“Year-to-date 2025 R&D expenses were $4.1 billion, in line with 2024, suggesting we are on track for our full year goal.”

In context

“ty, contract and other revenues in the third quarter. This relates to an IP asset sale from 2018. Given we are now able to reasonably estimate future royalty and milestone payments, we are required to recognize this revenue in the third quarter. This is a nonrecurring accounting item and does not reflect cash received during the quarter. As a reminder, this contribution was not part of our product sales and therefore, did not impact our product gross margin in the third quarter, but it does otherwise flow through to the bottom line, contributing approximately $0.25 after tax. Moving to our non-GAAP results on Slide 24. Third quarter product gross margin was 86%, in line with 87% in the third quarter of 2024. R&D expenses of $1.3 billion, were down 3% compared to the third quarter of 2024. Year-to-date 2025 R&D expenses were $4.1 billion, in line with 2024, suggesting we are on track for our full year goal. Acquired IPR&D expenses were $170 million in the third quarter, including a $120 million upfront payment to Pregene for a research and licensing collaboration in the in vivo cell therapy space. SG&A expenses of $1.4 billion, were down 4% compared to the third quarter of 2024, modestly lower than we expected due to the timing of spending. Third quarter operating margin was 50%, reflecting the continued focus on operating expense discipline and leverage. The non-GAAP effective tax rate was 18% this quarter, slightly below our expectations due to a $79 million tax settlement. And finally, non-GAAP diluted EPS was $2.47 for the quarter. Excluding the $400 million nonrecurring other revenue, non-GAAP diluted EPS would have been $2.22 for the third quarter. Moving to our full year guidance on S”