Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.
As of December 31, 2021, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on this assessment, management, under the supervision and with the participation of our principal executive officer and principal financial officer, concluded that, as of December 31, 2021, our internal control over financial reporting was effective.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Harmony Biosciences Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Harmony Biosciences, Inc. and subsidiary (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 28, 2022, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion .
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 28, 2022
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Limitations on Effectiveness of Controls and Procedures
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.
Item 9B. Other Information.
None
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
Our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of our code of business conduct and ethics is posted on the investor relations page on our website which is located at https://ir.harmonybiosciences.com. We will post any amendments to our code of business conduct and ethics other than technical, administrative or other non-substantive amendments, or waivers of its requirements, on our website or in a Form 8-K filed with the SEC.
Item 11. Executive Compensation.
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
Item 14. Principal Accounting Fees and Services.
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a)(1) Financial Statements
See “Part II—Item 8. Financial Statements and Supplementary Data.—Index to Financial Statements.”
(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the financial statements or the notes those financial statements.
(a)(3) Exhibits.
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
EXHIBIT INDEX
Exhibit
Incorporated by Reference
Filed
No.
Exhibit Description
Form
Date
Number
Herewith
3.1
Amended and Restated Certificate of Incorporation of Harmony Biosciences Holdings, Inc.
8-K
August 21, 2020
3.1
3.2
Amended and Restated Bylaws.
8-K
August 21, 2020
3.2
4.1
Form of Common Stock Certificate.
S-1/A
August 6, 2020
4.1
4.3
Description of Registrant’s Securities.
10-K
March 25, 2021
4.3
10.1
Credit Agreement, dated as of August 9, 2021, among Harmony Biosciences, Inc., as Borrower, Harmony Biosciences, LLC, as Guarantor, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Wilmington Trust, National Association, as Administrative Agent.
10-Q
August 10, 2021
10.2
10.2
Pledge and Security Agreement, dated as of August 9, 2021, among Harmony Biosciences, Inc. and Harmony Biosciences, LLC, as Grantors, the Grantors from time to time party thereto, and Wilmington Trust, National Association, as Administrative Agent.
10-Q
August 10, 2021
10.3
10.3
Harmony Biosciences Holdings, Inc. 2020 Incentive Award Plan
S-8
August 21, 2020
10.2
10.4
Form of Option Agreement under Harmony Biosciences Holdings, Inc. 2020 Incentive Award Plan.
S-8
August 21, 2020
10.3
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10.5
Form of Restricted Stock Unit Agreement under Harmony Biosciences Holdings, Inc. 2020 Incentive Award Plan.
S-1/A
August 11, 2020
10.6
10.6
Harmony Biosciences Holdings, Inc. 2020 Employee Stock Purchase Plan .
S-1/A
August 11, 2020
10.7
10.7
Amended and Restated Employment Agreement, dated August 11, 2020, by and between Harmony Biosciences, LLC and John C. Jacobs.
S-1/A
August 11, 2020
10.8
10.8
Form of Indemnification Agreement between Harmony Biosciences, LLC and each director and executive officer.
S-1/A
August 11, 2020
10.12
10.9
Harmony Biosciences, LLC Separation Plan.
S-1/A
August 11, 2020
10.13
10.10
Harmony Biosciences Holdings, Inc. Amended and Restated 2017 Equity Incentive Plan.
S-1/A
August 11, 2020
10.3
10.11
Harmony Biosciences Holdings, Inc. Non- Employee Director Compensation Program .
10-Q
November 12, 2020
10.9
10.12
Offer Letter, dated October 10, 2017, by and between Harmony Biosciences, LLC and Jeffrey Dayno.
S-1/A
August 11, 2020
10.9
10.13
Offer Letter, dated September 8, 2017, by and between Harmony Biosciences, LLC and Andrew Serafin.
S-1/A
August 11, 2020
10.10
10.14
License and Commercialization Agreement, dated July 28, 2017, by and between Bioprojet Société Civile de Recherche and Harmony Biosciences, LLC .
S-1
July 27, 2020
10.10
10.15
Amendment No. 1 to License and Commercialization Agreement, dated August 27, 2018, by and between Bioprojet Société Civile de Recherche and Harmony Biosciences, LLC.
S-1
July 27, 2020
10.11
10.16
Trademark License Agreement, dated August 23, 2018, by and among Bioprojet Europe, Ltd., Bioprojet Société Civile de Recherche and Harmony Biosciences, LLC.
S-1
July 27, 2020
10.12
10.17
Management Services Agreement, dated September 22, 2017, by and between Paragon Biosciences, LLC and Harmony Biosciences, LLC.
S-1
July 27, 2020
10.13
10.18
Right of Use Agreement, dated November 1, 2019, by and between Paragon Biosciences, LLC and Harmony Biosciences, LLC .
S-1
July 27, 2020
10.14
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10.19
Second Amended and Restated Investors’ Rights Agreement, dated August 9, 2019, by and among the Registrant and the other parties thereto.
S-1
July 27, 2020
10.15
10.20
Offer Letter, dated September 7, 2017, by and between Harmony Biosciences, LLC and Jeffrey Dierks.
10-K
March 25, 2021
10.20
10.21
Confidential Separation Agreement and General Release, between Harmony Biosciences, LLC and Susan L. Drexler, dated March 4, 2021.
8-K
March 10, 2021
10.1
10.22
Employment Agreement, dated March 4, 2021, between Harmony Biosciences, LLC and Sandip Kapadia.
8-K
March 15, 2021
10.1
10.23*
Promotion Increase Award Letter to Jeffrey Dierks, dated June 9, 2021 .
10-Q
August 10, 2021
10.1
21.1
List of Subsidiaries of Harmony Biosciences Holdings, Inc.
X
23.1
Consent of Independent Registered Public Accounting Firm
X
31.1
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1**
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2**
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101
The following financial statements from the Company’s Yearly Report on Form 10-K for the fiscal year ended December 31, 2020 formatted in Inline XBRL: (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) and (vi) Notes to Financial Statements, tagged as blocks of text and including detailed tags.
X
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104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
X
*
Indicates management contract or compensatory plan or arrangement.
**
This certification is deemed furnished, and not filed, with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Harmony Biosciences Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
+
Certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10)
Item 16. Form 10-K Summary.
None.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HARMONY BIOSCIENCES HOLDINGS, INC.
By:
/s/ John C. Jacobs
Name:
John C. Jacobs
Title:
President, Chief Executive Officer and Director
Date: February 28, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ John C. Jacobs
President, Chief Executive Officer, and Director
February 28, 2022
John C. Jacobs
(Principal Executive Officer)
/s/ Sandip Kapadia
Chief Financial Officer (Principal
February 28, 2022
Sandip Kapadia
Financial Officer and Principal Accounting Officer)
/s/ Jeffrey S. Aronin
Chairman of the Board
February 28, 2022
Jeffrey S. Aronin
/s/ Antonio Gracias
Director
February 28, 2022
Antonio Gracias
/s/ R. Mark Graf
Director
February 28, 2022
R. Mark Graf
/s/ Jack Bech Nielsen
Director
February 28, 2022
Jack Bech Nielsen
/s/ Juan A. Sabater
Director
February 28, 2022
Juan A. Sabater
/s/ Gary Sender
Director
February 28, 2022
Gary Sender
/s/ Linda Szyper
Director
February 28, 2022
Linda Szyper
/s/ Andreas Wicki
Director
February 28, 2022
Andreas Wicki
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