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Acquisition of Soleno Therapeutics, Inc.
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition of Soleno Therapeutics, Inc. Acquisition of Soleno Therapeutics, Inc.
On May 18, 2026 (the acquisition date), we completed our acquisition of Soleno Therapeutics, Inc. (Soleno) through a cash tender offer followed by a merger. Pursuant to the merger agreement, we paid $53.00 per share in cash for each outstanding share of Soleno common stock. Following the merger, Soleno became a wholly owned subsidiary of the Company.
Soleno is a commercial-stage rare disease company that markets VYKAT® (diazoxide choline) XR for the treatment of hyperphagia in patients with Prader-Willi syndrome. The acquisition expands the Company’s rare disease portfolio and commercial product base.
We accounted for the acquisition as a business combination using the acquisition method of accounting in accordance with Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recognized at their estimated fair values as of the acquisition date.
In connection with the merger, the vesting of certain outstanding Soleno equity awards was accelerated as of the acquisition date and each vested Soleno equity award became entitled to receive cash consideration. The purchase price for the acquisition included $67.4 million related to the settlement of outstanding Soleno equity awards attributable to pre-combination service. In addition, we recognized stock-based compensation expense of $60.1 million during the second quarter and first six months of 2026 related to the acceleration of outstanding Soleno equity awards attributable to post-combination service that were settled in cash.
The purchase price allocation related to this acquisition is preliminary and subject to change during the measurement period, which will not exceed one year from the acquisition date. We continue to evaluate, among other items, deferred tax assets and liabilities and uncertain tax positions. Measurement-period adjustments will be recognized with a corresponding adjustment to goodwill in the reporting period in which the adjustment amounts are determined and will be applied as if the accounting had been completed as of the acquisition date.
The following table summarizes the preliminary consideration transferred:
(in millions)May 18,
2026
Cash paid to Soleno stockholders$2,762.5 
Cash paid to settle Soleno equity awards attributable to pre-combination service67.4 
Total preliminary consideration transferred$2,829.9 
The following table summarizes the preliminary allocation of consideration transferred to the assets acquired and liabilities assumed as of the acquisition date:
(in millions)May 18,
2026
Cash and cash equivalents$471.3 
Accounts receivable34.7 
Inventory185.3 
Prepaid expenses and other current assets9.0 
Intangible assets2,237.8 
Right-of-use assets4.6 
Accounts payable and accrued liabilities(113.9)
Operating lease liabilities(4.6)
Deferred tax liabilities(489.4)
Other assets and liabilities, net0.5 
Total identifiable net assets acquired2,335.3 
Goodwill494.6 
Total assets acquired and liabilities assumed$2,829.9 
Acquired Inventory
The estimated fair value of the acquired inventory was determined based on the estimated selling price of the related finished product, reduced, as applicable, for costs to complete manufacturing, costs of disposal and market-participant profit allowances for the remaining manufacturing and selling efforts. The valuation resulted in fair-value step-ups for VYKAT XR work-in-process and finished goods inventory of $41.5 million and $126.7 million, respectively. The fair-value step-ups will be recognized in cost of revenues as the related acquired inventory is sold, which is expected to occur over approximately four to six years following the acquisition date.
Acquired Intangible Assets
The estimated fair value of the acquired intangible assets relates to the developed product rights for VYKAT XR and was determined using a probability adjusted discounted cash flow analysis approach using a discount rate of 24.0%. The developed product rights are being amortized over a useful life of 16 years using the straight line method.
Deferred Tax Assets and Liabilities
The deferred tax liability relates to the tax effect of the difference between the fair value and tax basis of acquired intangible assets and inventory.
Goodwill
Goodwill was recognized as the excess of consideration transferred over the preliminary fair values of identifiable net assets acquired. A significant portion of the goodwill recognized resulted from the recognition of deferred tax liabilities associated with the fair value adjustments recorded for acquired assets. The remaining goodwill is primarily attributable to expected synergies from combining operations, the assembled workforce, expanded commercial capabilities, and future economic benefits that do not qualify for separate recognition. Goodwill is not deductible for income tax purposes.
Transaction Costs
Transaction costs, which were comprised primarily of financial advisory and legal fees, totaled $33.1 million during the second quarter and first six months of 2026 and were included in selling, general, and administrative expenses. No transaction costs were incurred during the second quarter and first six months of 2025.
Revenues and Net Income of Soleno
The results of operations of Soleno have been included in the condensed consolidated statements of income and comprehensive income beginning on the acquisition date. From the acquisition date through June 30, 2026, total net revenues and net loss attributable to Soleno were $54.4 million and $52.2 million, respectively, inclusive of $104.7 million in acquisition-related expenses, amortization of the VYKAT XR fair-value step up, and amortization of the acquired intangible asset related to the developed product rights for VYKAT XR.
Pro Forma Financial Information (unaudited)
The following unaudited pro forma financial information presents the combined results of the Company and Soleno for the periods presented as if the acquisition had occurred on January 1, 2025:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2026202520262025
Revenues$998.4 $720.2 $1,907.5 $1,292.8 
Net income (loss)$203.4 $67.7 $395.0 $(57.9)
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and Soleno. In order to reflect the occurrence of the acquisition as if it had occurred on January 1, 2025 as required, the unaudited pro forma financial information includes adjustments to reflect:
(i)the incremental amortization expense to be incurred based on the fair values of the VYKAT XR identifiable intangible asset acquired;
(ii)the incremental cost of revenues related to the fair value adjustments associated with acquisition date inventory;
(iii)the reallocation of acquisition-related compensation costs, including stock-based compensation expense associated with accelerated Soleno equity awards attributable to post-combination service and transaction bonuses payable to certain Soleno employees, from the historical three and six month periods ended June 30, 2026, in which such costs were recognized, to the periods in which they would have been recognized assuming the acquisition had occurred on January 1, 2025;
(iv)the reallocation of non-recurring acquisition-related transaction costs incurred by Neurocrine and Soleno from the historical three and six month periods ended June 30, 2026, in which such costs were recognized, to the periods in which they would have been recognized assuming the acquisition had occurred on January 1, 2025;
(v)the reversal of Soleno's direct acquisition-related costs; and
(vi)the related income tax effects of the aforementioned adjustments to the provision for Neurocrine.
The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2025. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.