What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-04 · 140 added, 130 removed, 206 unchanged (57% of the section changed)

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We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Important factors that could cause such differences include, but are not limited to, statements about:

All statements other than statements of historical

facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these items or similar expressions.

All of our forward-looking statements are qualified in their entirety by reference to known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

These factors include , but are not limited to, risks and uncertainties relating to:

● our commercialization efforts and strategy for WAKIX;

● the rate and degree of market acceptance and clinical utility of pitolisant in additional indications, if approved, and any other product candidates we may develop or acquire, if approved;

● our research and development plans, including our plans to explore the therapeutic potential of pitolisant in additional indications, progress developing the new Pitolisant Gastro-resistant ( “ Pitolisant GR ” ) and Pitolisant High Dose ( “ Pitolisant HD ” ) formulations, and the development of ZYN002, BP1-15205, clemizole hydrochloride ( “ EPX-100 ” ) and other compounds;

● our research and development plans, including our plans to explore the therapeutic potential of pitolisant in additional indications, progress developing the new Pitolisant Gastro-resistant ( “ Pitolisant GR ” ) and Pitolisant High Dose ( “ Pitolisant HD ” ) formulations, and the development of BP-205, clemizole hydrochloride ( “ EPX-100 ” ) and other compounds;

● our ongoing and planned clinical trials;

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● significant competition in our industry;

● our intellectual property position;

● our intellectual property positions;

● loss or retirement of key members of management;

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● the impact of government laws and regulations;

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions.

● other risks and uncertainties identified under the “ Risk Factors ” section or other portions of this report or other of our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions.

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Company Overview

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.

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.

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

help patients thrive.

Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc.

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We aligned with the FDA on the proposed Phase 3 registration study design to support further investigation of pitolisant as a potential treatment to address the unmet medical need for children, adolescents and adults with PWS experiencing EDS, for which there is currently no approved treatment.

In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as the registrational trial and also support our efforts to seek pediatric exclusivity for pitolisant.

In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as the registrational trial and support our efforts to seek pediatric exclusivity for pitolisant.

In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.

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In June 2021, we initiated a Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and announced topline results from this trial in the fourth quarter of 2023, in which clinically meaningful improvements were demonstrated in EDS and fatigue, the two most prominent non-muscular symptoms in patients with DM1.

The safety and tolerability profile of pitolisant in adult patients with DM1 was consistent with the established safety and tolerability profile of pitolisant with no new safety signals detected and no serious adverse events reported.

The safety profile of pitolisant in adult patients with DM1 was consistent with the established safety and tolerability profile of pitolisant with no new safety signals detected and no serious adverse events reported.

Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication.

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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.

In February 2026, the FDA approved WAKIX for the treatment of cataplexy in patients six years and older with narcolepsy.

We remain committed to obtaining pediatric exclusivity for WAKIX.

We believe the initiation of the PWS Phase 3 registrational trial, the TEMPO study, and our current data in pediatric narcolepsy, which resulted in the FDA’s approval of WAKIX in its current pediatric indication, are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.

We believe the initiation of the PWS Phase 3 registrational trial, the TEMPO study, and our current data in pediatric narcolepsy, which resulted in

the FDA’s approval of WAKIX in its current pediatric indication, are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.

We have expanded our pipeline through the acquisition of additional assets that focus on addressing the unmet needs of patients living with rare neurological diseases as well as patients living with other neurological diseases who have unmet medical needs.

We target assets that will allow us to further leverage the expertise and infrastructure that we have successfully built at Harmony so we can optimize the benefit of internal synergies.

We are targeting assets that will allow us to further leverage the expertise and infrastructure that we have successfully built at Harmony so we can optimize the benefit of internal synergies.

Consistent with this objective, in July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.

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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.

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

We initiated the pivotal bioequivalence study in the first quarter of 2025.

The topline data readout in the fourth quarter of 2025 showed pitolisant GR to be bioequivalent to WAKIX.

In addition, we completed a dosing optimization study that supports initiating pitolisant GR at the therapeutic dose of 17.8mg without titration.

We are on track to submit an NDA in the second quarter of 2026 and 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.

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.

Utility patents have been filed for Pitolisant GR and Pitolisant HD, with the potential for patent protection to the mid-2040’s.

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

After receiving “Study May Proceed” letters from the FDA, the Phase 3 registrational trial in narcolepsy, ONSTRIDE1, and the Phase 3 registrational trial in IH, ONSTRIDE2, were initiated.

We anticipate topline data in 2027 and a potential PDUFA date in 2028.

Utility patents have been filed for both of these formulations, with the potential for patent protection to the mid-2040’s.

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP-205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).

Under the Sublicense, we obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of BP1.15205.

Under the Sublicense, we have obtained the exclusive right to develop, manufacture and commercialize BP-205 in the United States and Latin American territories, which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of BP-205.

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 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.

We filed an investigational medicinal product dossier (“IMPD”) with the EMA and began first-in-human studies in the fourth quarter of 2025 with topline data from the single ascending dose part of the study anticipated in 2026.

We plan to submit a United States IND in mid-2026 and initiate a sleep-deprived healthy volunteer study in the second half of 2026.

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

Under this agreement, Harmony and CiRC will collaborate on the research and development of two discovery-stage candidates (together the “Candidates”) using cell replacement therapy for the treatment of refractory epilepsies and treatment-resistant narcolepsy.

Under this agreement, Harmony and CiRC will collaborate on the research and development of two discovery-stage candidates, CBS104 for refractory epilepsy and CBS105 for treatment-resistant narcolepsy (together the “Candidates”), using cell replacement therapy for the treatment of refractory epilepsies and treatment-resistant narcolepsy.

In August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor type 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.

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We conducted a preclinical PoC study to assess the effect of HBS-102 on hyperphagia, weight gain and other metabolic parameters in a mouse model of PWS.

The final report was received during the third quarter of 2024.

In addition, a 13-week toxicology study has been completed.

The results from these preclinical studies are encouraging.

Neurobehavioral Franchise

In October 2023, we acquired Zynerba Pharmaceuticals, Inc.

(“Zynerba”), adding global rights to develop, manufacture and commercialize ZYN002, which is a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery.

Transdermal delivery provides better gastrointestinal tolerability and minimize the potential for drug interactions or impacts on liver function tests by avoiding first-pass metabolism in the liver.

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

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.

The final report was received during the third quarter of 2024, and the results are consistent with the expected results.

In addition, a 13-week toxicology study has been completed, and we believe the preliminary results are encouraging.

We are exploring an opportunity to evaluate a novel amorphous form of pitolisant in larger CNS indications.

Our current efforts are focused on formulation optimization with new modes of delivery and towards a Phase 1 PK study.

Rare Epilepsy Franchise

In April 2024, we acquired Epygenix Therapeutics, Inc.

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

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

As a result, we now have an exclusive license relating to the use of EPX-100 for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”).

As a result, we now have an exclusive license relating to the use of clemizole (“EPX-100”) for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”).

Patients with both conditions often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy.

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EPX-100 is currently in two Phase 3 registrational clinical trials, one for each of DS (the ARGUS Study) and LGS (the LIGHTHOUSE Study).

Additionally, we are currently developing a liquid formulation of lorcaserin for the treatment of DEEs (“EPX-200”), another asset acquired pursuant to the terms of the Epygenix Agreement.

We anticipate topline data in 2027 and a potential PDUFA date in 2028.

In December 2025, we announced initial open-label extension data from the ARGUS Study, which showed clinically meaningful reductions in seizure activity in participants with DS and a favorable benefit-risk profile.

Additionally, we are currently developing a liquid formulation of lorcaserin, a selective 5HT-2C agonist, for the treatment of DEEs (“EPX-200”), another asset acquired pursuant to the terms of the Epygenix Agreement.

EPX-200 is currently in the pre-IND phase.

Commercial Performance Metrics

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 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.

As of March 31, 2026, we have continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019.

There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies.

The average number of patients on WAKIX for the three months ended March 31, 2026, was approximately 8,500.

Additionally, as of March 31, 2026, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Financial Operations Overview

Net Product Revenue

Net product revenue includes revenue from product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts.

Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different patient segments and/or changes in our estimates .

Cost of Product Sales

Cost of product sales includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs, depreciation and salaries of employees involved with oversight of production.

We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX .

The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be January 2027.

We regularly review our inventory levels and expect write-offs from time to time.

Net product revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts.

Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different customer segments and/or changes in our estimates .

Cost of Product Sold

Cost of product sold includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs, and salaries of employees involved with oversight of production.

We expect the cost of product sold to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX .

The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be May 2027.

We regularly review our inventory levels and expect write-offs from time to

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 third 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 fourth quarter of 2028, with additional API on-hand inventory to support at least 24 months beyond this time frame .

Research and Development Expenses

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with PWS and DM1 and the development of our product candidates ZYN002, EPX-100, EPX-200 Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102.

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS, and DM1 and the development of our product candidates EPX-100, EPX-200 Pitolisant GR, Pitolisant HD, BP-205 and HBS-102.

We also incur research and development expenses related to our team of Medical Science Liaisons (“MSLs”) who interact with key opinion leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant.

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

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

● costs related to packaging and labelling of clinical supplies;

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

● payments associated with the achievement of development and regulatory milestones;

● acquired in-process research and development;

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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 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.

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 and Pitolisant GR, complete the Phase 3 clinical trials for EPX-100 and Pitolisant HD, and advance the development of BP-205, CBS105 and HBS-102 toward new indications .

product candidates that we move forward for regulatory approval.

There are numerous risks and uncertainties associated with developing product candidates, including uncertainty related to :

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Sales and Marketing Expenses

Our sales and marketing expenses primarily relate to the market development and commercialization activities of WAKIX for the treatment of EDS and cataplexy in adult patients with narcolepsy.

Our sales and marketing expenses primarily relate to the market development and commercialization activities of WAKIX for the treatment of EDS and cataplexy in patients six years and older with narcolepsy.

Market development and commercial activities account for a significant portion of our operating expenses and are expensed as incurred.

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General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments.

General and administrative expenses also consist of office leases, legal fees, including ANDA litigation expenses, and professional fees, including tax and accounting, insurance and consulting fees.

General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting, and consulting fees.

We anticipate that our general and administrative expenses will increase in the future to support our continued commercialization efforts, ongoing and future potential research and development activities, and increased costs of operating as a public company.

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Paragon Agreement

We are party to a right-of-use agreement with Paragon Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois.

Additionally, we received consulting services from Paragon.

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.

We are party to a right-of-use agreement with Paragon whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois.

We paid fees of $0.1 million to Paragon related to rent for each of the three months ended March 31, 2026, and 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 September 30,

Nine Months Ended September 30,

(In thousands)

Three Months Ended March 31,

(In thousands)

Net product revenue

Cost of product sales

Cost of product sold

Operating expenses:

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Net Product Revenue

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%.

Net product revenue increased by $30.7 million, or 16.6%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase for the three months ended March 31, 2026, was primarily due to a 12.1% increase in the number of units shipped and the impact of a 7% price increase partially offset by higher rebates of approximately 3.7% .

The price increase occurred in January 2026.

Cost of Product Sales

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.

Cost of Product Sold

Cost of product sold increased by $12.5 million, or 39.1%, for the three months ended March 31, 2026, compared to the same period in 2025.

Cost of product sold as a percentage of net product revenue was 20.7% for the three months ended March 31, 2026, compared to 17.3% for the three months ended March 31, 2025.

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

The increase in the cost of product sold as a percentage of net revenue was driven by new royalties related to the Novitium License Agreement.

Research and Development Expenses

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

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

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Other research and development

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.

Research and development expenses increased by $34.8 million, or 100.9%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase for the three months ended March 31, 2026, was primarily driven by IPR&D charges of $32.0 million related to upfront license fee payments that occurred during the three months ended March 31, 2026, a combined $7.4 million increase in research and development expenses for EPX-100 and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $1.0 million increase associated with development of BP-205, a $0.8 million increase in personnel costs associated with higher headcount, a $0.1 million increase in stock compensation associated with new equity awards, and a $0.5 million increase in other research and development expenses offset by a $7.0 million decrease in clinical expenses as we phase out the ZYN002 program in FXS.

Sales and Marketing Expenses

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.

Sales and marketing expenses increased by $1.0 million, or 3.2%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase for the three months ended March 31, 2026, was primarily due to a $2.6 million increase in patient engagement and marketing activities and a $0.5 million increase in personnel costs, offset by a $1.1 million decrease in travel and meeting expense and a $1.0 million decrease in stock compensation expense.

The increase in patient engagement and marketing activities 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 $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.

General and administrative expenses increased by $1.3 million, or 4.0%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase in the three months ended March 31, 2026, was primarily due to a $2.3 million increase in legal and professional fees, primarily associated with patent lawsuits and a $0.3 million increase in personnel costs associated with higher headcount offset by a $1.3 million decrease in stock compensation.

Interest Expense

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 expense decreased by $0.6 million, or 15.7%, for the three months ended March 31, 2026, compared to the same period in 2025.

The decrease for the three months ended March 31, 2026, was primarily due to lower average outstanding debt balances and lower interest rates compared to the prior year.

Interest Income

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.

Interest income increased by $0.7 million, or 14.1%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase for the three months ended March 31, 2026, was primarily a result of having higher invested balances compared to the prior year.

Income tax expense was $7.2 million, representing an 18.1% effective tax rate, for the three months ended March 31, 2026, compared to $11.6 million, representing a 20.3% effective tax rate, for the three months ended March 31, 2025.

The decrease in our effective tax rate for the three months ended March 31, 2026, was primarily driven by an increase in the benefits from research and development and orphan drug credits.

The effective tax rate of 18.1% for the three months ended March 31, 2026, included 1.3% in state income taxes offset by a 4.0% benefit from credits.

Liquidity, Sources of Funding and Capital Resources

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.

As of March 31, 2026, we had cash, cash equivalents, and investments of $870.5 million, outstanding debt of $160.0 million and retained earnings of $193.4 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 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 believe that our existing cash, cash equivalents and investments on hand as of March 31, 2026, 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 September 30, 2025.

As of March 31, 2026, the Company had an event of default, which dated back to July 2025, related to a nonfinancial covenant due to a delay in a subsidiary joining the TLA Credit Agreement as a guarantor.

On May 4, 2026, the Company entered into a Waiver and Consent Agreement with the Administrative Agent and certain lenders, whereby the event of default was waived.

The Company has made all required principal and interest payments on time in connection with the TLA Credit Agreement and is in compliance with all covenants as of May 7, 2026, the date of issuance of these condensed consolidated financial statements.

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 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 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.

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

During the three months ended March 31, 2026, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program.

As of March 31, 2026, the remaining amount of common stock authorized for repurchases was $150.0 million.

Bioprojet Agreements

In July 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more new products based on pitolisant in the United States and Latin America, with the potential to add additional indications and formulations upon the agreement of both parties.

We paid an initial, non-refundable $30.0 million licensing fee in October 2022 and additional payments of up to $155.0 million are potentially due under the 2022 LCA upon the achievement of certain future development and sales-based milestones.

In addition, certain payments will become due upon the achievement of development milestones for new indications and formulations as agreed upon by both parties.

The 2022 LCA also includes a fixed trademark royalty and a tiered royalty based on net sales of any new products commercialized, which will be payable to Bioprojet on a quarterly basis.

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).

Under the Sublicense, the Company obtained the exclusive right to develop, manufacture and commercialize the Licensed Compound in the United States and Latin American territories (the “Licensed Territories”), which are rights that Bioprojet originally licensed from Teijin Pharma, the innovator of the Licensed Compound.

The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application submission currently anticipated in the second half of 2025.

Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million.

In November 2025, we achieved a clinical milestone for BP-205 that triggered a $4.3 million payment to Bioprojet under the Sublicense.

We will also be obligated to pay up to $123.3 million upon achievement of other development and regulatory milestones and up to $240.0 million upon achievement of certain sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories .

ConSynance Agreement

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There are additional payments due upon the achievement of certain milestones, including $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.

Bioprojet Agreements

The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application submission currently anticipated in the second half of 2025.

Under the Sublicense, the Company paid Bioprojet an upfront license fee of $25.5 million and will also be obligated to pay up to $127.5 million upon achievement of development and regulatory milestones and up to $240.0 million upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on potential sales in the Licensed Territories.

In addition, certain payments will become due upon the achievement of development milestones for new indications and formulations as agreed upon by both parties.

The 2022 LCA also includes a fixed trademark royalty and a tiered royalty based on net sales of any new products commercialized, which will be payable to Bioprojet on a quarterly basis.

Epygenix Acquisition

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.

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

CiRC Agreement

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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.

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,

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.

Novitium Agreement

In January 2026, we entered into a license agreement (the “Novitium License Agreement”) with Novitium Pharma LLC (“Novitium”), which includes an exclusive license to additional intellectual property that will expand our patent estate, as well as a co-exclusive license, under which we intend to develop a new formulation of pitolisant in broad CNS indications outside of sleep/wake.

Pursuant to the Novitium License Agreement, we paid an upfront license fee of $15.0 million, which was recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2026, and will also be obligated to pay up to $10.0 million upon the achievement of certain development milestones, as well as low single-digit royalties on net sales of pitolisant based products.

MSN Agreement

On February 25, 2026 (the “MSN Effective Date”), we entered into a license agreement (the “MSN License Agreement”) with MSN Laboratories Private Limited (“MSN”), which includes an exclusive, royalty-bearing license, with the right to grant sublicenses, to additional intellectual property, including pending licensed patents, under which we intend to develop a new formulation of pitolisant in broad CNS indications outside of sleep/wake.

Pursuant to the MSN License Agreement, we paid an upfront license fee of $17.0 million, which was recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2026.

In addition, we will be obligated to pay $25.0 million upon approval of the pending licensed patents by the United States Patent and Trademark Office (“USPTO”), which amount we must deposit into an escrow account within nine months from the MSN Effective Date, and which will be returned us if approval by the USPTO does not occur by November 25, 2027.

In addition, we will be obligated to pay low single-digit royalties on net sales of future products that include a new formulation of pitolisant

Recent Milestone Payments

In November 2025, we achieved a clinical milestone for BP-205 that triggered a $4.3 million payment to Bioprojet under the Sublicense, which was paid in December 2025.

The following table sets forth a summary of our cash flows for the three months ended March 31, 2026, and 2025:

Three Months Ended March 31,

Selected cash flow data

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Operating Activities

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.

Net cash provided by operating activities for the three months ended March 31, 2026, primarily consisted of net income of $32.5 million adjusted for non-cash items of $10.3 million related to stock-based compensation expense, $32.0 million related to acquired IPR&D, $6.0 million related to intangible amortization and depreciation, offset by $3.9 million related to deferred tax assets.

Net working capital excluding cash increased by $49.6 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and a decrease in accrued expenses primarily from lower accrued royalties and legal and professional feels offset by an increase in accounts payable due to the timing of payments.

Investing Activities

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.

Net cash used in investing activities for the three months ended March 31, 2026, was $183.6 million, which was primarily attributable to $179.0 million in purchases of debt securities and $32.0 million in upfront license fees related to new license agreements, offset by $27.3 million from maturities of investments.

Financing Activities

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.

Net cash used in financing activities for the three months ended March 31, 2026, was $7.2 million, which primarily consisted of $5.0 million in principal payments associated with the TLA Credit Agreement and $2.6 million of employee withholding tax payments related to stock-based awards, partially offset by $0.3 million in proceeds from the exercise of stock options.

Critical Accounting Estimates

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In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis.

Significant estimates include assumptions used in the determination of the amount of revenue recognized on sales of WAKIX, costs incurred under services type agreements related to the performance of research and development activities, the measurement of compensation expense pursuant to stock-based awards, the calculation of our income tax provision, and the determination of accounting treatment for our business combinations.

business combinations.

We base our estimates on contractual terms, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions .

Items Deducted from Gross Product Revenue

Product revenue is recorded at the product’s list price and is reduced from the product’s list price at the time of recognition for variable consideration that is offered within contracts between us and our customers, payors, and other indirect customers relating to the sale of WAKIX.

Components of variable consideration include government (as detailed below) and commercial contracts, commercial co-payment assistance program, and distribution service fees.

These deductions are based on the amounts earned, or to be claimed on the related sales, and are classified as a current liability or reduction of receivables in our condensed consolidated balance sheet.

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

Distribution Fees & Discounts

Co-Pay Assistance

Balance as of December 31, 2025

Provision, net

Payments/Credits

Balance as of March 31, 2026

Included in these amounts are immaterial adjustments related to prior-year sales due to changes in estimates.

We define our critical accounting policies as those under GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

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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