What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-07 · 62 added, 41 removed, 162 unchanged (39% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q (this Quarterly Report), the audited financial statements and notes thereto as of and for the year ended December 31, 2025 included with our Annual Report on Form 10-K, filed with the SEC on February 26, 2026 (our Annual Report), and our unaudited condensed consolidated financial statements and related notes thereto as of and for the quarter ended March 31, 2026 included with our Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2026.

Past operating results are not necessarily indicative of results that may occur in future periods.

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These forward-looking statements involve a number of risks and uncertainties.

Such forward-looking statements include statements about the benefits to be derived from our products and our product candidates, the potential market opportunities for our products and our product candidates, our strategy for the commercialization of our products, our plans for exploring and developing our products for additional indications, the commercialization of DAYBUE or trofinetide in jurisdictions other than the U.S., our plans and timing with respect to seeking regulatory approvals, the potential commercialization of any of our product candidates that receive regulatory approval, the progress, timing, results or implications of clinical trials and other development milestones and activities involving our products and our product candidates, our strategy for discovering, developing and, if approved, commercializing our product candidates, our existing and potential future collaborations, our estimates of future payments, revenues and profitability, our estimates regarding our capital requirements, future expenses and need for additional financing, the potential or expected impacts of geopolitical and macroeconomic developments, possible changes in legislation, and other statements that are not historical facts, including statements which may be preceded by the words “aims,” “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “pro forma,” “projects,” “seeks,” “should,” “will,” “would” or similar words.

Such forward-looking statements include statements about the benefits to be derived from our products and our product candidates, the potential market opportunities for our products and our product candidates, our strategy for the commercialization of our products, our plans for exploring and developing our products for additional indications, the commercialization of DAYBUE products in jurisdictions other than the U.S., our plans and timing with respect to seeking regulatory approvals, the potential commercialization of any of our product candidates that receive regulatory approval, the progress, timing, results or implications of clinical trials and other development milestones and activities involving our products and our product candidates, our strategy for discovering, developing and, if approved, commercializing our product candidates, our existing and potential future collaborations, our estimates of future payments, revenues and profitability, our estimates regarding our capital requirements, future expenses and need for additional financing, the potential or expected impacts of geopolitical and macroeconomic developments, possible changes in legislation, and other statements that are not historical facts, including statements which may be preceded by the words “aims,” “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “pro forma,” “projects,” “seeks,” “should,” “will,” “would” or similar words.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

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Our neurological franchise is anchored by the commercial product NUPLAZID (pimavanserin), which is the first and only drug approved by the FDA for the treatment of hallucinations and delusions associated with PDP.

Our rare disease franchise is anchored by the commercial product DAYBUE, which is the first and only drug approved for the treatment of Rett syndrome.

Net product sales from these two commercial products totaled $268.1 million for the three months ended March 31, 2026, compared with $244.3 million for the three months ended March 31, 2025.

Our rare disease franchise is anchored by the DAYBUE products, which are the first and only drug approved for the treatment of Rett syndrome.

Net product sales from these two commercial products totaled $576.0 million for the six months ended June 30, 2026, compared with $508.9 million for the six months ended June 30, 2025.

In June 2026, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion following a re-examination procedure and recommended the granting of a marketing authorization for trofinetide, known as DAYBU ® in the European Union (EU) for the treatment of neurobehavioral symptoms of Rett syndrome in adults and pediatric patients aged five years and older.

If the marketing authorization is granted by the European Commission, DAYBU ® would be the first therapy approved for this indication in the EU.

In addition to these commercial products, we have a portfolio of product candidates and research programs that are designed to address significant unmet medical needs in neurological and rare diseases.

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Our most advanced current product candidate is remlifanserin for the treatment of Alzheimer’s disease psychosis (ADP) and Lewy Body Dementia Psychosis (LBDP).

In November 2023, we initiated a Phase 2 study evaluating the efficacy and safety of remlifanserin for the treatment of hallucinations and delusions associated with ADP.

In November 2023, we initiated our RADIANT Phase 2 study evaluating the efficacy and safety of remlifanserin for the treatment of hallucinations and delusions associated with ADP.

We have completed enrollment in the Phase 2 portion of the RADIANT program, initiated screening and enrollment in the Phase 3 portion and expect topline results for the Phase 2 portion between September and October 2026.

We initiated an additional Phase 2 study of remlifanserin in LBDP in September 2025.

In the fourth quarter of 2025, we initiated a Phase 2 study of ACP-211 for the treatment of major depressive disorder.

In July 2026, the FDA granted Fast Track designation for remlifanserin for the treatment of hallucinations and delusions associated with ADP.

We have several product candidates in earlier stages of development for the treatment of neurological and rare diseases.

These include ACP-711 for the treatment of essential tremor, with a Phase 2 study expected to begin in 2026;

These include ACP-711 for the treatment of essential tremor, with a Phase 2 study expected to begin in 2027 following the completion of a successful Phase 1 study;

and ACP-271, a GPR88 agonist, with a first-in-human study in healthy volunteers that initiated in the first quarter of 2026.

We have incurred substantial operating losses since our inception due in large part to expenditures for our research and development activities.

As of March 31, 2026, we had an accumulated deficit of approximately $1.8 billion.

As of June 30, 2026, we had an accumulated deficit of approximately $1.8 billion.

Contingent on the level of business development activities we may complete as well as pipeline programs we may advance, we may incur operating losses as we incur significant research and development costs and costs for continued commercialization of our products.

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The Ministry of Health in Israel approved DAYBUE for the treatment of Rett syndrome in adults and pediatric patients 2 years of age and older and weighing at least 9 kg in December 2025.

The FDA approved DAYBUE STIX in December 2025 for the treatment of Rett syndrome and we made the product available on a limited basis in the first quarter of 2026 followed by a broader launch in early Q2 2026.

In addition, we currently have contracts with multiple distributors outside the United States that distribute DAYBUE for limited named patient/compassionate use.

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License fees and royalties currently consist of milestone payments capitalized and subsequently amortized under our license agreement with Neuren.

License fees and royalties also include royalties of tiered, escalating, double-digit percentages due to Neuren based upon net sales of DAYBUE.

License fees and royalties also include royalties of tiered, escalating, double-digit percentages due to Neuren based upon net sales of DAYBUE products.

Research and Development Expenses

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To the extent that external expenses are not attributable to a specific project, they are allocated proportionally to each of the projects.

The following table summarizes our research and development expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended March 31,

The following table summarizes our research and development expenses for the three and six months ended June 30, 2026 and 2025 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Costs of external service providers:

NUPLAZID (pimavanserin)

DAYBUE (trofinetide)

DAYBUE (trofinetide) products

Remlifanserin

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* Includes upfront and milestone consideration as well as transaction costs associated with acquired in-process research and development.

At this time, due to the risks inherent in regulatory requirements and clinical development, we are unable to estimate with certainty the costs we will incur to support the commercialization of DAYBUE or DAYBUE STIX, as well as the further development of our early-stage product candidates.

At this time, due to the risks inherent in regulatory requirements and clinical development, we are unable to estimate with certainty the costs we will incur to support the commercialization of DAYBUE products, as well as the further development of our early-stage product candidates.

Likewise, we are unable to determine with certainty the anticipated completion dates for our current research and development programs.

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Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future.

We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the progress and timing of expenditures related to our commercial activities associated with our products and the extent to which we generate revenue from product sales, our further development of our early-stage product candidates and the progress and timing of expenditures related to studies of DAYBUE pursuant to our PMRs.

We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the progress and timing of expenditures related to our commercial activities associated with our products and the extent to which we generate revenue from product sales, our further development of our product candidates and the progress and timing of expenditures related to studies of DAYBUE pursuant to our PMRs.

Further, we expect our sales allowances to vary from quarter to quarter due to fluctuations in the volume of purchases eligible for government mandated discounts and rebates, as well as changes in discount percentages that may be impacted by potential future price increases and other factors.

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Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Comparison of the Three Months Ended March 31, 2026 and 2025

Comparison of the Three Months Ended June 30, 2026 and 2025

Product Sales, Net

Net product sales, comprised of NUPLAZID and DAYBUE, were $268.1 million and $244.3 million for the three months ended March 31, 2026 and 2025, respectively.

Net product sales of NUPLAZID were $166.9 million and $159.7 million for the three months ended March 31, 2026 and 2025, respectively.

Net product sales, comprised of NUPLAZID and DAYBUE products, were $308.0 million and $264.6 million for the three months ended June 30, 2026 and 2025, respectively.

Net product sales of NUPLAZID were $183.2 million and $168.5 million for the three months ended June 30, 2026 and 2025, respectively.

The increase in net product sales of NUPLAZID of $14.7 million was due to the growth in NUPLAZID unit sales in 2026 compared to 2025.

Net product sales of DAYBUE products were $124.8 million and $96.1 million for the three months ended June 30, 2026 and 2025, respectively.

The increase in net product sales of DAYBUE products of $28.7 million was due to the growth in DAYBUE unit sales as well as a higher average net selling price of DAYBUE products in 2026 compared to 2025.

Cost of Product Sales

Cost of product sales was $28.3 million and $20.7 million for the three months ended June 30, 2026 and 2025, respectively, or approximately 9% and 8% of net product sales, respectively.

Cost of product sales as a percentage of net product sales remained relatively flat during the three months ended June 30, 2026 as compared to the same period of 2025

Research and Development Expenses

Research and development expenses increased to $81.6 million for the three months ended June 30, 2026 from $78.0 million for the three months ended June 30, 2025.

The increase in research and development expenses was primarily related to increased expenditures for remlifanserin and ACP-211, offset by reduced expenditures for ending studies that took place in 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $160.3 million for the three months ended June 30, 2026 from $133.5 million for the three months ended June 30, 2025.

The increase in selling, general and administrative expenses was primarily driven by increased expenditures for DAYBUE products and NUPLAZID in the U.S., including the recent expansion of the DAYBUE and NUPLAZID teams.

Comparison of the Six Months Ended June 30, 2026 and 2025

Product Sales, Net

Net product sales, comprised of NUPLAZID and DAYBUE products, were $576.0 million and $508.9 million for the six months ended June 30, 2026 and 2025, respectively.

Net product sales of NUPLAZID were $350.1 million and $328.2 million for the six months ended June 30, 2026 and 2025, respectively.

The increase in net product sales of NUPLAZID of $21.9 million was mainly due to the growth in NUPLAZID unit sales in 2026 compared to 2025.

Net product sales of DAYBUE were $101.2 million and $84.6 million for the three months ended March 31, 2026 and 2025, respectively.

The increase in net product sales of DAYBUE of $16.6 million was primarily due to the growth in DAYBUE unit sales.

The following table provides a summary of activity with respect to our sales allowances and accruals for the three months ended March 31, 2026 (in thousands):

Net product sales of DAYBUE products were $226.0 million and $180.7 million for the six months ended June 30, 2026 and 2025, respectively.

The increase in net product sales of DAYBUE products of $45.3 million was primarily due to the growth in DAYBUE products unit sales.

The following table provides a summary of activity with respect to our sales allowances and accruals for the six months ended June 30, 2026 (in thousands):

Distribution Fees,

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Credits/payments for prior period sales

Balance as of March 31, 2026

Balance as of June 30, 2026

Cost of Product Sales

Cost of product sales was $24.8 million and $20.4 million for the three months ended March 31, 2026 and 2025, respectively, or approximately 9% and 8% of net product sales, respectively.

Cost of product sales as a percentage of net product sales remained relatively flat during the three months ended March 31, 2026 as compared to the same period of 2025.

Cost of product sales was $53.1 million and $41.1 million for the six months ended June 30, 2026 and 2025, respectively, or approximately 9% and 8% of net product sales, respectively.

Cost of product sales as a percentage of net product sales remained relatively flat during the six months ended June 30, 2026 as compared to the same period of 2025.

Research and Development Expenses

Research and development expenses was $76.9 million and $78.3 million for the three months ended March 31, 2026 and 2025, respectively.

The research and development expenses remained relatively flat as compared to the same period of 2025.

Research and development expenses was $158.4 million and $156.2 million for the six months ended June 30, 2026 and 2025, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $171.0 million for the three months ended March 31, 2026 from $126.4 million for the three months ended March 31, 2025.

The increase in selling, general and administrative expenses was primarily driven by increased investments to support continued growth of NUPLAZID and DAYBUE.

Selling, general and administrative expenses increased to $331.3 million for the six months ended June 30, 2026 from $259.9 million for the six months ended June 30, 2025.

The increase in selling, general and administrative expenses was primarily driven by increased investments to support continued growth of NUPLAZID and DAYBUE products.

Liquidity and Capital Resources

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• the costs of establishing, or contracting for, sales and marketing capabilities for our product candidates;

• the amount of U.S.

product sales from our products;

• the costs of preparing applications for regulatory approvals for DAYBUE in jurisdictions other than the U.S., for NUPLAZID in additional indications other than PDP and for other product candidates, as well as the costs required to support review of such applications;

• the costs of manufacturing and distributing our products for commercial use in the U.S.;

• the amount of product sales from our products;

• the costs of preparing applications for regulatory approvals for DAYBUE products in jurisdictions other than the U.S., for NUPLAZID in additional indications other than PDP and for other product candidates, as well as the costs required to support review of such applications;

• the costs of manufacturing and distributing our products for commercial use;

• our ability to obtain regulatory approval for, and subsequently generate product sales from, our product candidates;

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Additional funding, if obtained, may significantly dilute existing stockholders and could negatively impact the price of our stock.

We have invested a substantial portion of our available cash in money market funds, municipal bonds, and government sponsored enterprises in accordance with our investment policy.

We have invested a substantial portion of our available cash in money market funds, U.S.

treasury notes, and government sponsored enterprises in accordance with our investment policy.

Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of our investments to preserve principal and maintain liquidity.

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the payment will be set off against the allowance for such rebate that we have accrued up to the date of payment.

At March 31, 2026, we had $851.5 million in cash, cash equivalents, and investment securities, compared to $819.7 million at December 31, 2025.

At June 30, 2026, we had $956.5 million in cash, cash equivalents, and investment securities, compared to $819.7 million at December 31, 2025.

This $136.8 million increase was due to cash provided by operating activities.

Net cash provided by operating activities totaled $34.0 million for the three months ended March 31, 2026 compared to $20.3 million for the three months ended March 31, 2025.

This increase in cash provided by operations primarily resulted from the increase in product revenue partially offset by an increase in our selling, general and administrative cost.

Net cash provided by investing activities totaled $66.3 million for the three months ended March 31, 2026 compared to $124.0 million of net cash used in investing activities for the three months ended March 31, 2025.

The increase in net cash provided by investing activities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to increased net sales and maturity of investment securities.

Also during the three months ended March 31, 2025, there was a net payment of $98.8 million made to Neuren for the sale of the PRV and an annual net sales milestone which we did not have during the same period of 2026.

Net cash provided by financing activities increased to $4.2 million for the three months ended March 31, 2026 compared to $1.8 million for the three months ended March 31, 2025.

This increase in net cash provided by financing activities for the three months ended March 31, 2026 was attributable primarily to an increase in proceeds resulting from the exercise of employee stock options and awards.

Net cash provided by operating activities totaled $134.8 million for the six months ended June 30, 2026 compared to $84.3 million for the six months ended June 30, 2025.

This increase in cash provided by operations primarily resulted from the increase in product revenue partially offset by the increases in our research and development cost and selling, general and administrative cost.

Net cash provided by investing activities totaled $57.8 million for the six months ended June 30, 2026 compared to $167.3 million of net cash used in investing activities for the six months ended June 30, 2025.

The increase in net cash provided by investing activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to increased net sales and maturity of investment securities.

Also during the six months ended June 30, 2025, there was a net payment of $98.8 million made to Neuren for the sale of the PRV and an annual net sales milestone which we did not have during the same period of 2026.

Net cash provided by financing activities decreased to $14.7 million for the six months ended June 30, 2026 compared to $17.8 million for the six months ended June 30, 2025.

This decrease in net cash provided by financing activities for the six months ended June 30, 2026 was attributable primarily to a decrease in proceeds resulting from the exercise of employee stock options and awards.

Off-Balance Sheet Arrangements

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We do not have any direct investments in auction-rate securities or securities that are collateralized by assets that include mortgages or subprime debt.

If a 10 percent change in interest rates were to have occurred on March 31, 2026, this change would not have had a material effect on the fair value of our investment portfolio as of that date.

If a 10 percent change in interest rates were to have occurred on June 30, 2026, this change would not have had a material effect on the fair value of our investment portfolio as of that date.

Due to our investment in investment-grade, interest-bearing securities, as of the date of this Quarterly Report on Form 10-Q, we do not expect anticipated changes in interest rates to have a material effect on our interest rate risk in future reporting periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis