What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-07 · 120 added, 143 removed, 203 unchanged (56% 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.

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.

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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.

Sleep/Wake Franchise

Pitolisant was developed by Bioprojet and approved by the EMA in 2016 for the treatment of narcolepsy in adult patients with or without cataplexy and in 2021 for the treatment of EDS in adult patients with obstructive sleep apnea.

We acquired an exclusive license to develop, manufacture and commercialize pitolisant in the United States pursuant to our license agreement with Bioprojet (as amended, the “2017 LCA”) in July 2017.

Pitolisant was granted Orphan Drug designation for the treatment of narcolepsy by the FDA in 2010.

It received Breakthrough Therapy designation for the treatment of cataplexy in patients with narcolepsy and Fast Track designation for the treatment of EDS and cataplexy in patients with narcolepsy in April 2018.

In August 2019, WAKIX was approved by the U.S.

Food and Drug Administration (the “FDA”) for the treatment of EDS in adult patients with narcolepsy, and its U.S.

commercial launch was initiated in November 2019.

In October 2020, WAKIX was approved by the FDA for the treatment of cataplexy in adult patients with narcolepsy.

We believe that pitolisant’s ability to regulate histamine mediated through histamine-3 receptor antagonist and inverse agonist activity gives it the potential to provide therapeutic benefit in other rare neurological diseases.

We are focusing our development efforts on other rare neurological disorders in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”) and myotonic dystrophy type 1, otherwise known as dystrophia myotonica (“DM1”).

Based on the positive signals from the data from our Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS and other key behavioral symptoms in patients with PWS, an End-of-Phase 2 meeting with the FDA was held in June 2023.

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 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.

The Phase 3 registrational trial, the TEMPO study, was initiated in the first quarter of 2024.

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 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.

In January 2023, Bioprojet received a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) and in March 2023, the EMA granted approval for the marketing authorization of WAKIX for the treatment of narcolepsy with or without cataplexy in children six and older.

Based on the data from the positive Phase 3 trial conducted by Bioprojet, we submitted an sNDA for pediatric narcolepsy in December 2023.

In June 2024, we announced that the FDA approved our sNDA for WAKIX for the treatment of EDS in pediatric patients six years of age and older with narcolepsy.

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.

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 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 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.

We have made progress in the development of two new formulations of pitolisant:

Products and Product Candidates

WAKIX® (pitolisant) (“WAKIX”)

Our pitolisant franchise is anchored by WAKIX, an oral, once-daily therapy licensed from Bioprojet Société Civile de Recherche (“Bioprojet”) for the treatment of narcolepsy.

WAKIX is approved by the U.S.

Food and Drug Administration (the “FDA”) for the treatment of excessive daytime sleepiness (“EDS”) and cataplexy in patients six years and older with narcolepsy.

WAKIX is a first-in-class molecule with a novel mechanism of action (“MOA”) and is the only selective H 3 receptor antagonist/inverse agonist approved by the FDA.

Additionally, it is the first-and-only FDA-approved treatment that is not scheduled as a controlled substance by the United States Drug Enforcement Administration (the “DEA”).

We are focusing development efforts on other rare neurological diseases in which EDS is a prominent symptom, including Prader-Willi Syndrome (“PWS”), and remain committed to obtaining pediatric exclusivity for WAKIX.

In 2024, we initiated the PWS Phase 3 registrational trial, the TEMPO study, in support of these efforts.

We anticipate topline data from the TEMPO study in mid-2027.

Pitolisant gastro-resistant (“Pitolisant GR”) and Pitolisant high dose (“Pitolisant HD”)

We are developing two new formulations of pitolisant through a license agreement with Bioprojet:

Pitolisant GR and Pitolisant HD.

Both formulations entered clinical studies in the fourth quarter of 2023.

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

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.

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 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 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, 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.

We acquired full development and commercialization rights for HBS-102 globally, but we have provided an indication-limited grant-back license to ConSynance for the development and commercialization of the Compound in Greater China.

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, 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 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 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.

As such, there is a recognized need for improved treatment options for both conditions.

We believe the total addressable market for EPX-100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.

We believe the total addressable market for EPX-100 among patients with LGS is approximately 35,000 people based on an estimated current LGS prevalence of approximately 48,000 cases and 44,000 diagnosed LGS cases.

EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of both DS and LGS.

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

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.

Pitolisant GR is designed with an enteric coating meant to reduce the potential for gastrointestinal side effects in patients prone to gastrointestinal symptoms, and to enable patients to initiate treatment at a therapeutic dose without titration, which we believe is an important clinical differentiation.

In June 2026, we submitted a New Drug Application (“NDA”) for Pitolisant GR to the FDA, which was subsequently accepted for full review with a target Prescription Drug User Fee Act (“PDUFA”) date of April 1, 2027.

Pitolisant HD is an enhanced formulation of pitolisant with an optimized pharmacokinetic (“PK”) profile, enteric coating and higher dosing to drive greater efficacy.

It is designed to provide differentiated labeling for fatigue in narcolepsy and sleep inertia in idiopathic hypersomnia (“IH”).

Pitolisant HD is currently in a Phase 3 registrational trial in narcolepsy, ONSTRIDE1, and a Phase 3 registrational trial in IH, ONSTRIDE2.

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

Utility patents for both Pitolisant GR and Pitolisant HD have been filed to extend the pitolisant franchise into the 2040s.

Other Pipeline Products

Through business development, we have acquired or licensed the rights to develop BP-205 (orexin-2 receptor agonist), EPX-100 (clemizole hydrochloride), CBS-104 and CBS-105.

BP-205 is built on a novel chemical scaffold with the potential for best-in-class therapy due to its high potency.

We intend to develop BP-205 for the treatment of multiple central nervous system (“CNS”) indications outside of sleep/wake.

We filed an investigational medicinal product dossier (“IMPD”) with the EMA and began first-in-human studies in the fourth quarter of 2025.

The topline data from the single ascending dose (“SAD”) study are encouraging and supportive of a potential best-in-class profile for an orexin 2 receptor agonist.

In July 2026, we submitted an Investigational New Drug application (“IND”) to the FDA, which is now open, and are preparing to initiate a Phase 1b study in sleep-deprived healthy volunteers.

EPX-100 has been granted orphan drug designation and rare pediatric disease designation by the FDA for treatment of Dravet syndrome (“DS”) and Lennox-Gastaut syndrome (“LGS”).

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

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

CBS-104 and CBS-105 are investigational novel regenerative cellular therapies being developed in collaboration with CiRC Biosciences for the treatment of refractory epilepsy and treatment-resistant narcolepsy, respectively.

Key Developments

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.

In February 2026, 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.

In April 2026, we, along with our exclusive licensor Novitium, filed a lawsuit against AET Pharma US, Inc.

(“AET”), AET Laboratories Private Limited, Alfred E.

Tiefenbacher (GmbH & Co.

KG), Sandoz Inc., Sandoz Private Limited, and Sandoz GmbH, alleging that the defendants’ actions in connection with the filing of AET’s ANDA No.

218892 infringe one or more claims of U.S.

The case was filed in the United States District Court for the District of Delaware and assigned case no.

26-cv-00453-JLH.

In June 2026, we submitted an NDA for Pitolisant GR to the FDA, which was subsequently accepted for full review with a target PDUFA date of April 1, 2027.

In July 2026, we submitted an IND for BP-205 to the FDA, which is now open, and are preparing to initiate a Phase 1b study in sleep-deprived healthy volunteers in the third quarter of 2026, with topline data expected in early 2027.

In August 2026, we announced Phase 1 clinical PK data from the SAD study for BP-205, which demonstrated favorable PK, safety, and tolerability profiles.

Topline data from the Phase 1 multiple ascending dose study is expected in the fourth quarter of 2026.

In addition, we plan to initiate Phase 2 trials for BP-205 in mid-2027 to evaluate multiple CNS indications.

Commercial Performance Metrics

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.

As of June 30, 2026, we have continued to see growth in the number of unique healthcare professionals (“HCP”) prescribing 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 (“REMS”) programs.

The average number of patients on WAKIX for the three months ended June 30, 2026, was approximately 8,950.

Additionally, as of June 30, 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

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

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

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Research and Development Expenses

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.

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

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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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 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 .

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

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 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.

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

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

We expect our sales and marketing expenses to increase in the near- and mid-term to support WAKIX’s indications for the treatment of EDS or cataplexy in adult patients with narcolepsy, the treatment of EDS in pediatric patients 6 years of age and older with narcolepsy and to expand our portfolio with the anticipated growth from potential additional indications .

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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.

We anticipate that our general and administrative expenses will increase in the future to support our continued commercialization efforts and ongoing and future potential research and development activities.

These increases will likely be driven by costs associated with the hiring of additional personnel and fees paid to outside consultants, lawyers and accountants, among other expenses.

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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.

We paid rental fees to Paragon of $0.1 million and $0.2 million for the three and six months ended June 30, 2026, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Net product revenue

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Net Product Revenue

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% .

Net product revenue increased by $60.8 million, or 30.3%, for the three months ended June 30, 2026, and increased by $91.4 million, or 23.7%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The increase for the three months ended June 30, 2026, was primarily due to a 26.5% increase in the number of units shipped and the impact of a 7% price increase partially offset by higher rebates of approximately 4.0% .

The increase for the six months ended June 30, 2026, was primarily due to a 19.4% increase in the number of units shipped and the impact of a 7% price increase partially offset by higher rebates of approximately 3.8%.

The price increase occurred in January 2026.

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.

Cost of product sold increased by $25.0 million, or 65.6%, for the three months ended June 30, 2026, and increased by $37.6 million, or 53.5%, for the six months ended June 30, 2026, compared to the same periods in 2025.

Cost of product sold as a percentage of net product revenue was 24.2% and 22.6% for the three and six months ended June 30, 2026, respectively, compared to 19.0% and 18.2% for the three and six months ended June 30, 2025, respectively.

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.

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Pitolisant GR and Pitolisant HD

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Other research and development

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.

Research and development expenses decreased by $3.6 million, or 7.1%, for the three months ended June 30, 2026, and increased by $31.3 million, or 36.9%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The decrease for the three months ended June 30, 2026, was primarily driven by a $15.0 million IPR&D charge related to the CiRC Agreement that occurred during the three months ended June 30, 2025, a $4.4 million decrease related to the phase out of the ZYN002 program in FXS, and a $1.7 million decrease in clinical development associated with pitolisant offset by a combined $16.4 million increase in research and development expenses for BP-205, EPX-100, and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $0.3 million increase in personnel costs associated with higher headcount, and a $0.4 million increase in stock compensation.

The increase for the six months ended June 30, 2026, was primarily driven by a combined $24.7 million increase in research and development expenses for BP-205, EPX-100, and Pitolisant GR and HD as we progressed clinical trials and manufacturing, a $17.0 million increase in IPR&D charges related to the Novitium License Agreement ($15.0 million) and MSN License Agreement ($17.0 million) entered into during the six months ended June 30, 2026, offset by the CiRC Agreement ($15.0 million) entered into during the six months ended June 30, 2025, a $1.1 million increase in personnel costs associated with higher headcount, a $0.5 million increase in stock compensation associated with new equity awards, and a $1.0 million increase in other research and development expenses offset by a $11.3 million decrease related to the phase out of the ZYN002 program in FXS and a $1.7 million decrease in clinical development associated with pitolisant.

Sales and Marketing Expenses

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.

Sales and marketing expenses increased by $4.0 million, or 13.5%, for the three months ended June 30, 2026, and increased by $5.0 million, or 8.3%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The increase for the three months ended June 30, 2026, was primarily due to a $2.0 million increase in patient engagement and marketing activities, a $1.6 million increase in personnel costs, a $0.2 million increase in travel expenses and a $0.2 million increase in stock compensation expense.

The increase for the six months ended June 30, 2026, was primarily due to a $4.5 increase in patient engagement and marketing activities and a $2.1 million increase in personnel costs offset by a $0.8 million decrease in stock compensation expense and a $0.8 million decrease in travel expenses.

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 as a result of our sales force expansion.

General and Administrative Expenses

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.

General and administrative expenses decreased by $5.9 million, or 17.3%, for the three months ended June 30, 2026, and decreased by $4.6 million, or 7.1%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The decrease for the three months ended June 30, 2026, was primarily due to a $5.1 million decrease in legal and professional fees and a $2.4 million decrease in stock compensation offset by a $1.6 million increase in personnel costs.

The decrease for the six months ended June 30, 2026, was primarily due to a $2.8 million decrease in legal and professional fees and a $3.7 million decrease in stock compensation offset by a $1.9 million increase in personnel costs.

The decrease in legal and professional fees for both comparable periods was primarily driven by expenses incurred due to ANDA settlements and lower ANDA litigation during the three and six months ended June 30, 2025.

The increase in personnel costs for both comparable periods was primarily driven by higher headcount during the three and six months ended June 30, 2026.

Interest Expense

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 expense decreased by $0.6 million, or 15.8%, for the three months ended June 30, 2026, and decreased by $1.2, or 15.7%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The decrease for the three and six months ended June 30, 2026, was primarily due to lower average outstanding debt balances and lower interest rates compared to the same periods in the prior year.

Interest Income

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.

Interest income increased by $1.8 million, or 33.5%, for the three months ended June 30, 2026, and increased by $2.5 million, or 24.1%, for the six months ended June 30, 2026, compared to the same periods in 2025.

The increase for the three and six months ended June 30, 2026, was primarily a result of having higher invested balances compared to the prior year.

Income tax expense was $17.8 million, representing a 19.1% effective tax rate, for the three months ended June 30, 2026, compared to $9.9 million, representing a 19.9% effective tax rate, for the three months ended June 30, 2025.

Income tax expense was $25.0 million, representing an 18.8% effective tax rate, for the six months ended June 30, 2026, compared to $21.5 million, representing a 20.1% effective tax rate, for the six months ended June 30, 2025.

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.

The effective tax rate of 19.1% for the three months ended June 30, 2026, included 1.6% in state income taxes offset by a 4.1% benefit from credits.

The effective tax rate of 18.8% for the six months ended June 30, 2026, included 1.5% in state income taxes offset by a 4.1% benefit from credits.

Liquidity, Sources of Funding and Capital Resources

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.

As of June 30, 2026, we had cash, cash equivalents, and investments of $962.5 million, outstanding debt of $155.0 million and retained earnings of $268.8 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 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 believe that our existing cash, cash equivalents and investments on hand as of June 30, 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, as amended, provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $200.0 million.

The repayment schedule for the TLA Term Loan consists of $3.8 million quarterly principal payments, which commenced on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028.

The repayment schedule for the TLA Term Loan consisted of $3.8 million quarterly principal payments, commencing on December 31, 2023, which increased to $5.0 million quarterly principal payments beginning on December 31, 2025, and includes a $115.0 million payment due on the maturity date of July 26, 2028.

The TLA Term Loan bears interest at a per annum rate equal to, at our option, (i) a base rate plus a specified margin ranging from 2.50% to 3.00%, based on our senior secured net leverage ratio (as defined in the TLA Credit Agreement) or (ii) Term SOFR plus a credit spread adjustment of 0.10% plus a specified margin ranging from 3.50% to 4.00%, based on our senior secured net leverage ratio.

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

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.

We 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, we entered into a Waiver and Consent Agreement with the Administrative Agent and certain lenders, whereby the event of default was waived.

We have made all required principal and interest payments on time in connection with the TLA Credit Agreement and are in compliance with all covenants as of June 30, 2026.

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 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.

During the three and six months ended June 30, 2026, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program.

As of June 30, 2026, the remaining amount of common stock authorized for repurchases was $150.0 million.

Bioprojet Agreements

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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”).

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (the “Licensed Compound”), which we are developing 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.

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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

In August 2021, we entered into an asset purchase agreement with ConSynance Therapeutics, Inc.

(the “APA”) to acquire HBS-102, a potential first-in-class molecule with a novel mechanism of action.

Under the terms of the APA, we acquired full development and commercialization rights globally, with the exception of Greater China, for $3.5 million.

In March 2023, we achieved a preclinical milestone, which triggered a $0.8 million payment under the provisions of the APA, which we recognized as an IPR&D charge recorded in research and development within the consolidated statement of operations and comprehensive income for the year ended December 31, 2023.

In September 2024, we achieved a milestone for preclinical proof-of concept, which triggered a $1.0 million payment under the provisions of the APA, which we recognized as an IPR&D charge recorded in research and development within the consolidated statement of operations and comprehensive income for the year ended December 31, 2024.

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.

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 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.

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Novitium Agreement

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.

In January 2026, we entered into the Novitium License Agreement with 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 six months ended June 30, 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.

On February 25, 2026 (the “MSN Effective Date”), we entered into the MSN License Agreement with 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.

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.

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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 was paid in November 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,

The following table sets forth a summary of our cash flows for the six months ended June 30, 2026, and 2025:

Six Months Ended June 30,

Selected cash flow data

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Operating Activities

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 cash provided by operating activities for the six months ended June 30, 2026, primarily consisted of net income of $107.9 million adjusted for non-cash items of $19.9 million related to stock-based compensation expense, $32.0 million related to acquired IPR&D, $11.9 million related to intangible amortization and depreciation, offset by $7.1 million related to deferred tax assets.

Net working capital excluding cash increased by $45.4 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.

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.

Investing Activities

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.

Net cash used in investing activities for the six months ended June 30, 2026, was $315.1 million, which was primarily attributable to $331.5 million in purchases of debt securities and $32.0 million in upfront license fees related to new license agreements, offset by $48.4 million from maturities of investments.

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.

Financing Activities

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.

Net cash used in financing activities for the six months ended June 30, 2026, was $7.8 million, which primarily consisted of $10.0 million in principal payments associated with the TLA Credit Agreement and $3.6 million of employee withholding tax payments related to stock-based awards, partially offset by $5.9 million in proceeds from the exercise of stock options.

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.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods.

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.

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.

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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):

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

Distribution Fees & Discounts

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Payments/Credits

Balance as of March 31, 2026

Balance as of June 30, 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.

During the quarter covered by this report, there were no material changes to the accounting policies and assumptions previously disclosed, except as disclosed in Note 3 to the unaudited condensed consolidated financial statements contained herein.

We define our critical accounting policies as those 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.

During the quarter covered by this report, there were no material changes to our previously disclosed accounting policies and assumptions, except as discussed in Note 3 to the unaudited condensed consolidated financial statements contained herein.

Recent Accounting Pronouncements

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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