Neurocrine Biosciences [NBIX] — Financial Model Notes

Analysis date: 2026-07-29. Every figure is traced to a primary filing or a named computation. No spreadsheet ships with this memo; these notes are the model, written so any number in NBIX_Research.md or NBIX_Valuation.md can be re-derived.

1. Revenue — the quarterly build

Q4 is derived, not read: Q4 = FY − 9M. US registrants do not file a Q4 10-Q.

Growth rates that matter:

INGREZZA quarterly YoY: Q1'25 +7.7% · Q2'25 +7.7% · Q3'25 +12.0% · Q4'25 +6.9% · Q1'26 +20.5%. Two-year stack: Q1'26 $656.9m vs Q1'24 $506.0m = +29.8%, +13.9% annualised. This is the honest run rate and it is the number used as the conservative "demonstrated" alternative in NBIX_Valuation.md §2.3.

Q1 seasonality — the mechanism, stated numerically. US pharma resets gross-to-net in Q1 (deductibles, formulary re-contracting). Q1'25 fell 11.4% sequentially from Q4'24 ($615.2m → $545.2m). Q1'26 was flat sequentially ($657.5m → $656.9m). The disappearance of the step-down is the entire +20.5% print. Whether it recurs is the Q2 2026 test.

CRENESSITY sequential adds: +$38.7m → +$44.9m → +$37.2m → +$17.9m. The launch curve's first deceleration, in the seasonally weakest quarter.

Other revenues are AbbVie royalties on elagolix and Tanabe royalties on valbenazine — $26.6m of "collaboration revenue" in FY2025 plus other product sales. The Q1'26 drop to $4.3m from $12.9m follows the January 2026 divestiture of Neurocrine Group Limited.

2. Soleno / VYKAT XR — the acquired revenue line

Soleno Therapeutics (CIK 0001484565), acquired 2026-05-18.

Soleno Q1 2026: net income $31.4m, operating cash flow $26.0m, cash $133.0m + marketable securities $396.0m = $529.0m, $50.0m drawn under an Oxford Financing term loan (SOFR + 5.50%, interest-only to Feb 2030), 52,120,147 shares outstanding at 2026-04-30, accumulated deficit $400.0m.

Purchase price: 52.1m shares × $53.00 ≈ $2,762m, stated by NBIX as ~$2.9bn total transaction equity value including options and RSUs. Implied multiple: 10.2x trailing sales.

Structural note carried into NBIX: Soleno "contracts with one customer, its specialty pharmacy" and "accounts receivable, net are solely from sales of VYKAT XR, and are from this sole customer." A single-customer receivable concentration now sits inside NBIX's balance sheet.

3. Income statement (FY, 10-K and 8-K Ex-99.1)

3.1 The operating-leverage finding

FY2025 converted +21.4% revenue growth into +0.9% non-GAAP EPS growth. GAAP EPS rose +41.9% only because FY2024 carried a $138.4m non-recurring charge on convertible senior note settlements. The non-GAAP series is the one that describes the business.

R&D as a share of revenue: FY2024 31.0% → FY2025 35.5%. FY2026 guidance of $1,200–1,250m on an INGREZZA guide of $2,700–2,800m implies R&D stays at or above 32% of total revenue.

Non-GAAP reconciliation, FY2025 (Table 3 of the 8-K): stock-based compensation $91.0m (R&D) + $126.9m (SG&A), vacated legacy campus costs $3.4m, intangible amortisation $4.1m, equity-investment fair-value changes $4.0m, other $1.6m, less $55.1m of tax effect → $654.5m non-GAAP net income from $478.6m GAAP.

3.2 Q1 2026 non-recurring items

$53.9m of the $197.9m GAAP net income (27%) is the first two lines. Non-GAAP EPS of $1.94 is clean of both. But note the $22.8m easier milestone comparison and the $21.1m harder IPR&D comparison — these run through non-GAAP too, roughly offsetting.

4. Balance sheet (10-Q, 2026-03-31) and the pro-forma bridge

Cash + marketable securities = 266.5 + 1,049.7 + 1,331.0 = $2,647.2m, matching the company-stated total. No debt line exists — the convertible senior notes matured May 2024.

4.1 Pro-forma post-Soleno bridge (ESTIMATE — replaced by the Q2 2026 10-Q)

Excluded from the bridge, both of which push the estimate up: NBIX's own operating cash generation from 2026-04-01 to the 2026-05-18 close (Q1'26 free cash flow was $136.7m, implying roughly $70m for the stub), and Soleno's April–May cash generation. Excluded, pushing down: transaction and financing costs, and any cash-settled Soleno equity awards above the $2.9bn headline. The estimate is presented as an estimate everywhere it is used and is not presented as filed.

Credit facility terms (8-K, 2026-05-14): $1.0bn five-year senior secured revolver with JPMorgan; SOFR + 1.125–1.75% or ABR + 0.125–0.75%; commitment fee 0.10–0.25% on the undrawn portion; security interest in substantially all assets; financial covenants tested quarterly — maximum total net leverage 3.75:1.00 (electable to 4.25:1.00 after certain material acquisitions) and minimum consolidated interest coverage 2.00:1.00; no amortisation; matures 2031-05-14.

Leases are not in enterprise value. $406.2m non-current plus a current portion inside "other current liabilities" — roughly $470m total, largely relating to the vacated legacy campus (against which NBIX books impairment and sublease income as a non-GAAP adjustment). A book that capitalises leases should add ~$4.67/share to EV.

5. Cash flow

Accruals check. FY2025 operating cash flow of $782.7m exceeds net income of $478.6m by $304.1m. Capital intensity is trivial — capex is 1.2% of revenue. Cash conversion is clean; the accruals signal is favourable.

6. Derived metrics used in the memo

7. What is not modelled, and why

• Soleno purchase accounting. Not filed. No goodwill, no intangible schedule, no inventory fair-value step-up figure. That last item is the one to watch: it is precisely what distorted GMED's FY2024 margins in this same batch, and a large one would flatter FY2027 optics at FY2026's expense. Due in the Q2 2026 10-Q.
• No Street consensus anywhere in this file. Alpha Vantage EARNINGS_ESTIMATES quota was exhausted on 2026-07-29; the API returned its rate-limit notice, not data. Every forward number is company guidance (labelled) or a house estimate (labelled).
• NBIX guides INGREZZA only — no total-revenue, CRENESSITY or VYKAT guidance exists. The FY2026/FY2027 revenue build in NBIX_Valuation.md §3.1 is shown line by line with each line labelled GUIDANCE or HOUSE, and the house lines are ~41% of the FY2027 total. A downside-to-the-estimate case is run explicitly there.
• No probability-weighted pipeline value. osavampator and direclidine are Phase 3 with no disclosed topline dates; assigning a probability of success and a peak sales figure would be inventing two numbers to produce a third. They are described qualitatively and excluded from every valuation output.
• No Zydus litigation outcome is modelled. It is treated as a named downside cause with an assigned probability (20%), per the Downside Criteria, not as a cash-flow adjustment.
• Q2 2026 has not been reported. Latest hard data is Q1 2026 (filed 2026-05-05). Based on NBIX's own reporting pattern, the Q2 print is expected within days of this memo's date.