Sarepta Therapeutics, Inc. New Standards Disclosure

Recent Accounting Pronouncements

Recently adopted

In September 2025, the Financial Accounting Standards Board (the "FASB") issued ASU 2025-07. ASU 2025-07 clarifies the application of derivative accounting to certain contracts and refines the guidance for share-based noncash consideration received from customers. Specifically, ASU 2025-07 introduces a scope exception for contracts that are not exchange-traded and whose underlying is tied to operations or activities specific to one party. It also clarifies that share-based noncash consideration from a customer should initially be accounted for under ASC 606 until the right to receive or retain such consideration becomes unconditional, at which point financial instruments guidance may apply. ASU 2025-07 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Early adoption is permitted.

Effective in the fourth quarter of 2025, the Company early adopted ASU 2025-07 using the modified retrospective transition method. As a result, two existing contracts that include a settlement feature based on the Company’s operations or activities are now excluded from the scope of ASC 815 and any liabilities will be recognized as such obligations become probable and estimable under ASC 450. The Company recorded the cumulative effect of this accounting change to remove the previously recognized derivative liabilities as of January 1, 2025, reducing the contingent consideration liability by $47.4 million, with an offsetting adjustment to accumulated deficit. The elimination of this derivative liability would result in an increase of $11.1 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 would increase by $0.11 for both the three and nine months ended September 30, 2025. There is no impact to the previously reported net loss for the quarters ended March 31, 2025 and June 30, 2025, respectively.

In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments clarify that, to account for a settlement as an induced conversion, an inducement offer must provide at least the consideration (in form and amount) issuable under the original conversion terms, even for instruments with cash conversion features. The amendments also clarify that the guidance applies to instruments not currently convertible, provided they had a substantive conversion feature at issuance and at the time of the inducement offer. The Company early adopted ASU 2024-04, effective January 1, 2025 as permitted for entities that have previously adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The Company elected to apply the guidance prospectively to settlements occurring after the adoption date. The Company considered the application of this guidance in the accounting for the debt exchange transaction described in Note 13, Indebtedness.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The Company adopted ASU 2023-09 on a retrospective basis for all periods presented. The adoption of ASU 2023-09 had no impact to the Company’s consolidated balance sheets, consolidated statements of comprehensive (loss) income, or consolidated statements of cash flows, as ASU 2023-09 affects disclosures only. Refer to Note 18, Income Taxes for the related disclosures required by ASU 2023-09.

Recently issued but not yet adopted

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software ("ASU 2025-06"). ASU 2025-06 eliminates accounting considerations of software project development stages and clarifies the threshold applied to begin capitalizing costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires public entities to provide disaggregated disclosure of income statement expenses. Public entities are required to disaggregate, in a tabular presentation, each relevant expense caption on the face of the consolidated statements of comprehensive (loss) income such as the following expenses: purchases of inventory, employee compensation, intangible asset amortization, and depreciation. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.