What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2021-11-09 · 138 added, 307 removed, 282 unchanged (61% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

CURRENT ASSETS:

26 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock - $ 0.00001 par value;

10,000,000 shares and 00 shares authorized at September 30, 2021 and December 31, 2020, respectively;

00 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Common stock— $ 0.00001 par value;

500,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively;

58,414,546 shares and 56,890,569 issued and outstanding at September 30, 2021 and December 31, 2020, respectively

500,000,000 shares authorized at March 31, 2022 and December 31, 2021, respectively;

59,030,148 shares and 58,825,769 issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid in capital

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UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net product revenues

6 unchanged sentences

Operating income

Loss on debt extinguishment

Other income (expense), net

Other expense, net

Interest expense, net

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income and comprehensive (loss) income

Accumulation of dividends on preferred stock

Net (loss) income available to common stockholders

(LOSS) EARNINGS PER SHARE:

Income before income taxes

Income tax expense

Net income and comprehensive income

EARNINGS PER SHARE:

Weighted average number of shares of common stock - basic

3 unchanged sentences

AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)

1 unchanged sentence

Balance as of December 31, 2021

Issuance of common stock

Exercise of stock options

Stock-based compensation

Balance as of September 30, 2021

stockholders’

Balance as of June 30, 2021

Issuance of common stock

Exercise of options

Stock-based compensation

Balance as of September 30, 2021

Convertible Preferred

Balance as of March 31, 2022

stockholders’

Series A, B, & C

Balance as of December 31, 2020

Preferred stock dividend, Series A

Preferred stock accretion, Series A

Preferred stock dividend, Series B

Preferred stock accretion, Series B

Preferred stock dividend, Series C

Preferred stock accretion, Series C

Issuance of stock upon initial public offering, net of issuance costs

Issuance of Series A, B, C convertible stock to common stock

( 318,510,205 )

Reclassification of warrant liability to equity

Exercise of stock options

Stock-based compensation

Repurchase and cancellation of common units

Repurchase and cancellation of common units withheld for taxes

Balance as of September 30, 2020

Convertible Preferred

Series A, B, & C

stockholders’

equity (deficit)

Balance as of June 30, 2020

Preferred stock dividend, Series A

Preferred stock accretion, Series A

Preferred stock dividend, Series B

Preferred stock accretion, Series B

Preferred stock dividend, Series C

Preferred stock accretion, Series C

Issuance of stock upon initial public offering, net of issuance costs

Issuance of Series A, B, C convertible stock to common stock

( 318,510,205 )

Reclassification of warrant liability to equity

Exercise of options

Stock-based compensation

Repurchase and cancellation of common units withheld for taxes

Balance as of September 30, 2020

Balance as of March 31, 2021

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

3 unchanged sentences

(In thousands, except share and per share data)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Intangible amortization

1 unchanged sentence

Stock appreciation rights market adjustment

Warrant expense

Debt issuance costs amortization

Loss on debt extinguishment

Non-cash lease expense

Change in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses and other assets

Other non-current assets

Trade payables

1 unchanged sentence

Other non-current liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock upon initial public offering

Initial public offering issuance costs

Proceeds from issuance of common stock

Common stock issuance costs

Proceeds from long term debt

Debt issuance costs

Extinguishment of debt

Extinguishment of debt exit fees

Principal repayment of long term debt

Proceeds from exercised options

Repurchase of common stock

Tax payments for employees shares withheld

Net cash provided by financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

2 unchanged sentences

Cash paid during the year for interest

Supplemental Disclosures of Noncash Investing and Financing Activities:

Series A Preferred Stock accrued return

Series A accretion of issuance costs

Series B Preferred Stock accrued return

Series B accretion of issuance costs

Series C Preferred Stock accrued return

Series C accretion of issuance costs

Warrant financing

Warrant liability reclassified to equity

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

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ORGANIZATION AND DESCRIPTION OF BUSINESS

Our operating subsidiary, Harmony Biosciences, LLC (“Harmony”), was formed on May 17, 2017.

Harmony Biosciences Holdings, Inc.

(the “Company”) was founded on July 25, 2017 as Harmony Biosciences II, LLC, a Delaware limited liability company, and the Company converted to a Delaware corporation named Harmony Biosciences II, Inc.

on September 19, 2017.

On February 3, 2020, the Company changed its name to Harmony Biosciences Holdings, Inc.

(the “Company”) was founded in July 2017 as Harmony Biosciences II, LLC, a Delaware limited liability company, and the Company converted to a Delaware corporation named Harmony Biosciences II, Inc.

in September 2017.

In February 2020, the Company changed its name to Harmony Biosciences Holdings, Inc.

The Company is a holding company and has no operations.

The Company’s operations are conducted in its wholly owned subsidiary, Harmony.

The Company is a commercial-stage, rare disease pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological disorders who have unmet medical needs.

The Company’s operations are conducted in its wholly owned subsidiary, Harmony Biosciences, LLC (“Harmony”), which was formed in May 2017.

The Company is headquartered in Plymouth Meeting, Pennsylvania.

Initial Public Offering

On August 21, 2020, the Company completed its initial public offering (“IPO”) of common stock, in which it sold 6,151,162 shares, including 802,325 shares pursuant to the underwriters’ over-allotment option.

The shares began trading on the Nasdaq Global Market on August 19, 2020.

In August 2020, the Company completed its initial public offering (“IPO”) of common stock, in which it sold 6,151,162 shares, including 802,325 shares pursuant to the underwriters’ over-allotment option.

The shares were sold at an IPO price of $ 24.00 per share for net proceeds of approximately $ 135,435 , after deducting underwriting discounts and commissions and offering expenses of approximately $ 12,193 payable by the Company.

1 unchanged sentence

Warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for a total of 410,239 shares of common stock.

Reverse Stock Split

On August 11, 2020, the Company implemented a 1-for-8.215 reverse stock split of the Company’s common stock.

All share and per share data shown in the accompanying financial statements and related notes have been retroactively revised to reflect the reverse stock split.

Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities.

Shares of common stock reserved for issuance upon the conversion of the Company’s Preferred Stock and preferred dividend were proportionately reduced.

All references in the accompanying unaudited condensed consolidated financial statements and related notes to the number of shares of common stock, convertible preferred stock, warrants and options to purchase common stock and per share data reflect the effect of the reverse stock split.

LIQUIDITY AND CAPITAL RESOURCES

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

The Company has an accumulated deficit of $ 476,312 and $ 488,195 , as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, the Company had cash and cash equivalents of $ 189,704 .

On August 21, 2020, the Company received aggregate proceeds from a common stock offering of approximately $ 135,435 , net of underwriting discounts and commissions and other estimated offering expenses

(see Note 11).

On January 9, 2020, the Company received aggregate proceeds of approximately $ 200,000 through the loan agreement with OrbiMed Royalty & Credit Opportunities, LP (“OrbiMed”).

This capital raise and debt issuance has resolved the Company’s significant risks and uncertainties regarding sources of liquidity, which previously raised substantial doubt about the Company’s ability to continue as a going concern.

On August 9, 2021, the Company sold 1,048,951 shares of the Company’s common stock to Blackstone Alternative Credit Advisors (“Blackstone”) at a price per share of $ 28.60 for gross proceeds of $ 30,000 .

In addition, the Company received aggregate proceeds of approximately $ 200,000 through the credit agreement (“Blackstone Credit Agreement”) with Blackstone and repaid in full the loan with OrbiMed (see note 8).

The Company believes that its anticipated cash from operating and financing activities and existing cash and cash equivalents will enable the Company to meet its operational liquidity needs and fund its planned investing activities for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

The Company has an accumulated deficit of $ 432,113 and $ 453,598 , as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, the Company had cash and cash equivalents of $ 224,499 .

The Company believes that its existing cash and cash equivalents on hand as of March 31, 2022, as well as additional cash generated from operating and financing activities will meet its operational liquidity needs and fund its planned investing activities for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated balance sheet as of September 30, 2021, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020, and the unaudited condensed consolidated statements of operations and comprehensive income (loss) and the unaudited condensed consolidated statements of convertible preferred stock and shareholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020, are unaudited.

The balance sheet as of December 31, 2020 was derived from audited financial statements as of and for the year ended December 31, 2020.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2020, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2021, and the results of its operations and its cash flows for the three and nine months ended September 30, 2021 and 2020.

The unaudited condensed consolidated balance sheet as of March 31, 2022, the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021, and the unaudited condensed consolidated

statements of operations and comprehensive income and the unaudited condensed consolidated statements of shareholders’ equity for the three months ended March 31, 2022 and 2021, are unaudited.

The balance sheet as of March 31, 2021 was derived from audited financial statements as of and for the year ended December 31, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2021, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2022, and the results of its operations and its cash flows for the three months ended March 31, 2022 and 2021.

The unaudited condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year.

1 unchanged sentence

These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company has updated certain prior period disclosures within Note 9 in order to conform with current period presentation.

Use of Estimates

4 unchanged sentences

The Company’s unaudited condensed consolidated financial statements include cash, cash equivalents, restricted cash, accounts payable, and accrued liabilities, all of which are short term in nature and, accordingly, approximate fair value.

Additionally, prior to the IPO, the Company’s unaudited condensed consolidated financial statements included a warrant liability that was carried at fair value and was re-measured at each balance sheet date until it would be exercised or expired.

In connection with the IPO, the Warrants were re-evaluated under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480 Distinguishing Liabilities from Equity and reclassified to equity.

See Note 13 for a further discussion of the warrants.

It is the Company’s policy, in general, to measure non-financial assets and liabilities at fair value on a nonrecurring basis.

12 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that equal the amount reflected in the statements of cash flows.

September 30,

Cash and cash equivalents

1 unchanged sentence

Total cash, cash equivalents, and restricted cash shown in the statements of cash flows

Amounts included in restricted cash represent those amounts required to be held as a security deposit in the form of letters of credit for the Company’s credit card program and the fleet program.

Restricted cash includes amounts required to be held as a security deposit in the form of letters of credit for the Company’s credit card program and the fleet program.

Concentrations of Risk

1 unchanged sentence

Due to its size, the Company believes this financial institution represents minimal credit risk.

Deposits in this institution may exceed the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation for U.S.

Deposits may exceed the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation for U.S.

institutions.

6 unchanged sentences

Historically, the Company has not experienced credit losses on its accounts receivable.

As of September 30, 2021, three customers accounted for 100 % of gross accounts receivable;

As of March 31, 2022, three customers accounted for 100 % of gross accounts receivable;

Caremark LLC (“CVS Caremark”), which accounted for 38 % of gross accounts receivable;

PANTHERx Specialty Pharmacy LLC (“Pantherx”), which accounted for 34 % of gross accounts receivable;

and Accredo Health Group, Inc.

Accredo Health Group, Inc.

(“Accredo”), which accounted for 32 % of gross accounts receivable;

and PANTHERx Specialty Pharmacy LLC (“Pantherx”), which accounted for 30 % of gross accounts receivable.

As of December 31, 2021, three customers accounted for 100 % of gross accounts receivable;

CVS Caremark, which accounted for 44 % of gross accounts receivable;

Accredo, which accounted for 40 % of gross accounts receivable;

Pantherx, which accounted for 31 % of gross accounts receivable;

and Accredo, which accounted for 33 % of gross accounts receivable.

For the nine months ended September 30, 2021, three customers accounted for 100 % of gross product revenues;

and CVS Caremark, which accounted for 29 % of gross accounts receivable.

For the three months ended March 31, 2022, three customers accounted for 100 % of gross product revenues;

CVS Caremark accounted for 38 % of gross product revenues;

1 unchanged sentence

and Accredo accounted for 30 % of gross product revenues.

For the nine months ended September 30, 2020 three customers accounted for 100 % of gross product revenues;

CVS Caremark accounted for 40 % of gross product revenues;

Pantherx accounted for 34 % of gross product revenues;

For the three months ended March 31, 2021 three customers accounted for 100 % of gross product revenues;

Pantherx accounted for 38 % of gross product revenues CVS Caremark accounted for 35 % of gross product revenues;

and Accredo accounted for 27 % of gross product revenues.

5 unchanged sentences

The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the assets acquired was concentrated in a single identified asset.

The payment was recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021.

Additionally, there are payments due upon the achievement of certain milestones including $ 1,750 for preclinical milestones, $ 19,000 for development milestones, $ 44,000 for regulatory milestones and $ 110,000 for sales milestones.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued amended guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities in the balance sheet and disclosing key information about leasing arrangements.

The new guidance clarifies the criteria for distinguishing between a finance lease and operating lease, as well as classification between the two types of leases, which is substantially unchanged from the previous lease guidance.

Further, the new guidance requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset, initially measured at the present value of the lease payments.

For finance leases, a lessee should recognize interest on the lease liability separately from amortization of the right-of-use asset.

For operating

leases, a lessee should recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis.

For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities.

We will no longer be an emerging growth company as of December 31, 2021, after which we will not be able to take advantage of the reduced disclosure requirements applicable to emerging growth companies.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

2016-13 introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities.

As a result, we expect to adopt this standard on a modified retrospective basis on December 31, 2021 and to reflect the adoption as of January 1, 2021 in our annual results for the period ended December 31, 2021, but the Company does not expect a significant impact to its condensed consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

The amendments are effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted.

The Company is currently evaluating the impact of adopting this new accounting guidance.

ASU 2020-04, Reference Rate Reform (Topic 848).

In March 2020, the FASB issued ASU No.

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Inventory, net consisted of the following:

September 30,

Raw materials

2 unchanged sentences

Inventory, gross

Reserve for obsolescence

Reserve for excess inventory

Total inventory, net

INTANGIBLE ASSETS

On August 15, 2019, the Company received FDA approval of WAKIX (pitolisant) for the treatment of excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy.

This event triggered a milestone payment of $ 75,000 associated with the License Agreement (discussed below) which the Company capitalized as an intangible asset and paid in November of 2019.

The Company determined a useful life of 10 years for such intangible asset and the remaining useful life was 8.00 years as of September 30, 2021.

Prior to this event,

all other milestones associated with the License Agreement were expensed through research and development as they did not meet the criteria to be recognized as an intangible asset.

On October 13, 2020, the Company received notice that the FDA approved the New Drug Application (“NDA”) for WAKIX for the treatment of cataplexy in adult patients with narcolepsy.

This event triggered a milestone payment of $ 100,000 associated with the License Agreement which the Company capitalized as an intangible asset and paid in January of 2021.

The Company determined a useful life of 9 years for such intangible asset and the remaining useful life was 8.00 years as of September 30, 2021.

Amortization expense was $ 4,573 and $ 1,867 for the three months ended September 30, 2021 and 2020, respectively, and $ 13,781 and $ 5,560 , for the nine months ended September 30, 2021 and 2020, respectively, and is recorded in general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive income (loss).

In August 2019, the Company received FDA approval of WAKIX ® (pitolisant) for the treatment of excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy.

This event triggered a milestone payment of $ 75,000 under the provisions of the License Agreement (defined below) which the Company capitalized as an intangible asset.

The Company determined a useful life of 10 years for such intangible asset, and, as of March 31, 2022 the remaining useful life was 7.5 years.

In October 2020, the Company received FDA approval for the New Drug Application (“NDA”) for WAKIX for the treatment of cataplexy in adult patients with narcolepsy.

This event triggered a milestone payment of $ 100,000 under the provisions of the License Agreement which the Company capitalized as an intangible asset and paid in January of 2021.

The Company determined a useful life of 9 years for such intangible asset, and, as of March 31, 2022 the remaining useful life was 7.5 years.

In February 2022, the Company attained $ 500,000 in aggregate net sales of WAKIX in the United States.

This event triggered a final $ 40,000 payment under the provisions of the License Agreement which the

Company capitalized as an intangible asset and paid in March of 2022.

The Company determined a useful life of 7.6 years for such intangible asset, and, as of March 31, 2022 the remaining useful life was 7.5 years.

Amortization expense was $ 5,082 and $ 4,579 for the three months ended March 31, 2022 and 2021, respectively, and is recorded in general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive income (loss).

The Company expects the future annual amortization expense for the unamortized intangible assets to be as follows:

Years ending December 31,

2021 (excluding the nine months ended September 30, 2021)

2022 (Excluding the three months ended March 31, 2022)

The gross carrying amount and net book value of the intangible assets is as follows:

September 30,

Gross Carrying Amount

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LICENSE AGREEMENT

On July 28, 2017, Harmony entered into the License Agreement (“the License Agreement”) with Bioprojet Société Civile de Recherche (“Bioprojet”) whereby Harmony acquired the exclusive right to commercialize the pharmaceutical compound pitolisant for the treatment, and/or prevention, of narcolepsy, obstructive sleep apnea, idiopathic hypersomnia, and Parkinson’s disease as well as any other indications unanimously agreed by the parties in the United States and its territories.

A milestone payment of $ 50,000 was due upon acceptance by the FDA of pitolisant’s NDA, which was achieved on February 12, 2019 and was expensed within research and development for the year ended December 31, 2019.

A milestone payment of $ 77,000 , which included a $ 2,000 fee that is described below, was due upon FDA approval of WAKIX (pitolisant) for treatment of EDS in adult patients with narcolepsy, which was achieved on August 14, 2019.

In July 2017, Harmony entered into the License Agreement (“the License Agreement”) with Bioprojet Société Civile de Recherche (“Bioprojet”) whereby Harmony acquired the exclusive right to commercialize the pharmaceutical compound pitolisant for the treatment, and/or prevention, of narcolepsy, obstructive sleep apnea, idiopathic hypersomnia, and Parkinson’s disease as well as any other indications unanimously agreed by the parties in the United States and its territories.

A milestone payment of $ 50,000 was due upon acceptance by the FDA of pitolisant’s NDA, which was achieved in February 2019 and was expensed within research and development for the year ended December 31, 2019.

The $ 2,000 payment and $ 75,000 milestone payment were paid in August and November 2019, respectively.

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The $ 2,000 payment was paid in October 2020 and a $ 100,000 milestone payment was paid in January 2021.

An additional $ 40,000 milestone payment is due to Bioprojet upon WAKIX attaining $ 500,000 in aggregate net sales in the United States.

The License Agreement also requires sales-based milestone payments, a fixed trademark royalty and a tiered royalty, all based on net sales, which become due and payable to Bioprojet on a quarterly basis.

The Company incurred $ 13,202 and $ 7,297 for the three months ended September 30, 2021 and 2020, respectively, and $ 34,561 and $ 16,574 for the nine months ended September 30, 2021 and 2020, respectively, for sales-based,

trademark and tiered royalties recognized as cost of product sold.

As of September 30, 2021 and December 31, 2020, the Company had accrued $ 13,202 and $ 9,006 , respectively, for sales-based, trademark and tiered royalties.

The Company had $ 0 and $ 100,000 accrued for milestone payments to Bioprojet as of September 30, 2021, and December 31, 2020, respectively.

A final $ 40,000 milestone payment was paid to Bioprojet in March 2022 upon WAKIX attaining $ 500,000 in aggregate net sales in the United States.

The License Agreement also requires a fixed trademark royalty and a tiered royalty based on net sales, which is payable to Bioprojet on a quarterly basis.

The Company incurred $ 13,672 and $ 9,547 for the three months ended March 31, 2022 and 2021, respectively, for sales-based, trademark and tiered royalties recognized as cost of product sold.

As of March 31, 2022 and December 31, 2021, the Company had accrued $ 13,650 and $ 16,396 , respectively, for sales-based, trademark and tiered royalties.

ACCRUED EXPENSES

Accrued expenses consist of the following:

September 30,

Royalties due to third parties

4 unchanged sentences

Other expenses

Milestone payment

Credit Agreements

Blackstone Credit Agreement

On August 9, 2021, the Company entered into the Blackstone Credit Agreement that provides for (i) a senior secured term loan facility in an aggregate original principal amount of $ 200,000 (the “Initial Term Loan”) and (ii) a senior secured delayed draw term loan facility in an aggregate principal amount up to $ 100,000 (the “DDTL” and, together with the Initial Term Loan, the “Loans”).

The DDTL will become available on August 9, 2022.

The repayment schedule for the Initial Term Loan consists of quarterly $ 500 principal payments commencing on December 31, 2021 and increasing to quarterly $ 5,000 principal payments beginning on March 31, 2024, with a $ 145,500 payment due on the maturity date of August 9, 2026 (“Maturity Date”).

Interest is payable quarterly commencing on November 9, 2021 and continuing through the Maturity Date.

In August 2021, the Company entered into the Blackstone Credit Agreement that provides for (i) a senior secured term loan facility in an aggregate original principal amount of $ 200,000 (the “Initial Term Loan”) and (ii) a senior secured delayed draw term loan facility in an aggregate principal amount up to $ 100,000 (the “DDTL” and, together with the Initial Term Loan, the “Loans”).

The DDTL will be available to draw down through August 9, 2022.

The repayment schedule for the Initial Term Loan consists of quarterly $ 500 principal payments, which commenced on December 31, 2021 and increasing to quarterly $ 5,000 principal payments beginning on March 31, 2024, with a $ 145,500 payment due on the maturity date of August 9, 2026 (“Maturity Date”).

Interest is payable quarterly, which commenced on November 9, 2021 and continues through the Maturity Date.

The Initial Loan bears interest at a per annum rate equal to LIBOR, subject to a 1.00 % floor, plus 6.50 %.

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In addition, the Company paid $ 1,000 in debt issuance costs relating the DDTL, which are recorded in other current assets within the unaudited condensed consolidated balance sheet.

The fair value of the Initial Term Loan as of September 30, 2021 was $ 190,436 .

OrbiMed Credit Agreement

On January 9, 2020, the Company entered into a credit agreement with OrbiMed for an aggregate amount of $ 200,000 (the “OrbiMed Loan”), with a maturity date of January 2026 .

Borrowings under the OrbiMed Loan are collateralized by all of the Company’s assets, excluding the intellectual property licensed through the License Agreement.

The OrbiMed Loan bears an interest rate equal to the sum of (i) the greater of (a) 1-month LIBOR or (b) 2.00 % per annum, plus (ii) 11.00 % per annum, paid in cash monthly in arrears on the last day of

each month starting in January 2020.

At the time of prepayment or repayment of all or any portion of the principal of the OrbiMed Loan, the Company is required to pay an exit fee of 7.0 % of the principal amount of the OrbiMed Loan prepaid, repaid, or required to be prepaid or repaid.

The Company recorded the exit fee as a liability and debt discount at the origination of the term loan.

In connection with the OrbiMed Loan, the Company extinguished its $ 200,000 multi-draw loan agreement with CRG Servicing LLC (the “CRG Loan”), which required a payoff amount of $ 120,893 consisting of principal repayment, interest, and exit fees.

In connection with extinguishment of the CRG Loan, the Company recognized a loss on extinguishment of $ 22,639 within the Company’s unaudited condensed consolidated statements of operations for the nine months ended September 30, 2020.

In connection with the Blackstone Credit Agreement, the Company extinguished the OrbiMed Loan, which required a payoff amount of $ 222,666 consisting of principal repayment, interest, exit fees and a prepayment premium.

The Company recognized a loss on extinguishment of $ 26,146 relating to the OrbiMed Loan within the Company’s unaudited condensed consolidated statements of operation for the three and nine months ended September 30, 2021.

The fair value of the Initial Term Loan as of March 31, 2022 was $ 169,966 .

Long-term debt, net consists of the following:

September 30,

Liability component - principal

Unamortized debt discount associated with the exit fee, debt financing costs and discount with warrant financing (see note 13)

Unamortized debt discount associated with debt financing costs

Liability component - net carrying value

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Long term debt, net

Future minimum payments relating to long term debt, net as of September 30, 2021 for the periods indicated below consists of the following:

Future minimum payments relating to long term debt, net as of March 31, 2022 for the periods indicated below consists of the following:

Years ending December 31,

2021 (excluding the nine months ended September 30, 2021)

2022 (Excluding the three months ended March 31, 2022)

Interest expense related to the Company’s long term debt, net, which is included in interest expense, net in the unaudited condensed consolidated statements of operations and comprehensive income (loss), consists of the following:

Three Months Ended

Nine Months Ended

September 30,

Interest on principal balance

1 unchanged sentence

Total term loan interest expense

COMMITMENTS AND CONTINGENCIES

From time to time, the Company is subject to claims and suits arising in the ordinary course of business.

The Company accrues such liabilities when they are known, if they are deemed probable and can be reasonably estimated.

Lease Agreements

In June 2018, the Company entered into an operating lease for approximately fifteen thousand square feet of office space in Plymouth Meeting, PA, which expires in May 2024.

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The terms of the lease payments provide for rental payments on a monthly basis and on a graduated scale.

The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid.

In addition, tenant improvement allowances recorded are amortized as a reduction to rent expense on a straight-line basis over the lease term.

Rent expense was $ 420 and $ 773 for the three and nine months ended September 30, 2021, respectively, compared to $ 161 and $ 516 for the three and nine months ended September 30, 2020, respectively.

The following table sets forth the lease payment obligations as of September 30, 2021, for the periods indicated below:

The Company also leases a fleet of automobiles that are used by its sales representatives and are classified as operating leases.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments using our incremental borrowing rate.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Our leases have remaining lease terms of less than 1 year to 3 years , some of which may include the option to extend or terminate the leases.

The Company recorded operating lease costs of $ 385 and $ 264 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the weighted-average remaining lease term for operating leases was 2.3 years and the weighted-average discount rate for operating leases was 3.8 %.

Supplemental balance sheet information related to operating leases was as follows:

Classification

March 31, 2022

December 31, 2021

Operating lease right-of-use assets

Other noncurrent assets

Operating lease liability, current portion

Other current liabilities

Operating lease liability, long-term

Other long-term liabilities

Total operating lease liabilities

Supplemental cash flow information related to operating leases was as follows:

March 31, 2022

March 31, 2021

Operating cash flows from operating leases

Right of use assets obtained in exchange for operating lease obligations (1)

(1) Including the balance recognized on January 1, 2021, upon adoption of ASU No.

Future payments under noncancelable operating leases with initial terms of one year or more as of March 31, 2022 consisted of the following:

Years ending December 31,

2021 (excluding the nine months ended September 30, 2021)

CONVERTIBLE PREFERRED STOCK

Upon the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock were automatically converted into shares of common stock and the accrued dividend payable to holders of the

convertible preferred stock was paid out in shares of common stock, resulting in a total of 42,926,630 shares of common stock being issued to former holders of the Company’s convertible preferred stock.

Series A Preferred Stock

On September 22, 2017, the Company issued 270,000,000 shares of Series A convertible preferred stock for a purchase price of $ 1.00 per share, or $ 270,000 in the aggregate.

On January 8, 2018, the Company issued an additional 15,000,000 shares of Series A convertible preferred stock for a purchase price of $ 1.00 per share, or $ 15,000 in the aggregate.

As of September 30, 2020, there were 286,000,000 Series A convertible preferred stock authorized of which 285,000,000 were issued and outstanding.

Each outstanding share of Series A convertible preferred stock accrued dividends at 10 % per annum of the Series A original issue price, subject to adjustment for stock splits, combinations, recapitalizations, stock dividends and similar transactions.

Preferred dividends on the Series A convertible preferred stock were cumulative and were compounded annually.

Series B Preferred Stock

On January 8, 2018, the Company issued 8,000,000 shares of Series B convertible preferred stock for a purchase price of $ 1.25 per share, or $ 10,000 in the aggregate.

As of September 30, 2020, there were 8,030,000 shares of Series B convertible preferred stock authorized, of which 8,000,000 were issued and outstanding .

Each outstanding share of Series B convertible preferred stock accrued dividends at 10 % per annum of the Series B original issue price, subject to adjustment for stock splits, combinations, recapitalizations, stock dividends and similar transactions.

Preferred dividends on the Series B convertible preferred stock were cumulative and were compounded annually.

Series C Preferred Stock

On August 9, 2019, the Company issued 25,510,205 shares of Series C convertible preferred stock for a purchase price of $ 1.96 per share, or $ 50,000 in the aggregate.

As September 30, 2020, there were 25,600,000 shares of Series C convertible preferred stock authorized, of which 25,510,205 were issued and outstanding .

Each outstanding share of Series C convertible preferred stock accrued dividends at 10 % per annum of the Series C original issue price, subject to adjustment for stock splits, combinations, recapitalizations, stock dividends and similar transactions.

Preferred dividends on the Series C convertible preferred stock were cumulative and were compounded annually.

The holders of Series A, Series B, and Series C convertible preferred stock were entitled to receive, when and if declared by the board of directors of the Company, cumulative dividends equal to a 10 % per annum of Series A, Series B, and Series C convertible preferred stock.

In addition, the holders of the outstanding shares of Series A, Series B, and Series C convertible preferred stock were entitled to receive, when and if declared by the board of directors of the Company, a dividend at least equal to any dividend payable on the Company’s common stock as if all convertible preferred stock had been converted to common stock.

No dividends were declared as of December 31, 2019.

As part of the Company’s IPO, the Company’s accrued cumulative dividend was paid out to holders of Series A, Series B, and Series C convertible preferred stock in shares of the Company’s common stock and reflects the reverse stock split in connection with the mandatory conversion of the Series A, Series B, and Series C convertible preferred stock into shares of the Company’s common stock.

STOCKHOLDERS’ EQUITY (DEFICIT)

On August 11, 2020, the Company implemented a 1-for-8.215 reverse stock split of the Company’s common stock.

All share and per share data shown in the accompanying financial statements and related notes have been retroactively revised to reflect the reverse stock split with the exception of the preferred stock.

Shares of common stock reserved for issuance upon the conversion of the Company’s Preferred Stock were proportionately reduced.

As of August 11, 2020, all outstanding shares of preferred stock and preferred stock dividend were convertible into shares of common stock on a 1-for-8.215 basis .

On August 21, 2020, the Company completed its IPO of common stock, in which it sold 6,151,162 shares, including 802,325 shares pursuant to the underwriters’ over-allotment option.

The shares began trading on the Nasdaq Global Market on August 19, 2020.

2022 (Excluding the three months ended March 31, 2022)

Total lease payments

imputed interest

Total lease liabilities

COMMITMENTS AND CONTINGENCIES

From time to time, the Company is subject to claims and suits arising in the ordinary course of business.

The Company accrues such liabilities when they are known, if they are deemed probable and can be reasonably estimated.

As of March 31, 2022, there were no claims or suits outstanding.

STOCKHOLDERS’ EQUITY

The holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of the Company’s stockholders.

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The Company’s common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In connection with the Blackstone Credit Agreement, on August 9, 2021, the Company sold an aggregate of 1,048,951 shares of our common stock, par value $ 0.00001 per share, to Blackstone for an aggregate cash consideration of $ 30,000 , or $ 28.60 per share.

This sale did not involve a public offering and was therefore exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D thereunder as a transaction not involving any public offering.

In connection with the OrbiMed warrant (see Note 13) 221,511 shares of the Company’s common stock were issued to OrbiMed on September 3, 2021.

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

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In connection with the Company’s IPO, the board of directors adopted, and its stockholders approved, the 2020 Incentive Award Plan (the “2020 Plan”), in order to facilitate the grant of cash and equity incentives to directors, employees (including the Company’s named executive officers) and consultants of the Company and its subsidiaries.

Upon the effectiveness of the 2020 Plan, no further grants will be made under the 2017 Plan.

However, the 2017 Plan will continue to govern the terms and conditions of outstanding awards granted under it.

The 2020 Plan provides for the grant of stock options, including incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”), SARs, restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards.

Stock options and stock appreciation rights under the 2017 Plan and the 2020 Plan have a 10-year contractual term and vest over the vesting period specified in the applicable award agreement, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan).

Stock options and stock appreciation rights under the 2020 Plan have a 10-year contractual term and vest over the vesting period specified in the applicable award agreement, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan).

RSUs vest over the vesting period specified in the applicable award agreement, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan).

As of March 31, 2022, there were 5,089,156 shares of common stock reserved for issuance under the 2020 Plan.

The number of shares that may be issued under the 2020 Plan will automatically increase on January 1 of each year in an amount equal to the lesser of (i) 4.0 % of the shares of the Company’s common stock outstanding on December 31 of the preceding year or (ii) an amount determined by the Company’s board of directors.

2017 Stock Incentive Plan

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Under the 2017 Plan, directors, officers, employees, consultants, and advisors of the Company can be paid incentive compensation measured by the value of the Company’s common shares through grants of stock options, stock appreciation rights (“SARs”), or restricted stock.

Following the adoption of the 2020 Plan, no further grants have been, or will be, made under the 2017 Plan.

However, the 2017 Plan will continue to govern the terms and conditions of outstanding awards granted under it.

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2021:

The following table summarizes stock option activity for the three months ended March 31, 2022:

Awards outstanding—December 31, 2021

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Awards forfeited

Awards outstanding—September 30, 2021

Awards outstanding—March 31, 2022

Stock Appreciation Rights

The following table summarizes SARs activity for the nine months ended September 30, 2021:

The following table summarizes SARs activity for the three months ended March 31, 2022:

Awards outstanding—December 31, 2021

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Awards forfeited

Awards outstanding—September 30, 2021

Awards outstanding—March 31, 2022

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2021:

The following table summarizes RSU activity for the three months ended March 31, 2022:

Awards outstanding—December 31, 2021

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Awards forfeited

Awards outstanding—September 30, 2021

As of September 30, 2021 and December 31, 2020, stock awards issued under the 2017 and 2020 Plans of 1,473,881 and 987,538 common shares, respectively, were vested.

The Company has elected early

adoption of ASU No.

2016-09 to recognize forfeitures as they occur.

As a result of the adoption, for the nine months ended September 30, 2020, the Company reversed $ 2 out of stock-based compensation previously recorded.

Awards outstanding—March 31, 2022

As of March 31, 2022 and December 31, 2021, stock awards issued under the 2017 and 2020 Plans of 1,225,948 and 1,285,432 common shares, respectively, were vested.

Value of Stock Options and SARs

The Company has valued awards for each of the plans included herein using the Black-Scholes option-pricing model.

The Company historically has been a private company and lacks company-specific historical and implied volatility information.

Therefore, the Company estimates its expected stock volatility based on historical volatility of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

The Company lacks sufficient historical company-specific volatility information.

Therefore, the Company estimates expected stock volatility based on historical volatility of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

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The assumptions used to value the awards are summarized in the following table.

September 30,

Dividend yield

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Risk-free interest rate

Lack of marketability discount

Expected term (years)

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The fair value of RSUs is equal to the value of the Company’s common stock on the grant date.

The weighted average per share fair value of awards issued under the 2017 Plan and 2020 Plan was $ 12.52 and $ 10.06 on September 30, 2021 and December 31, 2020, respectively.

The weighted average per share fair value of awards issued under the 2017 Plan and 2020 Plan was $ 16.94 and $ 12.82 on March 31, 2022 and December 31, 2021, respectively.

Stock-Based Compensation

Stock-based compensation expense, net for the three and nine months ended September 30, 2021 and 2020, respectively, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in the following line items:

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense, net for the three months ended March 31, 2022 and 2021, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income in the following line items:

Three Months Ended March 31,

Research and development expense

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Options and RSUs issued under the 2017 Plan and 2020 Plan are included in stockholder’s equity, and SARs are included in other non-current liabilities, in the Company’s unaudited condensed consolidated balance sheet.

As of September 30, 2021, the total unrecognized stock-based compensation expense related to

Options and RSUs was $ 63,450 .

As of March 31, 2022, the total unrecognized stock-based compensation expense related to Options and RSUs was $ 95,566 .

Such amount will be recognized in the Company’s consolidated statement of operations over a weighted average period of 3.5 years.

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Funds are collected from employees through after-tax payroll deductions.

The total number of shares reserved for issuance under the ESPP was initially 629,805 .

The total number of shares reserved for issuance under the ESPP was initially 629,805 , which will automatically increase on January 1 of each year in an amount equal to the lesser of (i) 1.0 % of the shares of the Company’s common stock outstanding on December 31 of the preceding year or (ii) an amount determined by the Company’s board of directors.

It is intended that the ESPP meet the requirements for an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.

For the three and nine months ended September 30, 2021, there were no shares issued under the ESPP, respectively.

The discount on the ESPP for the three and nine months ended September 30, 2021 was $ 60 and $ 80 , respectively, and is recorded within stock-based compensation expense.

In connection with the OrbiMed Loan, the Company issued warrants (the “Warrants”) to OrbiMed on January 9, 2020.

Pursuant to the Warrants, OrbiMed could purchase up to 410,239 shares of the Company’s common stock for an initial exercise price of $ 16.10 at any time from the date of execution of the Warrants through the expiration date, defined within the Warrants as the earlier of (i) January 9, 2027 and (ii) the closing date of a Corporate Reorganization.

The fair value of the Warrants using the Black-Scholes option-pricing model was $ 2,359 on January 9, 2020 and was initially recorded as a warrant liability which was included in warrant liability in the unaudited condensed consolidated balance sheet.

The portion of the OrbiMed Loan proceeds allocated to the warrant liability resulted in a debt discount, which is presented in the unaudited condensed consolidated balance sheets as a direct deduction from the carrying value of the debt and is being amortized as additional interest expense over the six-year loan term of the OrbiMed Loan.

In connection with the Blackstone Credit Agreement, the OrbiMed Loan was repaid in fully and the unamortized debt discount related to the Warrants was included in the loss on debt extinguishment (see Note 11).

On September 3, 2021, OrbiMed exercised its option to purchase shares of the Company’s common stock pursuant to the Warrants, which resulted in the net settlement of 221,511 shares of the Company’s common stock issued to OrbiMed.

In connection with the IPO, the financial instrument underlying the warrants was converted from the Company’s Series C Preferred Stock to the Company’s Common Stock.

As a result of this conversion the Warrants were re-evaluated under ASC 480 Distinguishing Liabilities from Equity and ASC 815 Derivatives and Hedging and reclassified to equity.

For the three months ended March 31, 2022, there were no shares issued under the ESPP.

The discount on the ESPP for the three months ended March 31, 2022 was $ 94 and is recorded within stock-based compensation expense.

EARNINGS PER SHARE

The Company has reported a net loss for the three months ended September 30, 2021.

The weighted average number of shares utilized for basic and diluted net loss per share attributable to common stockholders are the same for this period because all stock options and warrants have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact.

The Company has reported net income for the nine months ended September 30, 2021.

Diluted net income (loss) per common share is computed under the treasury stock method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, stock appreciation rights, restricted stock units and warrants.

In addition, the Company analyzes the potential dilutive effects of the outstanding convertible preferred stock under the ‘if-converted’ method when calculating diluted earnings per share, in which it is assumed that the outstanding convertible preferred stock converts into common stock at the beginning of the

period or when issued if later.

The Company has reported net income for both the three months ended March 31, 2022 and 2021.

Diluted net income per common share is computed under the treasury stock method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, stock appreciation rights, restricted stock units and warrants.

The Company reports the more dilutive of the approaches (treasury stock or ‘if converted’) as its diluted net income per share during the period.

For the three and nine months ended September 30, 2020, the Company used the two-class method to compute net loss per common share because the Company has issued securities (convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company.

Under this method, net income is reduced by the amount of any dividends earned and the accretion of convertible preferred stock to its redemption value during the period.

The remaining earnings (undistributed earnings) are allocated to common stock and each series of convertible preferred stock to the extent that each preferred security may share in the earnings as if all of the earnings for the period had been distributed.

The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share.

The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock have no obligation to fund losses.

The Company reported a net loss for the three and nine months ended September 30, 2020, and the weighted average number of shares utilized for basic and diluted net loss per share attributable to common stockholders are the same for these periods because all convertible preferred stock and stock options have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact.

Additionally, the fair value adjustment for the warrants was excluded from the computation of diluted net loss for the three and nine months ended September 30, 2020 since the additional income would have an antidilutive impact.

The following table sets forth the computation of basic and diluted net (loss) income per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Accumulation of dividends on preferred stock

Net (loss) income available to common shareholders

Net (loss) income per common share - basic

Net (loss) income per common share - diluted

The following table sets forth the computation of basic and diluted net income per share:

Three Months Ended March 31,

Net income per common share - basic

Net income per common share - diluted

Weighted average number of shares of common stock - basic

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Securities outstanding that are included in the computation above, utilizing the treasury stock method are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options, SARs, and RSUs to purchase common stock

Potential common shares issuable upon conversion of preferred stock, exercise of stock options, and exercise of warrants that were excluded from the computation of diluted weighted-average shares outstanding as well as the warrant fair value adjustments excluded from the numerator are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Potential common shares issuable upon exercise of stock options, and exercise of warrants that were excluded from the computation of diluted weighted-average shares outstanding as well as the warrant fair value adjustments excluded from the numerator are as follows:

Three Months Ended March 31,

Stock options, SARs, and RSUs to purchase common stock

Adjustment for warrants

RELATED-PARTY TRANSACTIONS

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In addition, the Chairman of the Company’s board of directors was the President and owner of the entity.

The Company incurred $ 71 and $ 3,628 for the three months ended September 30, 2021 and 2020, respectively, and $ 213 and $ 7,101 for the nine months ended September 30, 2021 and 2020, respectively, in management fee expense and other expenses to this related party, which are included in general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The Company terminated the Management Services Agreement upon the consummation of its IPO.

The Company terminated the management agreement upon the consummation of its IPO.

The Company is also party to a right of use agreement with the related party whereby it has access to and the right to use certain office space leased by the related party in Chicago, Illinois.

In addition, the Company had participated in certain transactions with separate related parties that also share common ownership with the Company, primarily related to combined employee health plans.

In August 2021, the Company paid a $ 2,300 advisory fee to Paragon in connection with the Blackstone Credit Agreement.

$ 2,000 of this payment was recorded in debt issuance costs as a component of long-term debt, net and $ 300 was recorded in common stock issuance costs as a component of additional paid-in capital, within the unaudited condensed consolidated balance sheet as of September 30, 2021.

As of September 30, 2021 and December 31, 2020, the amount included in prepaid expenses and other assets was $ 0 and $ 1 , respectively, and there were no amounts due to related parties included in current liabilities.

The Company incurred $ 71 for each of the three months ended March 31, 2022 and 2021, in expenses to this related party, which are included in general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2022 and December 31, 2021, there were no amounts due to or due from related parties included in the unaudited condensed consolidated balance sheets.

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 1. Financial Statements