15,866 | | | 7,732 | |
Acquired in-process research and development | 10,000 | | | 1,000 | |
| | | |
| | | |
| | | |
Deferred tax benefit | (205,972) | | | (224,317) | |
Other non-cash transactions | 19,615 | | | 54,262 | |
Changes in assets and liabilities: | | | |
Accounts receivable | (21,979) | | | 23,581 | |
Inventories | (26,877) | | | (12,016) | |
Prepaid expenses and other current assets | 708 | | | (37,327) | |
Operating lease assets | 10,697 | | | 14,423 | |
Other non-current assets | (9,544) | | | (20,881) | |
Accounts payable | (16,938) | | | 17,705 | |
Accrued liabilities | 56,428 | | | (76,261) | |
Income taxes payable | 20,098 | | | 61,159 | |
Deferred revenue | — | | | (459) | |
Operating lease liabilities, less current portion | (9,701) | | | (13,855) | |
Other non-current liabilities | 320 | | | 20,500 | |
Net cash provided by operating activities | 997,328 | | | 924,668 | |
Investing activities | | | |
Acquisition of investments | (835,125) | | | (270,000) | |
Purchases of property, plant and equipment | (24,783) | | | (13,860) | |
Acquired in-process research and development | (10,000) | | | (1,000) | |
Proceeds from maturity of investments | 555,000 | | | 20,000 | |
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Net cash used in investing activities | (314,908) | | | (264,860) | |
Financing activities | | | |
Net proceeds from issuance of exchangeable senior notes, due 2030 | 980,767 | | | — | |
Proceeds from employee equity incentive and purchase plans | 11,451 | | | 37,606 | |
Repayments of long-term debt | (23,250) | | | (23,250) | |
Payment of employee withholding taxes related to share-based awards | (53,748) | | | (49,338) | |
Share repurchases | (311,429) | | | (169,966) | |
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Repayment of exchangeable senior notes, due 2024 | (575,000) | | | — | |
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Net cash provided by (used in) financing activities | 28,791 | | | (204,948) | |
Effect of exchange rates on cash and cash equivalents | 614 | | | (652) | |
Net increase in cash and cash equivalents | 711,825 | | | 454,208 | |
Cash and cash equivalents, at beginning of period | 1,506,310 | | | 881,482 | |
Cash and cash equivalents, at end of period | $ | 2,218,135 | | | $ | 1,335,690 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
JAZZ PHARMACEUTICALS PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The Company and Summary of Significant Accounting Policies
Jazz Pharmaceuticals plc is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines, including leading therapies for sleep disorders and epilepsy, and a growing portfolio of cancer treatments. Our patient-focused and science-driven approach powers pioneering research and development advancements across our robust pipeline of innovative therapeutics in oncology and neuroscience.
Our lead marketed products, listed below, are approved in countries around the world to improve patient care.
Neuroscience
•Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, a product approved by the U.S. Food and Drug Administration, or FDA, in July 2020, and launched in the U.S. in November 2020 for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients seven years of age and older with narcolepsy, and also approved by FDA in August 2021 for the treatment of idiopathic hypersomnia, or IH, in adults and launched in the U.S. in November 2021. Xywav contains 92% less sodium than Xyrem®. Xywav is also approved in Canada for the treatment of cataplexy in patients with narcolepsy.
•Epidiolex® (cannabidiol) oral solution, a product approved by FDA and launched in the U.S. in 2018 by GW Pharmaceuticals plc, or GW, and currently indicated for the treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients one year of age or older; in the EU and Great Britain (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with LGS or DS, in conjunction with clobazam (EU and Great Britain only), in patients 2 years of age and older and for adjunctive treatment of seizures associated with TSC in patients 2 years of age and older.
Oncology
•Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn), a product approved by FDA in June 2021 and launched in the U.S. in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia or lymphoblastic lymphoma in adults and pediatric patients aged one month or older who have developed hypersensitivity to E. coli-derived asparaginase. In September 2023, the European Commission granted marketing authorization under the trade name Enrylaze. This therapy is also approved in Great Britain, Canada and Switzerland.
•Zepzelca® (lurbinectedin), a product approved by FDA in June 2020 under FDA's accelerated approval pathway and launched in the U.S. in July 2020 for the treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy; in Canada, Zepzelca received conditional approval in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy.
Throughout this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” “the Company,” “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries. Throughout this Quarterly Report on Form 10-Q, all references to “ordinary shares” refer to Jazz Pharmaceuticals plc’s ordinary shares.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10‑K for the year ended December 31, 2023.
In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results. The results for the
three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, for any other interim period or for any future period.
Our significant accounting policies have not changed substantially from those previously described in our Annual Report on Form 10‑K for the year ended December 31, 2023.
These condensed consolidated financial statements include the accounts of Jazz Pharmaceuticals plc and our subsidiaries, and intercompany transactions and balances have been eliminated.
Our operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision maker, or CODM. Our CODM has been identified as our chief executive officer. We have determined that we operate in one business segment, which is the identification, development and commercialization of meaningful pharmaceutical products that address unmet medical needs.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
Adoption of New Accounting Standards
In November 2023, the Financial Accounting Standards Board, or FASB, issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures”, which requires enhanced disclosures about significant segment expenses. The amendments are effective retrospectively to all prior periods presented in the financial statements, for fiscal years beginning after December 15, 2023. The new guidance is not expected to have a material impact on our financial statement disclosures.
Significant Risks and Uncertainties
We expect that our business will continue to meaningfully depend on oxybate revenues; however, there is no guarantee that oxybate revenues will remain at current levels. In this regard, our ability to maintain oxybate revenues and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the commercialization of Xywav for the treatment of IH in adults and adoption in that indication; competition from the introduction of two authorized generic, or AG, versions of high-sodium oxybate and a branded fixed-dose, high-sodium oxybate, Avadel’s Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S. market, as well as potential future competition from additional AG versions of high-sodium oxybate and from generic versions of high-sodium oxybate and from other competitors; increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to maintain adequate coverage and reimbursement for Xywav; increased rebates required to maintain access to our products; challenges to our intellectual property around Xywav and/or Xyrem, including from pending antitrust and intellectual property litigation; and continued acceptance of Xywav and Xyrem by physicians and patients. A significant decline in oxybate revenues could cause us to reduce our operating expenses or seek to raise additional funds and would have a material adverse effect on our business, financial condition, results of operations and growth prospects, including on our ability to acquire, in-license or develop new products to grow our business.
In addition to risks related specifically to Xywav and Xyrem, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, and other risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with: ongoing clinical research activity and related outcomes; obtaining regulatory approval of our late-stage product candidates, such as zanidatamab; effectively commercializing our approved products such as Epidiolex, Rylaze and Zepzelca; obtaining and maintaining adequate coverage and reimbursement for our products; contracting and rebates to pharmacy benefit managers and similar organizations that reduce our net revenue; increasing scrutiny of pharmaceutical product pricing and resulting changes in healthcare laws and policy; market acceptance; regulatory concerns with controlled substances generally and the potential for abuse; future legislation; action by the U.S. Federal Government authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products; delays or problems in the supply of our products; loss of single source suppliers or failure to comply with manufacturing regulations; delays or problems with third parties that are part of our manufacturing and supply chain; identifying, acquiring or in-licensing additional products or product candidates; our ability to realize the anticipated benefits of acquired or in-licensed products or product candidates, such as Epidiolex and zanidatamab, at the expected levels, with the expected costs and within the expected timeframe; pharmaceutical product
development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing our intellectual property rights; complying with applicable regulatory requirements; and possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations.
Concentrations of Risk
Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, investments and derivative contracts. Our investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper issued by U.S. corporations, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of U.S. states, agencies and municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. We are exposed to credit risk in the event of a default by the financial institutions holding our cash, cash equivalents and investments to the extent recorded on the balance sheet.
We manage our foreign currency transaction risk and interest rate risk within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. As of September 30, 2024, we had foreign exchange forward contracts with notional amounts totaling $292.7 million. As of September 30, 2024, the outstanding foreign exchange forward contracts had a net asset fair value of $8.4 million. As of September 30, 2024, we had interest rate swap contracts with notional amounts totaling $500.0 million with a liability fair value of $3.0 million. The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not significant.
We are also subject to credit risk from our accounts receivable related to our product sales. We monitor our exposure within accounts receivable and record a reserve against uncollectible accounts receivable as necessary. We extend credit to pharmaceutical wholesale distributors and specialty pharmaceutical distribution companies, primarily in the U.S., and to other international distributors and hospitals. Customer creditworthiness is monitored and collateral is not required. We monitor economic conditions in certain European countries which may result in variability of the timing of cash receipts and an increase in the average length of time that it takes to collect accounts receivable outstanding. Historically, we have not experienced significant credit losses on our accounts receivable and, as of September 30, 2024 and December 31, 2023, allowances on receivables were not material. As of September 30, 2024, five customers accounted for 81% of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc. and its affiliates, or ESSDS, which accounted for 41% of gross accounts receivable, ASD Specialty Healthcare LLC, or ASD, which accounted for 14% of gross accounts receivable and McKesson Corporation and affiliates, or McKesson, which accounted for 14% of gross accounts receivable. As of December 31, 2023, five customers accounted for 79% of gross accounts receivable, including ESSDS, which accounted for 41% of gross accounts receivable, ASD, which accounted for 13% of gross accounts receivable and McKesson, which accounted for 11% of gross accounts receivable.
We depend on single source suppliers for most of our products, product candidates and their active pharmaceutical ingredients, or APIs. With respect to our oxybate products, the API is manufactured for us by a single source supplier and the finished products are manufactured both by us in our facility in Athlone, Ireland and by our U.S.-based supplier.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures”, which requires enhanced tax disclosures providing greater disaggregation of information in the Company's effective tax rate reconciliation and disaggregates income taxes paid by jurisdiction. The amendments are effective on a prospective basis, with the option to apply it retrospectively, for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of adopting this new accounting guidance.
2. Cash and Available-for-Sale Securities
Cash, cash equivalents and investments consisted of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | Cash and Cash Equivalents | | Investments |
Cash | $ | 797,583 | | | $ | — | | | $ | — | | | $ | 797,583 | | | $ | 797,583 | | | $ | — | |
Time deposits | 650,000 | | | — | | | — | | | 650,000 | | | 250,000 | | | 400,000 | |
Money market funds | 1,170,552 | | | — | | | — | | | 1,170,552 | | | 1,170,552 | | | — | |
Totals | $ | 2,618,135 | | | $ | — | | | $ | — | | | $ | 2,618,135 | | | $ | 2,218,135 | | | $ | 400,000 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | Cash and Cash Equivalents | | Investments |
Cash | $ | 437,724 | | | $ | — | | | $ | — | | | $ | 437,724 | | | $ | 437,724 | | | $ | — | |
Time deposits | 420,000 | | | — | | | — | | | 420,000 | | | 300,000 | | | 120,000 | |
Money market funds | 768,586 | | | — | | | — | | | 768,586 | | | 768,586 | | | — | |
Totals | $ | 1,626,310 | | | $ | — | | | $ | — | | | $ | 1,626,310 | | | $ | 1,506,310 | | | $ | 120,000 | |
Cash equivalents and investments are considered available-for-sale securities. We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of income. Our investment balances represent time deposits with original maturities of greater than three months and less than one year. Interest income from available-for-sale securities was $26.0 million and $74.6 million in the three and nine months ended September 30, 2024, respectively, and $19.2 million and $44.4 million in the three and nine months ended September 30, 2023, respectively.
3. Fair Value Measurement
The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of September 30, 2024 and December 31, 2023, that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
| Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | | | Total Estimated Fair Value | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | | | Total Estimated Fair Value |
Assets: | | | | | | | | | | | | | | | |
Available-for-sale securities: | | | | | | | | | | | | | | | |
Money market funds | $ | 1,170,552 | | | $ | — | | | | | $ | 1,170,552 | | | $ | 768,586 | | | $ | — | | | | | $ | 768,586 | |
Time deposits | — | | | 650,000 | | | | | 650,000 | | | — | | | 420,000 | | | | | 420,000 | |
Foreign exchange forward contracts | — | | | 8,364 | | | | | 8,364 | | | — | | | 18,035 | | | | | 18,035 | |
Interest rate contracts | — | | | 13 | | | | | 13 | | | — | | | 3,784 | | | | | 3,784 | |
Totals | $ | 1,170,552 | | | $ | 658,377 | | | | | $ | 1,828,929 | | | $ | 768,586 | | | $ | 441,819 | | | | | $ | 1,210,405 | |
Liabilities: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Interest rate contracts | $ | — | | | $ | 2,976 | | | | | $ | 2,976 | | | $ | — | | | $ | 3,410 | | | | | $ | 3,410 | |
Foreign exchange forward contracts | — | | | — | | | | | — | | | — | | | 681 | | | | | 681 | |
Totals | $ | — | | | $ | 2,976 | | | | | $ | 2,976 | | | $ | — | | | $ | 4,091 | | | | | $ | 4,091 | |
As of September 30, 2024, our available-for-sale securities included money market funds and time deposits and their carrying values were approximately equal to their fair values. Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs and time deposits were measured at fair value using Level 2 inputs. Level 2 inputs are obtained from various third party data providers and represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.
Our derivative assets and liabilities include interest rate and foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.
There were no transfers between the different levels of the fair value hierarchy in 2024 or 2023.
As of September 30, 2024 and December 31, 2023, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $4.3 million and $4.7 million, respectively. The carrying amount, which is recorded within other non-current assets, is based on the latest observable transaction price.
As of September 30, 2024, the estimated fair values of the 2.000% exchangeable senior notes due 2026, or 2026 Notes, and the 3.125% exchangeable senior notes due 2030, or 2030 Notes, were approximately $1.0 billion and $1.0 billion, respectively. The 2030 Notes together with the 2026 Notes and the 1.50% exchangeable senior notes due 2024, or 2024 Notes, that were repaid upon maturity on August 15, 2024, are collectively known as the Exchangeable Senior Notes. As of September 30, 2024, the estimated fair values of the 4.375% senior secured notes, due 2029, or the Secured Notes, and the seven-year U.S. dollar term loan B facility were approximately $1.4 billion and $2.7 billion, respectively. The fair values of each of these debt facilities was estimated using quoted market prices obtained from brokers (Level 2).
4. Derivative Instruments and Hedging Activities
We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of sterling and euro denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S. dollar functional currency and fluctuations in interest rates on our outstanding term loan borrowings. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.
We enter into foreign exchange forward contracts, with durations of up to 12 months, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain non-U.S. dollar denominated liabilities, including intercompany balances. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of September 30, 2024 and December 31, 2023, the notional amount of foreign exchange contracts where hedge accounting is not applied was $292.7 million and $511.7 million, respectively.
The foreign exchange loss in our condensed consolidated statements of income included the following gains (losses) associated with foreign exchange contracts not designated as hedging instruments (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Foreign Exchange Forward Contracts: | 2024 | | 2023 | | 2024 | | 2023 |
Gain (loss) recognized in foreign exchange loss | $ | 14,396 | | | $ | (13,549) | | | $ | 9,485 | | | $ | (8,921) | |
To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in April 2023, which are effective until April 2026. These agreements hedge contractual term loan interest rates. As of September 30, 2024, the interest rate swap agreements had a notional amount of $500.0 million. As a result of these agreements, the interest rate on a portion of our term loan borrowings is fixed at 3.9086%, plus the borrowing spread, until April 30, 2026.
The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges for the three and nine months ended September 30, 2024 was as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Interest Rate Contracts: | 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
Gain (loss) recognized in accumulated other comprehensive loss, net of tax | $ | (5,197) | | | $ | 3,539 | | | $ | 1,572 | | | $ | 9,218 | |
Gain reclassified from accumulated other comprehensive loss to interest expense, net of tax | (1,340) | | | (1,289) | | | (4,040) | | | (2,060) | |
Assuming no change in the U.S dollar Secured Overnight Financing Rate, or Term SOFR, based interest rates from market rates as of September 30, 2024, $0.5 million of loss, net of tax, recognized in accumulated other comprehensive loss will be reclassified to earnings over the next 12 months.
The cash flow effects of our derivative contracts for the nine months ended September 30, 2024 and 2023 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows.
The following tables summarize the fair value of outstanding derivatives (in thousands):
| | | | | | | | | | | | | | |
| Classification | September 30, 2024 | | December 31, 2023 |
Assets | | | | |
Derivatives designated as hedging instruments: | | | | |
Interest rate contracts | Other current assets | $ | 13 | | | $ | 3,784 | |
| | | | |
Derivatives not designated as hedging instruments: | | | | |
Foreign exchange forward contracts | Other current assets | 8,364 | | | 18,035 | |
Total fair value of derivative asset instruments | | $ | 8,377 | | | $ | 21,819 | |
| | | | |
Liabilities | | | | |
Derivatives designated as hedging instruments: | | | | |
Interest rate contracts | Accrued liabilities | $ | 572 | | | $ | — | |
Interest rate contracts | Other non-current liabilities | 2,404 | | | 3,410 | |
Derivatives not designated as hedging instruments: | | | | |
Foreign exchange forward contracts | Accrued liabilities | — | | | 681 | |
Total fair value of derivative liability instruments | | $ | 2,976 | | | $ | 4,091 | |
| | | | |
| | | | |
| | | | |
Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event. The following table summarizes the potential effect on our condensed consolidated balance sheets of offsetting our interest rate and foreign exchange forward contracts subject to such provisions (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 |
| Gross Amounts of Recognized Assets/ Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheet | | Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet | | Gross Amounts Not Offset in the Consolidated Balance Sheet |
Description | | | | Derivative Financial Instruments | | Cash Collateral Received (Pledged) | | Net Amount |
Derivative assets | $ | 8,377 | | | $ | — | | | $ | 8,377 | | | $ | (1,830) | | | $ | — | | | $ | 6,547 | |
Derivative liabilities | (2,976) | | | — | | | (2,976) | | | 1,830 | | | — | | | (1,146) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Gross Amounts of Recognized Assets/ Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheet | | Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet | | Gross Amounts Not Offset in the Consolidated Balance Sheet |
Description | | | | Derivative Financial Instruments | | Cash Collateral Received (Pledged) | | Net Amount |
Derivative assets | $ | 21,819 | | | $ | — | | | $ | 21,819 | | | $ | (4,091) | | | $ | — | | | $ | 17,728 | |
Derivative liabilities | (4,091) | | | — | | | (4,091) | | | 4,091 | | | — | | | — | |
5. Inventories
Inventories consisted of the following (in thousands):
| | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
Raw materials | $ | 24,819 | | | $ | 25,595 | |
Work in process | 366,602 | | | 431,732 | |
Finished goods | 147,881 | | | 139,712 | |
Total inventories | $ | 539,302 | | | $ | 597,039 | |
As of September 30, 2024 and December 31, 2023, inventories included $243.4 million and $328.0 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired as part of our acquisition of GW.
6. Goodwill and Intangible Assets
The gross carrying amount of goodwill was as follows (in thousands):
| | | | | |
Balance at December 31, 2023 | $ | 1,753,130 | |
| |
| |
Foreign exchange | 51,516 | |
Balance at September 30, 2024 | $ | 1,804,646 | |
The gross carrying amounts and net book values of our intangible assets were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
| Remaining Weighted- Average Useful Life (In years) | | Gross Carrying Amount | | Accumulated Amortization | | Net Book Value | | Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
Acquired developed technologies | 8.0 | | $ | 8,064,193 | | | $ | (2,919,976) | | | $ | 5,144,217 | | | $ | 7,785,495 | | | $ | (2,367,456) | | | $ | 5,418,039 | |
Manufacturing contracts | — | | 11,984 | | | (11,984) | | | — | | | 11,828 | | | (11,828) | | | — | |
Trademarks | — | | 2,889 | | | (2,889) | | | — | | | 2,886 | | | (2,886) | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Total finite-lived intangible assets | | | $ | 8,079,066 | | | $ | (2,934,849) | | | $ | 5,144,217 | | | $ | 7,800,209 | | | $ | (2,382,170) | | | $ | 5,418,039 | |
The increase in the gross carrying amount of intangible assets as of September 30, 2024, compared to December 31, 2023, relates to the positive impact of foreign currency translation adjustments due to the strengthening of sterling against the U.S. dollar.
The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.
Based on finite-lived intangible assets recorded as of September 30, 2024, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):
| | | | | |
Year Ending December 31, | Estimated Amortization Expense |
2024 (remainder) | $ | 162,109 | |
2025 | 648,436 | |
2026 | 648,436 | |
2027 | 648,436 | |
2028 | 647,104 | |
Thereafter | 2,389,696 | |
Total | $ | 5,144,217 | |
7. Certain Balance Sheet Items
Property, plant and equipment consisted of the following (in thousands):
| | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
Manufacturing equipment and machinery | $ | 91,560 | | | $ | 82,897 | |
Leasehold improvements | 71,950 | | | 67,722 | |
Land and buildings | 70,762 | | | 70,912 | |
Computer software | 41,847 | | | 38,134 | |
Construction-in-progress | 30,645 | | | 18,661 | |
Computer equipment | 17,530 | | | 15,398 | |
Furniture and fixtures | 8,942 | | | 9,273 | |
| | | |
Subtotal | 333,236 | | | 302,997 | |
Less accumulated depreciation and amortization | (156,814) | | | (133,351) | |
Property, plant and equipment, net | $ | 176,422 | | | $ | 169,646 | |
Accrued liabilities consisted of the following (in thousands):
| | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
Rebates and other sales deductions | $ | 405,134 | | | $ | 325,711 | |
Employee compensation and benefits | 125,497 | | | 121,209 | |
Accrued royalties | 40,923 | | | 30,706 | |
Clinical trial accruals | 37,620 | | | 44,757 | |
Consulting and professional services | |