What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-05 · 74 added, 66 removed, 262 unchanged (35% of the section changed)

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Company Overview

At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.

We are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.

To date, we have focused on rare neurological diseases with a growing portfolio now spanning sleep/wake, neurobehavioral, and rare epilepsy, and we are harnessing scientific insights and pioneering approaches to advance meaningful treatments that help patients thrive.

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In addition, in June 2024, the FDA did not approve our sNDA seeking to expand the WAKIX label for the treatment of pediatric patients with cataplexy.

2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which is planned for the third quarter of 2025.

In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which was submitted in the third quarter of 2025.

We remain committed to obtaining pediatric exclusivity for WAKIX.

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We received data from the Pitolisant GR pilot bioequivalence study, which supports further development of Pitolisant GR.

In addition, we completed the Dosing Optimization study that supports imitating pitolisant GR at the therapeutic dose of 17.8mg without titration.

We initiated the pivotal bioequivalence study in the first quarter of 2025 and anticipate the topline data readout in the fourth quarter of 2025.

Our anticipated PDUFA date for Pitolisant GR is in 2026.

We anticipate a PDUFA date for Pitolisant GR in the first quarter of 2027.

We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials.

Preparations are ongoing to initiate Phase 3 registrational trials in narcolepsy and idiopathic hypersomnia (“IH”) in the fourth quarter of 2025.

Our anticipated PDUFA date for the Pitolisant HD narcolepsy and IH programs is in 2028.

In addition, we submitted an Investigational New Drug (“IND”) application for pitolisant HD with the FDA and preparations are ongoing to initiate Phase 3 registrational trials in narcolepsy and idiopathic hypersomnia (“IH”) in the fourth quarter of 2025.

We anticipate a PDUFA date for the Pitolisant HD narcolepsy and IH programs in 2028.

A phase 1b study was conducted to evaluate the safety and tolerability of pitolisant at repeat doses of up to 180mg and the initial results are consistent with the known safety profile of pitolisant and support advancement of the Pitolisant HD development program.

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In June 2025, we announced positive pre-clinical data demonstrating significant wake-promoting and cataplexy-suppressing effects in a standard transgenic mouse model of narcolepsy type 1, and presented safety data from the three month GLP toxicity studies in two different species.

We plan to file an investigational medicinal product dossier (“IMPD”) with the EMA and begin first-in-human studies in the second half of 2025 with topline data anticipated in 2026.

We filed an investigational medicinal product dossier (“IMPD”) with the EMA and are on track to begin first-in-human studies in the fourth quarter of 2025 with topline data anticipated in 2026.

In June 2025, we entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with a related party, CiRC Biosciences, Inc.

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The most common adverse effect observed in clinical studies has been application site pain, which has occurred in less than 7% of patients.

ZYN002 is currently working toward completion of a Phase 3 registrational trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”), which was designed to confirm the positive findings from the prespecified analysis of the primary outcome in the subgroup of patients with complete methylation from the Phase 2/3 CONNECT study conducted by Zynerba.

We believe the total addressable market for ZYN002 among patients with FXS is approximately 25,000 people based on an estimated current FXS prevalence of up to 87,000 cases and up to 40,000 diagnosed FXS cases.

We have completed enrollment in our ZYN002 Phase 3 registrational trial and topline data is on track for the third quarter of 2025.

ZYN002 has patent protection for the treatment of FXS until 2038.

Based on the positive proof-of-concept (“PoC”) study data obtained by Zynerba in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025 in 22q deletion syndrome, pending positive data from the RECONNECT study.

In September 2025, ZYN002 completed a Phase 3 registrational trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”), which was designed to confirm the positive findings from the prespecified analysis of the primary outcome in the subgroup of patients with complete methylation from the Phase 2/3 CONNECT study conducted by Zynerba.

The RECONNECT study did not meet the primary endpoint of improvement in social avoidance primarily due to a higher than expected placebo response rate.

We are currently reviewing the full data set from the RECONNECT study and determining the next steps for the FXS program.

We have paused the initiation of a Phase 3 study in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms.

Rare Epilepsy Franchise

In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc.

In April 2024, we acquired Epygenix Therapeutics, Inc.

(“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”).

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We have continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019.

As of June 30, 2025, there are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) and approximately 5,000 HCPs who do not participate in the oxybate REMS programs.

The average number of patients on WAKIX for the three months ended June 30, 2025, was approximately 7,600.

Additionally, as of June 30, 2025, we have formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

As of September 30, 2025, there are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) and approximately 5,000 HCPs who do not participate in the oxybate REMS programs.

The average number of patients on WAKIX for the three months ended September

30, 2025, was approximately 8,100.

Additionally, as of September 30, 2025, we have formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Financial Operations Overview

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We will continue to assess inventory levels in future periods as demand for WAKIX and the rate of inventory turnover evolves.

We currently have adequate supply of WAKIX to cover demand into the second quarter of 2027, with additional API on-hand inventory to support at least two years beyond this time frame .

We currently have adequate supply of WAKIX to cover demand into the third quarter of 2027, with additional API on-hand inventory to support at least two years beyond this time frame .

Research and Development Expenses

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● manufacturing costs in connection with producing materials for use in conducting clinical trials ;

● costs related to packaging and labelling of clinical supplies;

● costs related to packaging, labelling and distribution of clinical supplies;

● other third-party expenses (e.g., consultants, advisors) directly attributable to the development of our product candidates;

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Product candidates in later stages of clinical development generally have higher development costs in the current period than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, milestone payments, and the cost of submitting an NDA to the FDA (and/or other regulatory authorities).

We expect our research and development expenses to be significant as we advance our current clinical development programs and prepare to seek regulatory approval for additional indications for pitolisant, complete the Phase 3 clinical trials for ZYN002, EPX-100 and advance the development of Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102 toward new indications .

We expect our research and development expenses to be significant as we advance our current clinical development programs and prepare to seek regulatory approval for additional indications for pitolisant, complete the Phase 3 clinical trials for EPX-100 and advance the development of Pitolisant GR, Pitolisant HD, BP1.15205, EPX-200 and HBS-102 toward new indications .

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any additional indications for pitolisant or other product candidates that we move forward for regulatory approval.

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Additionally, we received consulting services from Paragon.

We paid fees of $0.2 million and $0.3 million to Paragon related to rent and consulting services for the three and six months ended June 30, 2025, respectively.

We paid fees of $0.1 million and $0.4 million to Paragon related to rent and consulting services for the three and nine months ended September 30, 2025, respectively.

Interest Expense

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The following table sets forth selected items in our unaudited condensed consolidated statements of operations for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Net Product Revenue

Net product revenue increased by $27.7 million, or 16.0%, for the three months ended June 30, 2025, and increased by $57.8 million, or 17.7%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The increase for the three months ended June 30, 2025, was primarily due to a 10.0% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates of approximately 1.0%.

The increase for the six months ended June 30, 2025, was primarily due to a 13.2% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates and co-pay assistance of approximately 2.0%.

Net product revenue increased by $53.4 million, or 28.7%, for the three months ended September 30, 2025, and increased by $111.2 million, or 21.7%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The increase for the three months ended September 30, 2025, was primarily due to a 26.8% increase in the number of units shipped, and the impact of a 7.0% price increase partially offset by higher rebates of approximately 5.1%.

The increase for the nine months ended September 30, 2025, was primarily due to an 18.0% increase in the number of units shipped, and the impact of a 7.0% price increase partially offset by higher rebates of approximately 3.0%.

The price increase occurred in January 2025.

Cost of Product Sales

Cost of product sales increased by $6.0 million, or 18.7%, for the three months ended June 30, 2025, and increased by $10.5 million, or 17.6%, for the six months ended June 30, 2025, compared to the same period in 2024.

Cost of product sales as a percentage of net product revenue was 19.0% and 18.2% for the three and six months ended June 30, 2025, respectively, compared to 18.6% and 18.2% for the three and six months ended June 30, 2024, respectively.

The increase in cost of product sales was primarily due to higher royalties as a result of the increase in net product revenue of WAKIX.

Cost of product sales increased by $16.9 million, or 39.4%, for the three months ended September 30, 2025, and increased by $27.4 million, or 26.7%, for the nine months ended September 30, 2025, compared to the same period in 2024.

Cost of product sales as a percentage of net product revenue was 24.9% and 20.8% for the three and nine months ended September 30, 2025, respectively, compared to 23.0% and 19.9% for the three and nine months ended September 30, 2024, respectively.

The increase in cost of product sales in both comparable periods was primarily due to higher royalties as a result of the increase in net product revenue of WAKIX.

The increase in cost of product sales as a percentage of net revenue in both comparable periods was due to triggering a higher royalty tier under the 2017 LCA earlier in 2025 compared to 2024.

Research and Development Expenses

The following table is a summary of our research and development expenses:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Other research and development

Research and development expenses decreased by $13.4 million, or 21.1%, for the three months ended June 30, 2025, and decreased by $1.1 million, or 1.3%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The decrease for the three months ended June 30, 2025 was primarily driven by $42.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement ($25.5 million) and the acquisition of Epygenix ($17.1 million) that occurred during the three months ended June 30, 2024, and a $0.9 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for the IH indication, partially offset by $15.0 million in IPR&D charges related to the CiRC Agreement during the three months ended June 30, 2025 , a combined $11.1 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we ramped up clinical trials and manufacturing, a $2.7 million increase in personnel costs associated with higher headcount, a $0.5 million increase in stock compensation associated with new equity awards and $0.9 million in other research and development expenses.

The decrease for the six months ended June 30, 2025 was primarily driven by $42.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement ($25.5 million) and the acquisition of Epygenix ($17.1 million) that occurred during the six months ended June 30, 2024, and a $4.6 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for the IH indication, partially offset by $15.0 million in IPR&D charges related to the CiRC Agreement during the six months ended June 30, 2025 , a combined $23.4 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we ramped up clinical trials and manufacturing, a $4.8 million increase in personnel costs associated with higher headcount, a $1.4 million increase in stock compensation associated with new equity awards and $1.5 million in other research and development expenses.

Research and development expenses increased by $29.6 million, or 116.5%, for the three months ended September 30, 2025, and increased by $28.5 million, or 25.6%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The increase for the three months ended September 30, 2025 was primarily driven by IPR&D charges of $15.0 million related to a clinical milestone achieved for ZYN002 that occurred during the three months ended September 30, 2025, a combined $11.6 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $1.9 million increase in personnel costs associated with higher headcount, a $0.3 million increase in stock compensation associated with new equity awards and $2.6 million in other research and development expenses primarily associated with BP.15205, offset by a $0.8 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for the IH indication, and a $1.0 million preclinical milestone achieved for HBS-102 that occurred during the three months ended September 30, 2024.

The increase for the nine months ended September 30, 2025 was primarily driven by IPR&D charges of $30.0 million related to a $15.0 million clinical milestone achieved for ZYN002 and a $15.0 million upfront fee related to the CiRC Agreement, a combined $35.0 million increase in research and development expenses for EPX-100, ZYN002 and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $6.7 million increase in personnel costs associated with higher headcount, a $1.7 million increase in stock compensation associated with new equity awards and $4.1 million in other research and development expenses primarily associated with BP.15205 offset by $43.6 million in IPR&D charges associated with the acquisition of

Epygenix ($17.1 million), a preclinical milestone achieved for HBS-102 ($1.0 million) and the Bioprojet Sublicense Agreement ($25.5 million) that occurred during the nine months ended September 30, 2024, and a $5.5 million decrease in clinical development associated with pitolisant, driven by a decrease in clinical trial expenses for the IH indication.

Sales and Marketing Expenses

Sales and marketing expenses increased by $1.6 million, or 5.5%, for the three months ended June 30, 2025, and increased by $5.0 million, or 9.0%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The increase for the three months ended June 30, 2025, was primarily due to a $1.0 million increase in patient engagement and marketing activities and a $0.9 million increase in personnel costs offset by a $0.4 million decrease in stock compensation expense.

The increase for the six months ended June 30, 2025, was primarily due to a $2.9 million increase in patient engagement and marketing activities, a $1.8 million increase in personnel costs and a $0.3 million increase in stock compensation expense.

The increase in patient engagement and marketing activities for both comparable periods was driven by our continued growth of WAKIX and the increase in personnel costs and stock compensation was related to costs associated with the separation of an executive of the Company.

Sales and marketing expenses increased by $2.0 million, or 7.2%, for the three months ended September 30, 2025, and increased by $7.0 million, or 8.4%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The increase for the three months ended September 30, 2025, was primarily due to a $1.6 million increase in patient engagement and marketing activities and a $0.7 million increase in personnel costs, offset by a $0.3 million decrease in stock compensation expense.

The increase for the nine months ended September 30, 2025, was primarily due to a $4.5 million increase in patient engagement and marketing activities and a $2.5 million increase in personnel costs.

The increase in patient engagement and marketing activities for both comparable periods was driven by our continued growth of WAKIX and the increase in personnel costs was driven primarily by higher headcount.

General and Administrative Expenses

General and administrative expenses increased by $6.7 million, or 24.6%, for the three months ended June 30, 2025, and increased by $12.3 million, or 23.2%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The increase in the three months ended June 30, 2025, was primarily due to a $6.1 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.5 million increase in stock compensation associated with new equity awards, and a $0.1 million increase in personnel costs associated with higher headcount.

The increase in the six months ended June 30, 2025, was primarily due to a $10.6 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.8 million increase in stock compensation associated with new equity awards, and a $0.8 million increase in personnel costs associated with higher headcount.

General and administrative expenses increased by $1.2 million, or 4.3%, for the three months ended September 30, 2025, and increased by $13.5 million, or 16.6%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The increase in the three months ended September 30, 2025, was primarily due to a $1.2 million increase in legal and professional fees, primarily associated with patent lawsuits and a $0.6 million increase in personnel costs associated with higher headcount offset by a $0.7 million decrease in stock compensation.

The increase in the nine months ended September 30, 2025, was primarily due to a $11.8 million increase in legal and professional fees, primarily associated with patent lawsuits, and a $1.4 million increase in personnel costs associated with higher headcount.

Interest Expense

Interest expense decreased by $0.8 million, or 17.2%, for the three months ended June 30, 2025, and decreased by $1.5 million, or 16.3%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The decrease for the three and six months ended June 30, 2025, was primarily due to lower interest rates as a result of the reduction of the Term SOFR.

Interest expense decreased by $0.7 million, or 16.7%, for the three months ended September 30, 2025, and decreased by $2.2 million, or 16.4%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The decrease for the three and nine months ended September 30, 2025, was primarily due to lower average outstanding debt balances compared to the prior year.

Interest Income

Interest income increased by $0.6 million, or 12.6%, for the three months ended June 30, 2025, and increased by $1.2 million, or 13.2%, for the six months ended June 30, 2025, compared to the same periods in 2024.

The increase for the three and six months ended June 30, 2025, was primarily a result of having higher invested balances compared to the prior year.

Income tax expense was $9.9 million, representing a 19.9% effective tax rate, for the three months ended June 30, 2025, compared to $10.1 million, representing a 46.6% effective tax rate, for the three months ended June 30, 2024.

Income tax expense was $21.5 million, representing a 20.1% effective tax rate, for the six months ended June 30, 2025, compared to $23.6 million, representing a 32.1% effective tax rate, for the six months ended June 30, 2024.

The decrease in our effective tax rate for both comparable periods was primarily driven by a $17.1 million IPR&D charge related to the Epygenix acquisition recognized during the three and six months ended June 30, 2024, which was nondeductible for tax purposes, an increase in the benefits from research and development and orphan drug credits and a decrease in state taxes.

The effective tax rate of 19.9% for the three months ended June 30, 2025, included 1.3% in state income taxes, offset by a 2.7% benefit from credits.

The effective tax rate of 20.1% for the six months ended June 30, 2025, included 1.2% in state income taxes, offset by a 2.6% benefit from credits.

Interest income increased by $0.8 million, or 16.2%, for the three months ended September 30, 2025, and increased by $2.0 million, or 14.3%, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The increase for the three and nine months ended September 30, 2025, was primarily a result of having higher invested balances compared to the prior year.

Income tax expense was $16.6 million, representing a 24.6% effective tax rate, for the three months ended September 30, 2025, compared to $16.1 million, representing a 25.9% effective tax rate, for the three months ended September 30, 2024.

Income tax expense was $38.1 million, representing a 21.9% effective tax rate, for the nine months ended September 30, 2025, compared to $39.6 million, representing a 29.2% effective tax rate, for the nine months ended September 30, 2024.

The decrease in our effective tax rate for both comparable periods was primarily driven by an increase in the benefits from research and development and orphan drug credits and a decrease in state taxes, partially offset by an IPR&D charge of $15.0 million related to ZYN002 clinical milestones that was incurred during the three months ended September 30, 2025, which is nondeductible for tax purposes .

The effective tax rate of 24.6% for the three months ended September 30, 2025, included 3.5% in nondeductible IPR&D and 1.7% in state income taxes, offset by a 2.2% benefit from

The effective tax rate of 21.9% for the nine months ended September 30, 2025, included 1.6% in state income taxes and 1.4% in nondeductible IPR&D, offset by a 2.6% benefit from credits.

Liquidity, Sources of Funding and Capital Resources

As of June 30, 2025, we had cash, cash equivalents, and investments of $672.3 million, outstanding debt of $173.8 million and retained earnings of $87.6 million.

As of September 30, 2025, we had cash, cash equivalents, and investments of $778.4 million, outstanding debt of $170.0 million and retained earnings of $138.4 million.

The unaudited condensed consolidated financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

We believe that our existing cash, cash equivalents and investments on hand as of June 30, 2025, will enable us to meet our operational liquidity needs and fund our potential investing activities for the next 12 months.

We believe that our existing cash, cash equivalents and investments on hand as of September 30, 2025, will enable us to meet our operational liquidity needs and fund our potential investing activities for at least the next 12 months.

We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.

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The TLA Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions.

We were in compliance with all covenants as of June 30, 2025.

We were in compliance with all covenants as of September 30, 2025.

Share Repurchases

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The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason.

During the three and six months ended June 30, 2025, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program.

As of June 30, 2025, the remaining amount of common stock authorized for repurchases was $150.0 million.

During the three and nine months ended September 30, 2025, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program.

As of September 30, 2025, the remaining amount of common stock authorized for repurchases was $150.0 million.

Epygenix Acquisition

In April 2024, we acquired all of the outstanding capital stock of Epygenix, pursuant to the terms of a stock purchase agreement.

In April 2024, we acquired Epygenix, pursuant to the terms of a stock purchase agreement.

In connection with the closing of the transaction, we paid the former stockholders of Epygenix up front consideration of $35.0 million less a working capital adjustment.

In addition, we will also be obligated to pay up to $130.0 million upon the achievement of development and regulatory milestones and up to $515.0 million upon the achievement of certain sales-based milestones, in each case to Epygenix’s former stockholders.

In addition, we will also be obligated to pay up to $130.0 million upon the achievement of development and regulatory milestones and up to $515.0

million upon the achievement of certain sales-based milestones, in each case to Epygenix’s former stockholders.

As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of DS and LGS .

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In addition, we have an option to obtain an exclusive license for each of the Candidates that would grant us global rights to develop, manufacture and commercialize that Candidate.

We would be obligated to pay an option exercise fee of $8.0 million, or $16.0 million in the aggregate if the options related to both Candidates were exercised, and we would be obligated upon achievement to pay future development, regulatory and sales-based milestones, as well as royalties on sales of any product derived from the Candidates.

The following table sets forth a summary of our cash flows for the six months ended June 30, 2025, and 2024:

Six Months Ended June 30,

We would be obligated to pay an option exercise fee of $8.0

million, or $16.0 million in the aggregate if the options related to both Candidates were exercised, and we would be obligated upon achievement to pay future development, regulatory and sales-based milestones, as well as royalties on sales of any product derived from the Candidates.

Recent Milestones

In September 2025, we achieved a clinical milestone for ZYN002 that triggered a $15.0 million payment to contingent value rights holders per the terms of our acquisition of Zynerba, which will be paid in the fourth quarter of 2025.

In September 2024, we achieved a preclinical milestone that triggered a $1.0 million payment under the provisions of the APA, which was paid in October 2024.

The following table sets forth a summary of our cash flows for the nine months ended September 30, 2025, and 2024:

Nine Months Ended September 30,

Selected cash flow data

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Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2025, primarily consisted of net income of $85.3 million adjusted for non-cash items of $23.8 million related to stock-based compensation expense, $15.0 million related to acquired IPR&D and $11.9 million related to intangible amortization and depreciation, partially offset by $10.8 million related to deferred tax assets.

Net working capital excluding cash increased by $12.4 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and an increase in accounts payable due to the timing of payments.

Net cash provided by operating activities for the six months ended June 30, 2024, primarily consisted of net income of $49.9 million adjusted for non-cash items of $42.6 million related to acquired IPR&D, $21.4 million related to stock-based compensation expense, and $12.2 million related to intangible amortization and depreciation, offset by $17.8 million related to deferred tax assets.

Net working capital excluding cash increased by $34.8 million.

Net cash provided by operating activities for the nine months ended September 30, 2025, primarily consisted of net income of $136.2 million adjusted for non-cash items of $34.7 million related to stock-based compensation expense, $30.0 million related to acquired IPR&D, $17.9 million related to intangible amortization and depreciation, offset by $14.7 million related to deferred tax assets.

Net working capital excluding cash decreased by $17.8 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period, offset by an increase in accounts payable due to the timing of payments and an increase in accrued expenses primarily from higher accrued rebates.

Net cash provided by operating activities for the nine months ended September 30, 2024, primarily consisted of net income of $96.0 million adjusted for non-cash items of $42.6 million related to acquired IPR&D, $32.9 million related to stock-based compensation expense, and $18.1 million related to intangible amortization and depreciation, offset by $22.6 million related to deferred tax assets.

Net working capital excluding cash increased by $23.1 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and decreases in accounts payable due to the timing of payments.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025, was $17.2 million, which was primarily attributable to $43.0 million in purchases of debt securities, a $15.0 million upfront fee paid to CiRC and $0.1 million in purchases of property and equipment, partially offset by $40.9 million from maturities of investments.

Net cash used in investing activities for the six months ended June 30, 2024, was $61.0 million, which was primarily attributable to $46.3 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, $33.1 million net cash consideration paid for the acquisition of Epygenix, and $0.6 million in purchases of property and equipment, partially offset by $44.5 million from maturities of investments.

Net cash used in investing activities for the nine months ended September 30, 2025, was $22.0 million, which was primarily attributable to $67.3 million in purchases of debt securities, a $15.0 million upfront fee paid to CiRC and $0.2 million in purchases of property and equipment, partially offset by $60.5 million from maturities of investments.

Net cash used in investing activities for the nine months ended September 30, 2024, was $60.3 million, which was primarily attributable to $69.6 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, $33.1 million net cash consideration paid for the acquisition of Epygenix, and $0.6 million in purchases of property and equipment, partially offset by $68.5 million from maturities of investments.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2025, was $3.0 million, which primarily consisted of $7.5 million in principal payments associated with the TLA Credit Agreement and $2.3 million of employee withholding tax payments related to stock-based awards, partially offset by $6.8 million in proceeds from the exercise of stock options.

Net cash used in financing activities for the six months ended June 30, 2024, was $7.1 million, which primarily consisted of $7.5 million in principal payments associated with the TLA Credit Agreement, partially offset by $0.7 million in proceeds from the exercise of stock options and $0.3 million of employee withholding tax payments related to stock-based awards.

Net cash used in financing activities for the nine months ended September 30, 2025, was $6.0 million, which primarily consisted of $11.3 million in principal payments associated with the TLA Credit Agreement and $2.3 million of employee withholding tax payments related to stock-based awards, partially offset by $7.6 million in proceeds from the exercise of stock options.

Net cash used in financing activities for the nine months ended September 30, 2024, was $8.3 million, which primarily consisted of $11.3 million in principal payments associated with the TLA Credit Agreement, partially offset by $3.2 million in proceeds from the exercise of stock options, and $0.3 million of employee withholding tax payments related to stock-based awards.

Critical Accounting Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis