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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The purpose of Management's Discussion and Analysis of Financial Condition and Results of Operations is to provide an understanding of the financial condition, changes in financial condition and results of operations of Sarepta Therapeutics, Inc. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Please review our legend titled “Forward-Looking Information” at the beginning of this Annual Report on Form 10-K which is incorporated herein by reference. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. Throughout this discussion, unless the context specifies or implies otherwise, the terms “Sarepta”, “we”, “us” and “our” refer to Sarepta Therapeutics, Inc. and its subsidiaries.

This section discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 have been excluded from this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Overview

We are a commercial-stage biopharmaceutical company focused on helping patients through the discovery and development of unique RNA-targeted therapeutics, siRNA knockdown therapies, gene therapy and other genetic therapeutic modalities for the treatment of rare diseases. Applying our proprietary, differentiated and innovative technologies, and through collaborations with our strategic partners, we have developed multiple approved products for the treatment of Duchenne and are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne and LGMD, as well as those through our partnered programs with Arrowhead, including FSHD, DM1, SCA2, IPF, Huntington's disease and other neuromuscular and skeletal diseases.

We commercialized four products that have been approved by the FDA, including EXONDYS 51, VYONDYS 53, AMONDYS 45, and ELEVIDYS. We are in the process of conducting various clinical trials for our approved products, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of these products. On November 3, 2025, we announced top-line results from our ESSENCE trial, a confirmatory trial intended to verify the clinical benefits of AMONDYS 45 and VYONDYS 53. The topline results did not show statistical significance on the study's primary endpoint. We intend to discuss with FDA the potential pathway forward.

Our pipeline includes programs at various stages of discovery, pre-clinical and clinical development. Through our collaborations with our strategic partners, we are expanding into adjacent therapeutic areas. Our pipeline reflects our aspiration to apply our multifaceted approach and expertise in precision genetic medicine to make a profound difference in the lives of patients suffering from rare diseases.

We have developed proprietary state-of-the-art CMC and manufacturing capabilities that allow synthesis and purification of our products and product candidates to support both clinical development as well as commercialization. Our current main focus in manufacturing is to sustain large-scale production of our PMO-based therapies and optimizing manufacturing for gene therapy-based product candidates. We have entered into certain manufacturing and supply arrangements with third-party suppliers and will utilize these capabilities to support production of certain of our products and product candidates and their components.

The likelihood of our long-term success must be considered in light of the expenses, difficulties and delays frequently encountered in the development and commercialization of new pharmaceutical products, competitive factors in the marketplace, the risks associated with government sponsored reimbursement programs and the complex regulatory environment in which we operate.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities for the periods presented. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. We believe that the estimates and judgments upon which we rely are reasonable based upon historical experience and information available to us at the time that we make these estimates and judgments. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected. Although we believe that our judgments and estimates are appropriate, actual results may differ from these estimates. We believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements:

•

inventory; and

•

income tax.

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Inventory Valuation

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis. We capitalize inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS inventory that may be used in clinical development programs is charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes.

We periodically analyze our inventories for excess or obsolescence and write down excess or obsolete or otherwise unmarketable inventory to its estimated net realizable value. Reserves are recorded to reduce the cost basis of inventory when it is determined that inventory on hand is excess or obsolete. Our determination of excess or obsolete inventory is based on assumptions about forecasted demand for our products, market conditions and regulatory approvals. In 2025, we recorded $165.3 million of charges as a component of cost of sales in the consolidated statements of comprehensive (loss) income relating to excess or obsolete inventory. It is reasonably possible that actual results may differ from management’s estimates regarding forecasted demand, market conditions and regulatory approval and such differences could be material to our consolidated balance sheets, consolidated statements of comprehensive (loss) income and consolidated statements of cash flows. Additionally, though our products are subject to strict quality control and monitoring, which we perform throughout the manufacturing processes, certain batches or units of product may not meet quality specifications. Expense incurred related to excess inventory, obsolete inventory, or inventories that do not meet our quality specifications is recorded as a component of cost of sales in the consolidated statements of comprehensive (loss) income.

Income Tax

We follow the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for expected future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the net deferred tax asset to zero when it is more likely than not that the net deferred tax asset will not be realized. As of December 31, 2025, we continued to maintain a full valuation allowance against all of our deferred tax assets, with the exception of deferred tax assets in certain foreign jurisdictions, based on management's evaluation of all available evidence, including our earnings history.

We will continue to monitor the realizability of our deferred tax assets in future periods. We may release all or a portion of the valuation allowance in the near-term; however, the release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, our level of profitability, revenue growth and expectations regarding future profitability. If and when we determine the valuation allowance should be released or reduced, the adjustment would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. The calculation of our tax liabilities (or amount of reduction in our deferred tax assets from net operating loss carryover and research credit carryover) resulting from uncertain tax positions can involve significant judgment. Further, the calculation may involve the application of complex tax regulations in a foreign jurisdiction. Any significant impact as a result of changes in underlying facts, law, tax rates, tax audit, or review could lead to adjustments to our deferred tax asset, income tax expense, our effective tax rate, and/or our cash flow. Although we believe that we have adequately provided for tax liabilities resulting from uncertain tax positions, the actual amounts paid, if any, could have a material impact on our results of operations. Interest and penalties associated with uncertain tax positions are classified as a component of income tax expense.

Please read Note 2, Summary of Significant Accounting Policiesand Recent Accounting Pronouncements to the consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for a further discussion of our critical accounting policies and estimates.

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The following table sets forth selected consolidated statements of operations data for each of the periods indicated:

For the Year Ended December 31,

(in thousands, except per share amounts) $ %

Revenues:

Cost and expenses:

Other (loss) income, net:

(Loss) earnings per share:

*Not meaningful

Revenues

Revenues from product sales are recorded at the time of sale at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates, governmental chargebacks including PHS chargebacks, prompt pay discounts, patient assistance programs and distribution fees. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if no payments are required of us) or a current liability (if a payment is required of us). Our estimates take into consideration current contractual and statutory requirements. Actual amounts of consideration ultimately received or paid may differ from our estimates.

The following table summarizes the components of our net product revenues, by product, for the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

Net product revenues for our products for 2025 increased by $76.3 million, or 4%, compared with 2024. The change primarily reflects an increase in net product revenues of ELEVIDYS of $77.9 million in 2025 as a result of its expanded label approval in June 2024, partially offset by higher discounts associated with the PHS chargeback program in 2025 due to ELEVIDYS no longer qualifying for pediatric designation, which had previously reduced our rebate obligations to certain payers.

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The following table summarizes the components of our collaboration and other revenues for the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

*Not meaningful

Collaboration and other revenues relate to the Roche Collaboration Agreement. For 2025 and 2024, we recognized $333.9 million and $114.0 million of collaboration and other revenues, respectively. In accordance with the Roche Collaboration Agreement, the parties agreed to enter into a supply agreement in order for us to supply Roche with clinical and commercial batches of ELEVIDYS (the “Roche Supply Agreement”). Roche utilizes the supply for sales of ELEVIDYS in territories outside of the U.S where Roche has received certain approvals for ELEVIDYS. We are eligible to receive royalties on these sales.

For 2025, we recognized $175.5 million in collaboration revenue consisting of (1) $112.0 million related to the expiration of an option for a certain program previously recorded as deferred revenue and (2) $63.5 million related to milestone payments received under the Roche Collaboration Agreement from the regulatory approval of ELEVIDYS in Japan for individuals ages 3- to less than 8-years-old, who do not have any deletions in exon 8 and/or exon 9 in the Duchenne gene and who are negative for anti-AAVrh74 antibodies, as compared to $48.0 million in collaboration revenue in 2024 related to Roche’s declined option to acquire the ex-US rights to a certain external, early-stage Duchenne development program previously recorded as deferred revenue. Please refer to Note 3, License and Collaboration Agreements for further discussion of the Roche Collaboration Agreement.

While the Roche Supply Agreement is in the process of being negotiated, we delivered batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis. Contract manufacturing revenue increased by $75.0 million primarily due to increased deliveries of ELEVIDYS to Roche in 2025 and increases in our manufacturing costs driven by greater-than-expected write-offs of (1) batches of our products not meeting our quality specifications as well as (2) certain excess or obsolete inventory attributable to Roche during 2025. In addition, royalty revenue increased by $17.4 million from increased sales of ELEVIDYS by Roche outside of the U.S. in 2025.

Cost of sales (excluding amortization of in-licensed rights)

Our cost of sales (excluding amortization of in-licensed rights) consists of inventory costs that relate to sales of our products and the related overhead costs and royalty payments primarily to BioMarin and UWA for our PMO Products and to Nationwide for ELEVIDYS. Cost of sales also include charges for inventory valuation for excess or obsolete inventory on hand and write-offs of batches of our products not meeting our quality specifications, including any associated costs expected to be reimbursed by Roche. Prior to receiving regulatory approval for our products, we expensed manufacturing and material costs as research and development expenses.

For the PMO Products, all previously expensed manufacturing costs had been fully consumed prior to 2024. For ELEVIDYS sold in 2025, a limited amount of related manufacturing costs incurred had previously been expensed as research and development expenses. For ELEVIDYS sold in 2024, the majority of related manufacturing costs incurred had previously been expensed as research and development expenses. If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to ELEVIDYS sold, including products sold to Roche under the Roche Collaboration Agreement, would have been approximately $22.9 million and $100.8 million for 2025 and 2024, respectively.

The following table summarizes the components of our cost of sales (excluding amortization of in-licensed rights) for the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

*Not meaningful

** See revenue section above for further details regarding product supply sold to Roche.

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The cost of sales (excluding amortization of in-licensed rights) for 2025 increased by $520.5 million, or 163%, compared with 2024. The change primarily reflects (1) an increase in the write-offs of certain batches of our products not meeting our quality specifications, (2) depletion of previously expensed ELEVIDYS inventory (3) a $165.3 million increase in our inventory valuation reserve related to excess ELEVIDYS and PMO inventory on hand as of the end of 2025, $24.4 million of which is expected to be reimbursed by Roche through increases in per unit cost of ELEVIDYS on future purchases, (4) increased demand following expanded label approval of ELEVIDYS in June 2024, (5) an increase in products sold to Roche under the Roche Collaboration Agreement, (6) termination costs incurred in association with a side letter agreement entered into with a raw material manufacturer for our PMO Products in 2025 and (7) the impairment of prepaid manufacturing deposits.

Research and development expenses

Research and development expenses consist of costs associated with research activities as well as those associated with our product development efforts, conducting pre-clinical trials, clinical trials and manufacturing activities. Direct research and development expenses associated with our programs include clinical trial site costs, clinical manufacturing costs, costs incurred for consultants, up-front fees and milestones paid to third parties in connection with technologies that have not reached technological feasibility and do not have an alternative future use, and other external services, such as data management and statistical analysis support, and materials and supplies used in support of clinical programs. Indirect costs of our programs include salaries, stock-based compensation and allocation of our facility- and technology-related costs.

Research and development expenses represent a substantial percentage of our total operating expenses. We do not maintain or evaluate and, therefore, do not allocate internal research and development costs on a project-by-project basis. As a result, a significant portion of our research and development expenses are not tracked on a project-by-project basis, as the costs may benefit multiple projects.

The following table summarizes our research and development expenses, by project, for each of the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

*Not meaningful

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The following table summarizes our research and development expenses, by category, for each of the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

*Not meaningful

Research and development expenses for 2025 increased by $717.5 million, or 89%, compared with 2024. The increase was primarily driven by the following:

•

$883.8 million increase in up-front and milestone expenses primarily due to the $583.6 million in acquired in-process research and development expense associated with our Arrowhead Collaboration Agreement. The remaining increase relates to $300.0 million of milestone payments to Arrowhead, triggered by Arrowhead's achievement of the DM1 Milestones, with no similar activity in 2024;

•

$120.2 million decrease in manufacturing expenses primarily due to costs associated with the termination of the development, commercial manufacturing and supply agreement (the “Thermo Agreement”) related to Brammer Bio MA, LLC, an affiliate of Thermo Fisher Scientific, Inc. (“Thermo”) in 2024, with no similar activity in 2025;

•

$22.9 million decrease in compensation and other personnel expenses primarily due to reduced headcount pursuant to our Restructuring in 2025, partially offset by increased use of temporary personnel;

•

$38.9 million decrease in clinical trial expenses primarily due to our decision to discontinue our PPMO programs in 2024 and the completion of certain SRP-9001 studies;

•

$1.8 million increase in facility- and technology-related expenses primarily due to utilization of our Bedford, Massachusetts facility beginning in 2025, with no similar activity in 2024;

•

$26.6 million decrease in stock-based compensation expense primarily due to the reversal of previously recognized expense related to unvested awards and reduced headcount pursuant to our Restructuring, fulfillment of remaining service conditions associated with certain restricted stock units with performance conditions ("PSUs") in March 2025 and our decision to suspend our employee stock purchase plan ("ESPP Suspension") in 2025. This was partially offset by certain performance conditions being met in June and December 2025 for certain PSUs;

•

$2.3 million decrease in pre-clinical expenses primarily due to a decrease in toxicology studies across our gene therapy programs; and

•

$41.8 million decrease in the offset to expense associated with a collaboration reimbursement from Roche primarily due to reimbursable costs associated with the termination of the Thermo Agreement in 2024, as well as a decrease in reimbursable research & development spend as a result of certain studies concluding in 2024 and a decrease in headcount pursuant to our Restructuring. This was partially offset by an increase in clinical supply costs due to additional SRP-9001 clinical batches released in 2025.

Selling, general and administrative expenses

Selling, general and administrative expenses consist of salaries, benefits, stock-based compensation and related costs for personnel in our executive, finance, legal, information technology, business development, human resources, commercial and other general and administrative functions. Other general and administrative expenses include an allocation of our facility- and technology-related costs and professional fees for legal, consulting and accounting services.

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The following table summarizes our selling, general and administrative expenses, by category, for each of the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

Selling, general and administrative expenses for 2025 decreased by $66.2 million, or 12%, compared with 2024. The decrease was primarily driven by the following:

•

$16.3 million decrease in professional service expenses primarily due to reduced costs relating to certain litigation matters and reduced commercial spending related to our cost reduction initiative associated with our Restructuring;

•

$18.0 million decrease in compensation and other personnel primarily due to reduced headcount pursuant to our Restructuring;

•

$34.3 million decrease in stock-based compensation expense primarily due to the fulfillment of remaining service conditions associated with certain PSUs in March 2025, reversal of previously recognized expense related to unvested awards and reduced headcount pursuant to our Restructuring and the ESPP Suspension. This was partially offset by certain performance conditions being met in June and December 2025 for certain PSUs;

•

$5.0 million increase in facility- and technology-related expenses primarily due to utilization of our Bedford, Massachusetts facility beginning in 2025, with no similar activity in 2024; and

•

$3.1 million decrease in other expenses primarily due to the timing of charitable contribution activity, partially offset by certain state tax penalties in 2025, with no similar activity in 2024.

Restructuring charge

The Restructuring, announced in July 2025, was designed to reduce operating expenses and align our cost structure with strategic priorities, aiming to enhance financial flexibility and meet our 2027 financial obligations. This plan included a revised cost structure, program portfolio and a reduction in force. The workforce reduction represented approximately 36% of our workforce. We recorded a restructuring charge of $42.0 million for 2025, primarily related to employee termination benefits, including severance, along with accelerated depreciation for assets impacted by the restructuring plan, with no similar activity in 2024.

Please refer to Note 4, Restructuring for additional information on the Restructuring.

Amortization of in-licensed rights

Amortization of in-licensed rights relates to the agreements we entered into with UWA, Nationwide, BioMarin and Parent Project Muscular Dystrophy in April 2013, December 2016, July 2017 and May 2018, respectively. Each in-licensed right is being amortized on a straight-line basis over the remaining life of the relevant patent from the date the related fee was incurred, either the regulatory approval or the first commercial sale of the applicable product. For 2025 and 2024, we recorded amortization of in-licensed rights of $2.6 million and $2.4 million, respectively.

Gain on debt extinguishment

On August 28, 2025 (the "First Effective Date"), we completed a partial refinancing of the 2027 Notes (the "August 2025 Exchange") and exchanged $700.0 million in aggregate principal amount of 2027 Notes for the following consideration:

(1)

$602.0 million in aggregate principal amount of 2030 Notes;

(2)

cash payments of $127.3 million, including $4.0 million of accrued interest of the 2027 Notes; and

(3)

5.9 million shares of our common stock with a fair market value of approximately $104.9 million, net of issuance costs of $2.4 million.

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On December 18, 2025 (the "Second Effective Date"), we completed the second partial refinancing of the 2027 Notes (the “December 2025 Exchange”) and exchanged $291.4 million in aggregate principal amount of the 2027 Notes for the following consideration:

(1)

$291.4 million in aggregate principal amount of the 2030 Notes; and

(2)

cash payments of $31.6 million, including $1.0 million of accrued interest of the 2027 Notes.

The Company concluded that neither the August 2025 Exchange nor December 2025 Exchange (collectively, the “Exchange Transactions”) met the criteria for induced conversion. Further, we concluded that the refinanced debt in the August 2025 Exchange as well as approximately $182.8 million of that in the December 2025 Exchange were substantially different from the original debt and, thus, accounted for as debt extinguishments. The gain recognized on the extinguishments for the year ended December 31, 2025 was $16.9 million. The Company also determined that the remaining $108.6 million of the refinanced debt in the December 2025 Exchange was not substantially different from the original debt and, therefore, accounted for as debt modification. Please refer to Note 13, Indebtedness for additional information on the August 2025 Exchange and December 2025 Exchange.

There was no similar activity in 2024.

Other (expense) income, net

Other (expense) income, net primarily consists of the unrealized gain or loss from our investments in our strategic equity investments, interest expense on our 2027 Notes and 2030 Notes, interest income on our cash, cash equivalents and investments and accretion of investment discount. Our cash equivalents and investments consist of money market funds, government and government agency bonds, corporate bonds, commercial paper and certificates of deposit.

Other (expense) income, net for 2025 increased by $62.0 million compared to 2024. The change is primarily due to a $35.2 million decrease in interest income as a result of lower interest rates and the investment mix of our investment portfolio, a $19.7 million increase in interest expense primarily due to the 2030 Notes carrying a higher interest rate than our 2027 Notes and a $13.1 million increase in the loss on our strategic investments in publicly traded companies, including Arrowhead. These changes were partially offset by a $7.8 million loss associated with the change in fair value derivative liabilities in 2024, which primarily relates to our contingent consideration, with no similar activity in 2025 due to the adoption of Accounting Standards Update 2025-07 ("ASU 2025-07"). As a result, two existing contracts that include a settlement feature based on our operations or activities are now excluded from ASC 815, Derivatives and Hedging and any liabilities will be recognized as such obligations become probable and estimable under ASC 450, Contingencies. Refer to Note 2,Summary of Significant Accounting Policies and Recent Accounting Pronouncements for additional information related to the adoption of ASU 2025-07.

Income tax expense

Income tax expense for 2025 and 2024 was $11.2 million and $25.5 million, respectively. Income tax expense for 2025 primarily relates to state taxes. Income tax expense for 2024 relates to state, foreign and federal taxes for which available tax losses or credits were not available to offset. As of December 31, 2025, we continued to maintain a full valuation allowance against our deferred tax assets, with the exception of deferred tax assets in certain foreign jurisdictions. We continue to monitor the available evidence relative to recovery of our deferred tax assets and whether such evidence would be sufficient to conclude that it is more likely than not that such deferred tax assets may be partially or fully recoverable. If we were to remove our valuation allowance in part or full, any such adjustment could have a material impact on our effective tax rate in the applicable period and beyond. Refer to Note 18, Income Taxes for discussion of the key drivers impacting our effective tax rate.

Liquidity and Capital Resources

In the August 2025 Exchange, we exchanged 2027 Notes for a combination of 2030 Notes, common stock and cash. Concurrently with the issuance of the 2030 Notes during the August 2025 Exchange, we completed the private placement of approximately 1.1 million shares of Common Stock to J. Wood Capital Advisors LLC ("JWCA") at a purchase price per share of $18.07. In the December 2025 Exchange, we exchanged 2027 Notes for 2030 Notes and cash. While the 2030 Notes carry a higher interest rate than the 2027 Notes, the August 2025 Exchange and December 2025 Exchange reduced our total outstanding principal amount of long-term debt by $98.0 million and delayed $893.4 million of the principal payment to 2030. Additionally, our Revolving Credit Facility remains undrawn as of December 31, 2025. Refer to Note 13, Indebtedness for additional discussion of our outstanding indebtedness. We periodically engage in discussions with the lenders under our Revolving Credit Facility regarding business developments and our continued ability to borrow under our Revolving Credit Facility. See Risk Factors—Risks Related to our Financial Condition and Capital Requirements—Our existing and any future indebtedness could adversely affect our ability to operate our business.

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The following table summarizes our financial condition for each of the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

Financial assets:

Borrowings:

Working capital:

For 2025, our principal sources of liquidity were primarily derived from the sales of our products, our collaboration arrangement with Roche and proceeds from the exercise of stock options. Our principal uses of cash for 2025 were our $583.6 million up-front payment to Arrowhead, $241.4 million equity investment in Arrowhead's common stock and the $50.0 million cash component of the $100.0 million of the DM1 Milestones (collectively, the “Arrowhead Payments”), costs incurred as a result of the August 2025 Exchange and the December 2025 Exchange, inventory commitments, research and development expenses, manufacturing costs, selling, general and administrative expenses, investments, capital expenditures, share repurchases under our $500.0 million share repurchase program approved by the Board of Directors in November 2024 (the “2024 Repurchase Program”) and other working capital requirements. Please refer to Note 14, Equity, for further discussion of share repurchases under the 2024 Repurchase Program during the period.

For 2024, our principal sources of liquidity were primarily derived from the sales of our products, the maturity and sale of available-for-sale securities, our collaboration arrangement with Roche, proceeds from exercise of stock options and the settlement of capped call options associated with our convertible senior notes due on November 15, 2024. Our principal uses of cash for 2024 were inventory commitments, research and development expenses, manufacturing costs, selling, general and administrative expenses, investments, capital expenditures and other working capital requirements.

The changes in our working capital for both periods primarily reflect use of cash in operating activities, as well as a reduction in our cash, cash equivalents and investments to fund the Arrowhead Payments in 2025. The Arrowhead Collaboration Agreement includes a commitment of $250.0 million in guaranteed payments to be paid in five equal annual installments of $50.0 million, beginning in February 2026. These payments are not contingent on clinical or regulatory milestones. The Arrowhead Collaboration Agreement also includes $300.0 million in payments for the DM1 Milestones. Of this amount, $100.0 million was settled during the year ended December 31, 2025 with a combination of $50.0 million in cash and shares of Arrowhead common stock valued at approximately $50.0 million, and the remaining $200.0 million was paid in January 2026. Refer to Note 3, License and Collaboration Agreements for further discussion of the Arrowhead DM1 Milestones. While our contractual obligations, commitments and debt service requirements over the next several years are significant, we intend to continue to fund our short-term financing needs and working capital requirements from cash flows from operating activities as well as cash on hand and drawing from our Revolving Credit Facility, as needed. Such sources are anticipated to be adequate to fund working capital requirements for at least twelve months from the date these consolidated financial statements were issued.

In response to two reported cases of ALF resulting in death of non-ambulatory patients, we suspended all commercial shipments of ELEVIDYS to non-ambulatory patients in June 2025. In July 2025, we also disclosed a recent death from ALF of a non-ambulatory LGMD patient participating in a Phase I/II trial for SRP-9004, who was not treated with ELEVIDYS. Thereafter, in response to a request from the FDA that we voluntarily stop all shipments of ELEVIDYS in the U.S., including to ambulatory patients, we temporarily suspended all shipments of ELEVIDYS in the U.S., effective July 22, 2025, to allow us the necessary time to respond to FDA's requests for information and complete a labeling supplement process. Although the FDA informed us on July 28, 2025 that it recommended the removal of the voluntary hold for ambulatory patients, and we subsequently resumed shipments of ELEVIDYS for ambulatory patients in the U.S. on July 31, 2025, the ELEVIDYS Suspension could materially impact our near-term revenue generation. In November 2025, the FDA approved dosing in Cohort 8 of ENDEAVOR (Study 9001-103). The purpose of Cohort 8 is to evaluate the use of sirolimus as an enhanced immunosuppressive regimen as part of treatment with ELEVIDYS for non-ambulatory patients. It is currently unclear whether or when we might resume commercial shipments of ELEVIDYS for non-ambulatory patients. We considered the ELEVIDYS Suspension and the partial resumption of shipments when concluding that our

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cash, cash equivalents and investments as of the date of issuance of this report, along with future cash inflows from operations and availability under our Revolving Credit Facility, are sufficient to fund our current operational plan for at least the next twelve months. Additionally, any regulatory action in response to the topline results of our ESSENCE trial that were announced on November 3, 2025 and failed to meet statistical significance on its primary endpoint, could adversely impact our cash flows from operations.

Beyond 2026, our cash requirements will depend extensively on our ability to advance our research, development and commercialization of product candidates. The likelihood of our long-term success must be considered in light of the expenses, difficulties and delays frequently encountered in the development and commercialization of new pharmaceutical products, competitive factors in the marketplace, the risks associated with government sponsored reimbursement programs and the complex regulatory environment in which we operate. We may seek additional financing primarily from, but not limited to, the sale and issuance of equity and debt securities, the licensing or sale of our technologies and entering into additional government contracts and/or funded research and development agreements. Further, while we anticipate that the Restructuring announced in July 2025 will result in a reduction in our future expenditures, actual savings realized may vary and there can be no assurance that the Restructuring will achieve our anticipated cost savings or operational efficiencies. Our future expenditures and long-term capital requirements may be substantial and will depend on many factors, including but not limited to the following:

•

our ability to continue to generate revenues from sales of commercial products and potential future products;

•

our ability to resume commercial shipments of ELEVIDYS for non-ambulatory patients in the U.S.;

•

our ability to realize the benefits of the Restructuring;

•

the risk that our Restructuring and pipeline reprioritization efforts may not generate their intended benefits to the extent or as quickly as anticipated;

•

the impact of potential regulatory actions from the FDA including changes to our drug labels or revocation of accelerated approvals and directives to remove products from the market relating to the topline results of our ESSENCE trial that failed to meet statistical significance on its primary endpoint;

•

the timing and costs associated with repurchases of our common stock under our 2024 Repurchase Program;

•

the timing of payments related to our future inventory commitments and manufacturing obligations;

•

the timing and costs associated with our existing lease obligations and new obligations expected to be entered into in future years;

•

the timing and costs associated with our pre-clinical and clinical trials;

•

the attainment of milestones and our obligations to make milestone payments to Arrowhead, Myonexus Therapeutics, Inc.'s selling shareholders, BioMarin, Nationwide, UWA and other institutions;

•

the timing and repayment of future borrowings on our Revolving Credit Facility;

•

obligations to holders of our 2027 Notes and 2030 Notes; and

•

the costs of filing, prosecuting, defending and enforcing patent claims and our other intellectual property rights.

We cannot provide assurances that financing will be available when and as needed or that, if available, the financings will be on favorable or acceptable terms. If we are unable to obtain additional financing when and if we require, this would have a material adverse effect on our business and results of operations. To the extent we issue additional equity securities, our existing stockholders could experience substantial dilution. Additional information regarding our Revolving Credit Facility is provided in Note 13, Indebtedness to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe that our existing cash, cash equivalents and investments along with future cash generated from operations and availability under our Revolving Credit Facility will be sufficient to meet the capital requirements of our operations for the next twelve months and foreseeable future.

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We have entered into long-term contractual arrangements from time to time for our facilities, the provision of goods and services, and issuance of debt securities, among others. Additional information regarding our obligations under debt, lease, and manufacturing arrangements is provided in Note 13, Indebtedness, Note 19, Leases and Note 23, Commitments and Contingencies, respectively, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The following table summarizes our total obligations under debt, lease, and manufacturing arrangements:

Due in less than one year Due in greater than one year Total

(in thousands)

(1) Interest payments are included within the future debt obligations.

(2) Lease obligations only include real estate leases that had commenced prior to December 31, 2025.

(3) The leases embedded in a certain supply agreement are included in manufacturing obligations. The decrease in short-term manufacturing commitments is primarily driven by a supplemental letter agreement (the "Letter Agreement") entered into with Catalent in August 2025 to address certain financial and operational matters related to the ELEVIDYS Suspension. Refer to Note 23, Commitments and Contingencies for further discussion surrounding the Letter Agreement with Catalent.

For products and product candidates that are currently approved or are in various research and development stages, we may be obligated to make up to $12.1 billion of future development, regulatory, up-front royalty and sales milestone payments associated with our license and collaboration agreements. Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones. Because the achievement of these milestones is not probable and payment is not required as of December 31, 2025, such contingencies have not been recorded in our consolidated financial statements. Amounts related to contingent milestone payments are not yet considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones.

Cash Flows

The following table summarizes our cash flow activity for each of the periods indicated:

For the Year Ended December 31,

(in thousands) $ %

Cash (used in) provided by

Operating Activities

Cash used in operating activities, which consists of our net (loss) income adjusted for non-cash items and changes in net operating assets and liabilities, totaled $205.5 million and $205.8 million of cash in 2025 and 2024, respectively. Cash used in operating activities in 2025 was primarily driven by the net loss of $713.4 million, adjusted for the following non-cash items:

•

$165.3 million in write-downs for excess and obsolete inventory;

•

$123.4 million in stock-based compensation expense;

•

$50.0 million in-kind milestone payments to Arrowhead;

•

$44.5 million in depreciation and amortization expense;

•

$17.3 million loss on investment in Arrowhead;

•

$17.0 million write-off of prepaid deposits;

•

$16.9 million gain on debt extinguishment;

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•

$14.0 million reduction in the carrying amount of the right of use assets; and

•

$20.6 million in other non-cash items.

These amounts were partially offset by $5.3 million in accretion of investment discount, net.

The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following:

•

$301.1 million increase in inventory primarily due to capitalized inventory related to ELEVIDYS;

•

$203.8 million decrease in accounts receivable primarily due to reduced shipments of ELEVIDYS in the second half of 2025 compared to 2024 due to the ELEVIDYS Suspension;

•

$79.8 million increase in other assets primarily due to the timing of billings to Roche for orders of ELEVIDYS for use outside of the U.S., as well as increased royalty receivables from Roche related to increased ELEVIDYS sales outside of the U.S.;

•

$104.3 million increase in accounts payable, accrued expenses, lease liabilities and other liabilities primarily due to the remaining $200.0 million associated with the Arrowhead DM1 Milestones being included in accounts payable as of December 31, 2025, partially offset by a reduction in accrued employee compensation costs pursuant to our Restructuring and payments on accrued employee compensation costs, a reduction in accrued income taxes and the timing and invoicing of payments with our contract research organizations and contract manufacturing organizations;

•

$72.1 million increase in deferred revenue primarily related to the timing of billings to Roche for orders of ELEVIDYS not yet shipped, partially offset by the recognition of collaboration revenue related to the expiration of an option for a certain program previously recorded as deferred revenue; and

•

$78.8 million decrease in manufacturing-related deposits and prepaids primarily due to the use of raw materials and services previously prepaid with Catalent and Aldevron.

Cash used in operating activities in 2024 was primarily driven by the net income of $235.2 million, adjusted for the following non-cash items:

•

$184.3 million in stock-based compensation expense;

•

$62.7 million in non-cash termination charges as a result of the Thermo Agreement termination;

•

$37.7 million in depreciation and amortization expense;

•

$16.2 million reduction in the carrying amount of the right of use assets;

•

$7.8 million charge related to the change in the fair value of derivatives; and

•

$7.1 million in other non-cash items.

These amounts were partially offset by $40.3 million in accretion of investment discount, net.

The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following:

•

$395.2 million increase in inventory primarily due to capitalized inventory related to ELEVIDYS;

•

$201.7 million increase in accounts receivable due to an increase in demand for ELEVIDYS following its initial FDA approval in June 2023 and subsequent expanded label approval in June 2024 and an increase in payment terms for product sales related to the PMO Products;

•

$188.6 million increase in manufacturing-related deposits and prepaids primarily due to an increase in prepaids for raw materials and batch fees with Catalent, partially offset by decreases in manufacturing-related deposits and prepaids at Thermo as a result of the termination of the Thermo Agreement during 2024; and

•

$32.2 million decrease in deferred revenue primarily related to the collaboration with Roche.

These amounts were partially offset by a $110.6 million increase in accounts payable, accrued expenses, lease liabilities and other liabilities primarily due to the timing and invoicing of payments with our CROs and CMOs.

Investing Activities

Cash provided by investing activities for 2025 was $69.6 million, compared to $755.6 million in 2024. Cash provided by investing activities in 2025 consisted of $295.9 million from the maturity and sales of available-for-sale securities and $174.1 million in proceeds from the sale of the Arrowhead investment, partially offset by $245.8 million in the acquisition of strategic investments primarily related to Arrowhead as well as purchases of property and equipment, available-for-sale securities and intangible assets of $102.0 million, $44.7 million and $7.9 million, respectively.

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Cash provided by investing activities in 2024 consisted of $2,002.1 million from the maturity and sales of available-for-sale securities, partially offset by purchases of available-for-sale securities, property and equipment and intangible assets of $1,099.6 million, $137.0 million and $10.0 million, respectively.

Financing Activities

Cash used in financing activities was $168.3 million in 2025, compared to $124.8 million of cash provided by financing activities in 2024. Cash used in financing activities in 2025 primarily consisted of the following:

•

$158.4 million for the repurchase of a portion of our 2027 Notes;

•

$25.0 million of purchases of our common stock under our 2024 Repurchase Program;

•

$17.1 million of debt issuance costs associated with our 2030 Notes;

•

$4.2 million of payments related to our Revolving Credit Facility; and

•

$2.4 million of issuance costs associated with issuance of our common stock.

These amounts were partially offset by the following items:

•

$20.0 million in proceeds from the private placement of approximately 1.1 million shares of our common stock pursuant to a privately negotiated subscription agreement with JWCA; and

•

$18.7 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program.

Cash provided by financing activities in 2024 primarily consisted of $79.5 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program and $45.3 million in proceeds from the settlement of the 2017 Capped Calls.

Other Funding Commitments

We have several on-going clinical trials in various development stages. Our most significant clinical trial expenditures are to CROs. The CRO contracts are generally cancellable at our option. As of December 31, 2025, we had $404.3 million in cancellable future commitments based on existing CRO contracts.

Recent Accounting Pronouncements

Please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest-Rate-Sensitive Financial Instruments

Our current investment policy is to maintain a diversified investment portfolio consisting of money market investments, commercial paper, certificates of deposit, government and government agency bonds and high-grade corporate bonds with maturities of 24 months or less. Our cash is primarily deposited in and invested through highly rated financial institutions in the U.S. As of December 31, 2025, we had $953.8 million of cash, cash equivalents, restricted cash and investments, comprised of $801.3 million of cash and cash equivalents, $139.4 million of investments and $13.1 million non-current restricted cash. The Company only holds debt securities classified as available-for-sale. The fair value of cash equivalents and investments is subject to change as a result of potential changes in market interest rates. Our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we sell securities that decline in market value due to changes in interest rates. The potential change in fair value for interest rate sensitive instruments has been assessed on a hypothetical 10 basis point adverse movement across all maturities. As of December 31, 2025, we estimate that such hypothetical adverse 10 basis point movement would result in a hypothetical loss in fair value of less than $0.1 million to our interest rate sensitive instruments.

The $158.6 million aggregate principal amount outstanding of our 2027 Notes has a fixed interest rate of 1.25% per annum, payable semiannually in cash on each March 15 and September 15. The $893.4 million aggregate principal amount outstanding of our 2030 Notes has a fixed interest rate of 4.875% per annum, payable semi-annually in cash on each March 1 and September 1. Therefore, no outstanding debt is subject to fluctuations in market interest rates. However, to the extent that we borrow funds pursuant to our $600.0 million revolving credit agreement among JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent, the lenders party thereto, and Sarepta Therapeutics Investments, Inc., a Delaware corporation (the “Credit Agreement”), in the future, indebtedness incurred under the Credit Agreement would bear interest at a variable rate, which would make us vulnerable to increases in interest rates.

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Market-Price-Sensitive Financial Instruments

Our strategic investment portfolio includes an investment in equity securities of a publicly traded biotechnology company as a result of a certain business development transaction. While we are holding such securities, we are subject to equity price risk and this may increase the volatility of our income in future periods due to changes in the fair value of our strategic equity investment. Changes in the fair value of this strategic equity investment are impacted by the volatility of the stock market and changes in general economic conditions, among other factors. The potential change in fair value for market-price-sensitive instruments has been assessed on a hypothetical 10.0% adverse movement. As of December 31, 2025, we estimate that such hypothetical 10.0% adverse movement would result in a hypothetical loss in fair value of approximately $0.4 million to our market-price-sensitive financial instruments.

Item 8. Financial Statements and Supplementary Data.

The information required by this Item 8 begins on page F-1 in Item 15 of Part IV of this Annual Report on Form 10-K and is incorporated into this item by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation as of the end of the period covered by this Annual Report on Form 10-K, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-15 under the Exchange Act. Based on that review, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (2) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. We considered these limitations during the development of our disclosure controls and procedures, and will continually reevaluate them to ensure they provide reasonable assurance that such controls and procedures are effective.

Internal Control over Financial Reporting

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control Integrated Framework.

Based on this assessment, management has concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.

The effectiveness of our internal control over financial reporting as of December 31, 2025, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have not been material changes in our internal control over financial reporting as defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act for the quarter ended December 31, 2025 that our certifying officers concluded materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

During the three months ended December 31, 2025, Cristin L. Rothfuss, Executive Vice President, General Counsel, entered into and adopted a written plan for the sale of our securities that is intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information (a “Rule 10b5-1 trading plan”). Ms. Rothfuss' 10b5-1 trading plan has an adoption date of December 16, 2025 and an end date of January 8, 2027, covering a total of 2,152 shares of common stock underlying vested restricted stock units as well as the net shares issued to Ms. Rothfuss upon the future vesting of restricted stock units.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information regarding our directors and executive officers required by this item will be included in either an amendment to this Annual Report on Form 10-K or in our definitive proxy statement for our 2026 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 11. Executive Compensation.

The information required by this item will be included in either an amendment to this Annual Report on Form 10-K or in our definitive proxy statement for our 2026 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item will be included in either an amendment to this Annual Report on Form 10-K or in our definitive proxy statement for our 2026 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be included in either an amendment to this Annual Report on Form 10-K or in our definitive proxy statement for our 2026 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

The information required by this item will be included in either an amendment to this Annual Report on Form 10-K or in our definitive proxy statement for our 2026 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements

The following consolidated financial statements of the Company and the Report of KPMG LLP, Independent Registered Public Accounting Firm, are included in Part IV of this Annual Report on Form 10-K on the pages indicated:

Consolidated Balance Sheets F-4

Consolidated Statements of Comprehensive (Loss) Income F-5

Consolidated Statements of Stockholders’ Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8

(2) Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.

(3) Exhibits

The exhibits required by Item 601 of Regulation S-K are listed in paragraph (b) below.

(b) Exhibits.

The following exhibits are filed herewith or are incorporated by reference to exhibits filed with the SEC:

Incorporated by Reference to Filings Indicated

ExhibitNumber Description Form File No. Exhibit FilingDate ProvidedHerewith

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-93-

-94-

-95-

-96-

21.1 Subsidiaries of the Registrant. X

23.1 Consent of Independent Registered Public Accounting Firm. X

24.1 Power of Attorney (contained on signature page). X

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101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents X

† Indicates management contract or compensatory plan, contract or arrangement.

^ Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

* Confidential treatment has been granted for portions of this exhibit.

** Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Item 16. Form 10-K Summary.

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 2, 2026 SAREPTA THERAPEUTICS, INC.

By: /s/ Douglas S. Ingram

Douglas S. Ingram

Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas S. Ingram and Ryan H. Wong, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 2, 2026:

Signature Title

Douglas S. Ingram

Ryan H. Wong

/s/ M. Kathleen Behrens Chairwoman of the Board

M. Kathleen Behrens, Ph.D.

/s/ Richard Barry Director

Richard Barry

/s/ Deirdre Connelly Director

Deirdre Connelly

/s/ Kathryn Boor Director

Kathryn J. Boor, Ph.D.

/s/ Michael A. Chambers Director

Michael A. Chambers

/s/ Stephen L. Mayo Director

Stephen L. Mayo, Ph.D.

/s/ Claude Nicaise Director

Claude Nicaise, MD

/s/ Hans Wigzell Director

Hans Wigzell, M.D., Ph.D.

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SAREPTA THERAPEUTICS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

PageNumber

Consolidated Balance Sheets F-4

Consolidated Statements of Comprehensive (Loss) Income F-5

Consolidated Statements of Stockholders’ Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Sarepta Therapeutics, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Sarepta Therapeutics, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-2

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of lower of cost or net realizable value of raw materials inventory

As discussed in Note 8 to the consolidated financial statements, raw materials inventory represented approximately 13%, or $141.3 million, of the Company’s total inventory balance as of year‐end. As discussed in Note 2, the Company periodically analyzes its inventories for excess amounts or obsolescence and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value (NRV). The Company’s determination of NRV requires estimates of forecasted demand for the Company’s products, consideration of market conditions, and regulatory approvals.

We identified the evaluation of NRV of raw materials inventory as a critical audit matter. Subjective auditor judgment was required to evaluate the forecasted demand assumptions used to estimate NRV for raw materials inventory. Specifically, there was a high degree of subjectivity in evaluating the impact of the outcome of uncertain future events such as clinical progress, competitive developments, and patient adoption rate on the forecasted demand and the forecasted demand assumptions were sensitive to variation such that minor changes in these assumptions could cause significant changes in the estimates.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s inventory process, including controls over the forecasted demand assumptions used in the estimation of NRV for raw materials inventory. For certain raw materials inventory, we assessed management’s ability to forecast future product demand by comparing prior period estimates to actual usage. We evaluated the reasonableness of management’s forecasted demand assumptions used in estimating NRV for raw materials inventory by:

•

comparing management’s assumptions of forecasted demand to independent forecasted demand assumptions developed using certain independent inputs

•

assessing clinical progress of the Company’s products and the potential impact on expected future product demand by inspecting clinical data and internal meeting minutes, and inquiring with research and development personnel

•

reading publicly available information related to competitor products that may influence expected future demand to assess the impact of competitor’s products on demand for certain raw materials inventory

•

assessing patient adoption rate by inspecting historical enrollment information

•

performing sensitivity analyses over the forecasted demand assumptions and assessing the results of the analyses against the recorded amounts.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

Boston, Massachusetts

March 2, 2026

F-3

Sarepta Therapeutics, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

As of December 31,

Assets

Current assets:

Liabilities and Stockholders’ Equity

Current liabilities:

Contingent consideration — 47,400

Other non-current liabilities 1,529 1,750

Commitments and contingencies (Note 23)

Stockholders’ equity:

Accumulated other comprehensive income (loss), net of tax 272 (218 )

See accompanying notes to consolidated financial statements.

F-4

Sarepta Therapeutics, Inc.

Consolidated Statements of Comprehensive (Loss) Income

(in thousands, except per share data)

For the Year Ended December 31,

Revenues:

Restructuring charge 42,009 — —

Other (loss) income, net:

Gain from sale of Priority Review Voucher — — 102,000

Other comprehensive income (loss):

Unrealized gains (losses) on investments, net of tax $ 490 $ (1,136 ) $ 2,582

Total other comprehensive income (loss) 490 (1,136 ) 2,582

(Loss) earnings per share:

See accompanying notes to consolidated financial statements.

F-5

Sarepta Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

Accumulated

Additional Other Total

Shares Amount Shares Amount Capital (Loss) Income Deficit Equity

Vest of restricted stock units 645 — — — — — — —

Unrealized gains from investments, net of tax — — — — — 2,582 — 2,582

Vest of restricted stock units 734 — — — — — — —

Unrealized losses from investments, net of tax — — — — — (1,136 ) — (1,136 )

Vest of restricted stock units 1,237 — — — — — — —

Issuance of performance stock awards 147 — — — — — — —

Restructuring charge — — — — (134 ) — — (134 )

Unrealized gains from investments, net of tax — — — — — 490 — 490

See accompanying notes to consolidated financial statements.

F-6

Sarepta Therapeutics, Inc.

Consolidated Statements of Cash Flows

(in thousands)

For the Year Ended December 31,

Cash flows from operating activities:

Non‐cash inventory write‐downs for excess and obsolescence 165,257 — —

In-kind milestone payment to Arrowhead Pharmaceuticals 50,000 — —

Loss on investment in Arrowhead Pharmaceuticals 17,293 — —

Non-cash write-off of prepaid deposits 17,041 — —

Non-cash termination charges — 62,747 —

Change in the fair value of derivatives — 7,838 1,200

Impairment of strategic investments — — 30,321

Gain from sale of Priority Review Voucher — — (102,000 )

Changes in operating assets and liabilities, net:

Cash flows from investing activities:

Acquisition of strategic investments (245,819 ) — (4,000 )

Proceeds from sale of investment in Arrowhead Pharmaceuticals 174,095 — —

Proceeds from sale of Priority Review Voucher — — 102,000

Cash flows from financing activities:

Repayment of 2027 Notes, including debt extinguishment costs (158,418 ) — —

Repurchases of common stock, net of excise tax (25,013 ) — —

Proceeds from issuance of common stock 20,000 — —

Payments related to Revolving Credit Facility (4,170 ) — —

Common stock issuance costs (2,386 ) — —

Payment on maturity of 2024 Notes — (68 ) —

Debt conversion costs for 2024 Notes — — (6,887 )

Cash, cash equivalents and restricted cash:

Reconciliation of cash, cash equivalents and restricted cash:

Supplemental disclosure of cash flow information:

Supplemental schedule of non-cash activities:

Common stock issued for conversion or exchange of 2027 Notes $ 107,320 $ — $ —

Lease liabilities terminated $ — $ 2,381 $ —

See accompanying notes to consolidated financial statements.

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Sarepta Therapeutics, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF BUSINESS

Sarepta Therapeutics, Inc. (together with its wholly-owned subsidiaries, “Sarepta” or the “Company”) is a commercial-stage biopharmaceutical company focused on helping patients through the discovery and development of unique RNA-targeted therapeutics, small interfering RNA ("siRNA") platform, gene therapy and other genetic therapeutic modalities for the treatment of rare diseases. Applying its proprietary, differentiated and innovative technologies, and through collaborations with its strategic partners, the Company has developed multiple approved products for the treatment of Duchenne muscular dystrophy (“Duchenne”) and is developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, Myotonic Dystrophy type 1 (“DM1"), facioscapulohumeral muscular dystrophy (“FSHD”) and other neuromuscular and central nervous system (“CNS”) disorders.

The Company's products in the U.S., EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”) and AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), were granted accelerated approval by the U.S. Food and Drug Administration (the “FDA”) in 2016, 2019 and 2021, respectively. Indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively, EXONDYS 51, VYONDYS 53 and AMONDYS 45 (collectively, the “PMO Products”) use the Company’s phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51, exon 53 and exon 45 of the dystrophin gene. Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein.

ELEVIDYS (delandistrogene moxeparvovec-rokl), an adeno-associated virus-(“AAV”) based gene therapy, was approved by the FDA in June 2024 for the treatment of ambulatory patients at least four years old with Duchenne with a confirmed mutation in the Duchenne gene, as well as for non-ambulatory patients under the accelerated approval pathway. ELEVIDYS was previously granted accelerated approval by the FDA in June 2023 for the treatment of ambulatory patients aged four through five years with Duchenne with a confirmed mutation in the Duchenne gene. In response to safety events announced in March and June 2025, the Company suspended all shipments of ELEVIDYS to non-ambulatory patients in the U.S. In response to a request from the FDA that the Company voluntarily stop all shipments of ELEVIDYS in the U.S., it temporarily suspended all shipments of ELEVIDYS in the U.S., effective July 22, 2025. On July 28, 2025, the FDA informed the Company that the FDA recommended the removal of the voluntary hold for ambulatory patients. On July 31, 2025, the Company resumed shipments of ELEVIDYS for ambulatory patients in the U.S. In November 2025, the Company announced a boxed warning for acute liver injury (“ALI”) and acute liver failure (“ALF”) and removal of non-ambulatory population from the Indication and Usage section of the Prescribing Information.

As of December 31, 2025, the Company had $953.8 million of cash, cash equivalents, restricted cash and investments, consisting of $801.3 million of cash and cash equivalents, $139.4 million of investments and $13.1 million of non-current restricted cash. The Company believes that its balance of cash, cash equivalents and investments as of the date of the issuance of this report, along with future cash inflows from operations and availability under the Company's Revolving Credit Facility (defined in Note 13), is sufficient to fund its current operational plan for at least the next twelve months, though it may pursue additional cash resources through public or private debt and equity financings, seek funded research and development arrangements and additional government contracts and establish collaborations with or license its technology to other companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

The accompanying consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), reflect the accounts of Sarepta and its wholly-owned subsidiaries. All intercompany transactions between and among its consolidated subsidiaries have been eliminated. All adjustments of a normal recurring nature necessary for a fair presentation have been reflected.

Estimates and Uncertainties

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Correction of Immaterial Errors

During the fourth quarter ended December 31, 2025, the Company recorded an immaterial error correction associated with the accounting for its partial refinancing of its convertible senior notes due on September 15, 2027 (the “2027 Notes”) that was

F-8

completed on August 28, 2025 (the "August 2025 Exchange"). During the three and nine months ended September 30, 2025, the Company recognized a loss on debt extinguishment of $138.6 million associated with the August 2025 Exchange. Upon further analysis during the fourth quarter of 2025, the Company determined that a gain on debt extinguishment of $3.8 million should have been recognized based on the fair value of the 2030 Notes at issuance. Correspondingly, the related interest expense recognized during the three and nine months ended September 30, 2025 should have been $1.9 million higher and the long-term debt balance should have been $140.5 million lower as of September 30, 2025. The correction of the errors resulted in a net decrease of $140.5 million to the previously reported net loss for both the three and nine months ended September 30, 2025. Accordingly, the previously reported basic and diluted net loss per share decreased by $1.40 and $1.43, respectively, for the three and nine months ended September 30, 2025.

The quarterly financial data required by Item 302(a) of Regulation S‐K, including the three months ended September 30, 2025, has been updated to reflect this correction in Note 24, Quarterly Financial Data.

Fair Value Measurements

The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements:

•

Level 1—quoted prices for identical instruments in active markets;

•

Level 2—quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

•

Level 3—valuations derived from valuation techniques in which one or more significant value drivers are unobservable.

The fair value of the majority of the Company’s financial assets is categorized as Level 1 within the fair value hierarchy. These assets include money market funds, the Company's strategic investment in a biotechnology company listed on Nasdaq and assets associated with the Company's deferred compensation plan that are held in a trust. For additional information related to fair value measurements, please read Note 5, Fair Value Measurements to the consolidated financial statements.

Cash Equivalents

Only investments that are highly liquid and readily convertible to cash and have original maturities of three months or less at the time of acquisition are considered cash equivalents.

Investments

Available-For-Sale Debt Securities

Available-for-sale debt securities are recorded at fair value and unrealized gains and losses are included in accumulated other comprehensive (loss) income in the consolidated statements of stockholders’ equity. Interest income and realized gains and losses are reported in other (expense) income, net, on a specific identification basis. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, the net amount of which, along with interest and realized gains and losses, is included in other (expense) income, net in the consolidated statements of comprehensive (loss) income.

Equity Investments

The Company’s equity investments include its strategic investments in both publicly traded and private biotechnology companies and are included in other non-current assets in the Company’s consolidated balance sheets. The strategic investment in the publicly traded biotechnology company has a readily determinable fair value and is carried at fair value. The strategic investments in the privately held biotechnology companies do not have a readily determinable fair value and are measured at cost less any impairment, plus or minus changes resulting from observable price changes for the identical or a similar investment of the same issuer. Any change in the valuation of equity investments is recorded as a gain or loss on the Company’s consolidated statements of comprehensive (loss) income.

Accounts Receivable, Net

The Company’s accounts receivable, net arise from product sales. They are generally stated at the invoiced amount and do not bear interest.

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The accounts receivable, net from product sales represents receivables due from the Company’s specialty distributor and specialty pharmacies and sites of care in the U.S., as well as certain distributors in South America, Europe, and the Middle East. Historically, the Company has had no material write-offs of its accounts receivable, net. Payment terms range from 65 to 90 days for sales within the U.S. and 90 and 150 days for the majority of product sales outside the U.S. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in the customers’ credit profiles or any specific issues. The Company provides reserves against trade receivables for expected credit losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are written-off against the established reserve. As of December 31, 2025 and 2024, the credit profiles for the Company’s customers are deemed to be in good standing and an allowance for expected credit losses is not considered necessary.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash held at financial institutions, cash equivalents, investments and accounts receivable, net from customers. As of December 31, 2025, the Company’s cash was concentrated at five financial institutions, which potentially exposes the Company to credit risks. However, the Company does not believe that there is significant risk of non-performance by the financial institutions. The Company also purchases commercial paper, government and government agency bonds, corporate bonds and certificates of deposit issued by highly rated corporations, financial institutions and governments and limits the amount of credit exposure to any one issuer. These amounts may at times exceed federally insured limits. The Company has not experienced any credit losses related to these financial instruments and does not believe to be exposed to any significant credit risk related to these instruments. As of December 31, 2025, four entities accounted for 33%, 26%, 20% and 10% of accounts receivable, net, respectively. As of December 31, 2024, three entities accounted for 54%, 21%, and 13%, of accounts receivable, net, respectively.

Inventories

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS inventory used in clinical development programs is charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes.

The Company periodically analyzes its inventories for excess or obsolescence and writes down excess or obsolete or otherwise unmarketable inventory to its estimated net realizable value. Reserves are recorded to reduce the cost basis of inventory when it is determined that inventory on hand is excess or obsolete. The Company determines excess or obsolete inventory based on assumptions about forecasted demand for our products, market conditions and regulatory approval. Additionally, though the Company’s products are subject to strict quality control and monitoring, which the Company performs throughout the manufacturing processes, certain batches or units of product may not meet quality specifications. Expense incurred related to excess inventory, obsolete inventory, or inventories that do not meet the Company's quality specifications is recorded as a component of cost of sales in the Company's consolidated statements of comprehensive (loss) income.

For products which are under development and have not yet been approved by regulatory authorities, purchased drug product is charged to research and development expense upon delivery. Delivery occurs when the inventory passes quality inspection and title and risk of loss transfers to the Company. Nonrefundable advance payments for research and development activities, including production of purchased drug product, are deferred and capitalized until the goods are delivered. If the Company does not expect the goods to be delivered or services to be rendered, the capitalized advanced payment will be charged to expense.

Property and Equipment

Property and equipment are initially recorded at cost, including the acquisition cost and all costs necessarily incurred to bring the asset to the location and working condition necessary for their intended use. The cost of normal, recurring or periodic repairs and maintenance activities related to property and equipment are expensed as incurred. The cost for planned major maintenance activities, including the related acquisition or construction of assets, is capitalized if the repair will result in future economic benefits. Interest costs incurred during the construction period of major capital projects are periodically reviewed, and if determined to be material, capitalized until the asset is ready for its intended use, at which point the interest costs are amortized as depreciation expense over the life of the underlying asset.

F-10

The Company generally depreciates the cost of its property and equipment using the straight-line method over the estimated useful lives of the respective assets, which are summarized as follows:

Asset Category Useful lives

Lab and manufacturing equipment 5 years

Office equipment 5 years

Software and computer equipment 3 - 5 years

Furniture and fixtures 7 years

Land improvements 25 years

Land Not depreciated

Building and improvements 30 years

Construction in progress Not depreciated until put into service

Intangible assets

The Company’s intangible assets, consisting of in-licensed rights, patent costs and software licenses, are included within other non-current assets in the Company’s consolidated balance sheets.

The in-licensed rights primarily relate to agreements with BioMarin Pharmaceutical, Inc. (“BioMarin”), the University of Western Australia (“UWA”), the Research Institute at Nationwide Children’s Hospital (“Nationwide”) and Parent Project Muscular Dystrophy (“PPMD”). The in-licensed rights are being amortized on a straight-line basis over the remaining life of the related patents because the life of the related patents reflects the expected time period that the Company will benefit from the in-licensed rights.

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company, intangible assets with definite lives and right of use (“ROU”) assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. The Company evaluates recoverability of assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Such reviews assess the fair value of the assets based upon estimates of future cash flows that the assets are expected to generate.

Convertible Debt

The Company accounts for the liability and equity components of convertible debt instruments that can be settled in cash as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives under ASC Topic 815, Derivatives and Hedging (“ASC 815”). Simultaneously with the issuance of the 2027 Notes in September 2022, the Company bought capped call options from certain counterparties to minimize the impact of potential dilution upon conversion. The premium for the capped call options was recorded as additional paid-in capital. For additional information related to the convertible debt transactions, please read Note 13, Indebtedness to the consolidated financial statements.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company performs the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers or provides to the customer. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied. The only performance obligation in the Company’s contracts with customers is to timely deliver drug products to the customer’s designated location.

F-11

Product revenues

The Company distributes its products principally through its customers or sells directly to sites of care. When the product is distributed through customers, the customers subsequently resell the products to patients and health care providers. The Company provides right of return to the customers only in cases of shipping error or product defect and other limited rights. Product revenues are recognized when the customers take control of the products, which typically occurs upon delivery. For information related to revenues by product type and region, please read Note 7, Product Revenues, Net, Accounts Receivable, Net and Reserves for Product Revenues to the consolidated financial statements.

Variable Consideration

Product revenues are recorded at the net sales price (transaction price) which includes reserves for variable consideration such as: rebates and chargebacks, distribution fees, prompt pay discounts, patient assistance and return reserves. These reserves, representing the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contracts, are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable if no payments are required of the Company or a current liability if a payment is required of the Company. Where appropriate, the estimates reflect the Company’s historical experience, contractual and statutory requirements, industry data and forecasted customer buying and payment patterns. Actual amounts may differ from the Company’s estimates. If actual results vary, these estimates are adjusted, which could have an effect on revenue in the period of adjustment.

Additional details relating to variable consideration are as follows:

•

Rebates and chargebacks: relating to governmental and commercial rebates and chargebacks.

o

Governmental rebates, including Medicaid rebates, relate to the Company’s estimated obligations to federal or state governments under established reimbursement arrangements. The commercial rebates relate to arrangements the Company enters into with payors that provide for privately-negotiated rebates. Rebate reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses.

o

Chargebacks, including Public Health Services (“PHS”) chargebacks, relate to the Company’s estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices that the Company charges to wholesalers. The wholesaler charges the Company for the difference between what the wholesaler pays for the products and the ultimate selling price to the qualified healthcare providers. Chargeback reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider from the wholesaler, and the Company generally issues credits for such amounts within a few weeks of receiving notification of resale from the wholesaler.

•

Distribution fees: relating to fees paid to customers in the distribution channel that provide the Company with inventory management and data and distribution services are generally accounted for as a reduction of revenue. To the extent that the services received are distinct from the Company’s sale of products to the customers, these payments are accounted for as selling, general and administrative expenses. Reserves for distribution fees result in an increase in a liability if payments are required of the Company or a reduction of accounts receivable if no payments are required of the Company.

•

Prompt payment discounts: relating to the Company’s estimated obligations for credits to be granted to specialty pharmacies for remitting payment on their purchases within established incentive periods. Reserves for prompt payment discounts are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable.

•

Patient assistance: relating to financial assistance programs provided to qualified patients. Reserves for costs related to patient assistance programs are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses.

•

Return reserves: relating to the limited return rights the Company provides to customers. The Company records product return reserve, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether return reserves are required, including the patient population and the customers’ limited return rights. Because of the pricing, the limited number of patients, and the customers’ limited return rights, most customers only carry a limited inventory. Based on these factors and the fact that the Company has not experienced significant product returns to date, return reserves have been immaterial to date.

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Collaboration revenue

The Company’s collaboration revenue is primarily generated from its collaboration arrangement with F. Hoffman-La Roche Ltd. (“Roche”). For more information, please read Note 3, License and Collaboration Agreements. At the inception of a collaboration arrangement, the Company first assesses whether the contractual arrangement is within the scope of ASC Topic 808, Collaborative Arrangements to determine whether the arrangement involves a joint operating activity and involves two (or more) parties that are both active participants in the activity and exposed to significant risks and rewards dependent on the commercial success of such activity. Then the Company determines whether the collaboration arrangement in its entirety represents a contract with a customer as defined by ASC 606. If only a portion of the collaboration arrangement is potentially with a customer, the Company applies the distinct good or service unit-of-account guidance in ASC 606 to determine whether there is a unit of account that should be accounted for under ASC 606. For the units of account in the collaboration arrangement that do not represent a vendor-customer relationship, the Company will (i) consider applying other GAAP, including by analogy, or (ii) if there is no appropriate analogy, consistently apply a reasonable and rational accounting policy election.

In general, by analogy to ASC 606, the Company identifies the performance obligations within the collaboration arrangement and identifies and allocates the transaction price the Company expects to receive on a relative standalone selling price basis to each performance obligation. Variable consideration, consisting of development and regulatory milestones, will be included in the transaction price only if the Company expects to receive such consideration and if it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement. Sales-based royalty and milestone payments are excluded from the transaction price the Company expects to receive until the underlying sales occur because the license to the Company’s intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in its collaboration arrangement.

For the recognition of revenue associated with each performance obligation, if the Company determines ASC 606 is not appropriate to apply by analogy, the Company will apply a reasonable, rational and consistently applied accounting policy election to faithfully depict the transfer of services to the collaboration partner over the estimated performance period. Up-front payments from a collaboration partner are recognized as deferred revenue when received and recognized as revenue over the estimated performance period. Reimbursement payments from a collaboration partner associated with cost-sharing provisions in a collaboration arrangement are recognized as the related expense is incurred and classified as an offset to operating expenses. Revenue from sales-based royalty payments is included as collaboration and other revenues on the consolidated statements of comprehensive (loss) income. Revenue from product sold to collaboration partners under a collaboration arrangement via contract manufacturing is included as collaboration and other revenues on the consolidated statements of comprehensive (loss) income.

Valuation of Product Options

The Company's collaboration arrangements may contain options which provide the collaboration partner with the right to obtain additional licenses. If an arrangement contains product options, by analogy to ASC 606, the Company evaluates the product options to determine whether they represent material rights, which may include options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent material rights, they are recognized as a separate performance obligation at inception of the arrangement. The Company allocates a portion of the transaction price of the collaboration arrangement to material rights based on the relative standalone selling price. Amounts allocated to material rights are not recognized as revenue until related options are exercised or expire. Key assumptions to determine the standalone selling price of product options in a collaboration arrangement include, but are not limited to, forecasted revenues, development timelines, incremental costs related to the arrangement, discount rates and likelihood of technical and regulatory success.

Research and Development Expenses

Research and development expenses consist of costs associated with research activities as well as those with the Company’s product development efforts, conducting pre-clinical trials, clinical trials and manufacturing activities. Research and development expenses are expensed as incurred. Up-front fees and milestones paid to third parties in connection with technologies which have not reached technological feasibility and do not have an alternative future use are expensed when incurred.

Direct research and development expenses associated with the Company’s programs include payments made to contract research organizations, clinical trial site costs, clinical manufacturing costs, costs incurred for consultants and other external services, such as data management and statistical analysis support and materials and supplies used in support of clinical programs. Indirect costs of the Company’s research and development programs include salaries, stock-based compensation and an allocation of its facility and technology costs.