What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-01 compared with 2022-08-02 · 76 added, 65 removed, 250 unchanged (36% of the section changed)

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● our ongoing and planned clinical trials;

● our ability to expand the scope of our license agreement with Bioprojet Soci é t é Civile de Recherche ( “ Bioprojet ” );

● our ability to expand the scope of our license agreements with Bioprojet Soci é t é Civile de Recherche ( “ Bioprojet ” );

● the availability of favorable insurance coverage and reimbursement for WAKIX;

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Drug Enforcement Administration (the “DEA”).

Regarding pediatric narcolepsy and a pediatric indication for WAKIX, our partner, Bioropjet, has completed a Phase 3 trial in pediatric patients with narcolepsy.

Regarding pediatric narcolepsy and a pediatric indication for WAKIX, our partner, Bioprojet, has completed a Phase 3 trial in pediatric patients with narcolepsy.

Bioprojet recently submitted the data to the European Medical Agency (“EMA”) seeking approval for a pediatric narcolepsy indication.

The EMA’s decision on Bioprojet’s pediatric narcolepsy submission could help inform our strategy toward submitting the data to the FDA.

In the meantime, we are committed to obtaining pediatric exclusivity for WAKIX and plan to submit a request for a pediatric written request later this year.

The EMA’s decision on Bioprojet’s pediatric narcolepsy submission is expected in the first quarter of 2023 and could help inform our strategy toward submitting the data to the FDA.

In the meantime, we are committed to obtaining pediatric exclusivity for WAKIX and submitted a request for a pediatric written request this quarter.

We believe that pitolisant’s ability to regulate histamine gives it the potential to provide therapeutic benefit in other rare neurological diseases that are mediated through H 3 receptors and histamine signaling.

We are taking a mechanism-based approach to managing the life cycle of pitolisant and have identified idiopathic hypersomnia (“IH”), another central disorder of hypersomnolence like narcolepsy, as our next potential new indication for WAKIX.

In April, we initiated a Phase 3 registrational trial (the “INTUNE Study”) to evaluate the efficacy and safety of pitolisant in adult patients with IH.

In April, we initiated a Phase 3 registrational trial (the “INTUNE Study”) to evaluate the efficacy and safety of pitolisant in adult patients with IH and have seen good momentum in patient enrollment, with over 70% of the targeted clinical trial sites activated.

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, otherwise known as dystrophia myotonica (“DM”).

In December 2020, we initiated a Phase 2 proof-of-concept clinical trial to evaluate pitolisant for the treatment of EDS and other key symptoms in patients with PWS and are on track for topline results from this trial in the fourth quarter of 2022.

In June 2021, we initiated a Phase 2 clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and anticipate topline results from this trial in 2023.

We recently received the initial topline data from our Phase 2 proof-of-concept clinical trial to evaluate pitolisant for the treatment of EDS and other key symptoms in patients with PWS.

The topline data showed a positive signal on the primary outcome related to EDS and we look forward to receiving the full data set, which will inform our understanding of the data as we plan to advance our development program in patients with PWS.

In June 2021, we initiated a Phase 2 proof-of-concept clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and anticipate topline results from this trial in 2023.

We also seek to expand 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, on August 4, 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 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.

Consistent with this objective, on July 31, 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, use 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 agreement of both parties.

In addition, on August 4, 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor 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.

In connection with the acquisition, we made an upfront payment of $3.5 million and will be required to make certain payments upon the achievement of certain development milestones, regulatory milestones, and sales milestones and pay ongoing royalties upon commercialization.

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

We are currently on track to begin a preclinical proof-of-concept study to assess the effect of HBS-102 on hyperphagia, weight gain, and other metabolic parameters in a mouse model of PWS later in 2022.

We have recently initiated a preclinical proof-of-concept study to assess the effect of HBS-102 on hyperphagia, weight gain, and other metabolic parameters in a mouse model of PWS.

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 patient 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 “Bioprojet License Agreement”) in July 2017.

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.

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In February 2020, we changed our name to Harmony Biosciences Holdings, Inc.

Our operations to date have consisted of building and staffing our organization, acquiring the rights to pitolisant, raising capital, opening an investigational new drug

applications (“IND”) for pitolisant in narcolepsy, conducting an Expanded Access Program (“EAP”) for pitolisant for appropriate patients with narcolepsy in the United States, preparing and submitting our NDA for pitolisant, gaining NDA approval for WAKIX for the treatment of EDS or cataplexy in adult patients with narcolepsy, and launching and commercializing WAKIX in the United States.

Our operations to date have consisted of building and staffing our organization, acquiring the rights to pitolisant, raising capital, opening an investigational new drug applications (“IND”) for pitolisant in narcolepsy, conducting an Expanded Access Program (“EAP”) for pitolisant for appropriate patients with narcolepsy in the United States, preparing and submitting our NDA for pitolisant, gaining NDA approval for WAKIX for the treatment of EDS or cataplexy in adult patients with narcolepsy, and launching and commercializing WAKIX in the United States.

In addition, we have opened INDs for the development of WAKIX/pitolisant in PWS, DM and IH and have initiated clinical trials in pursuit of potential new indications in those rare disease patient populations.

Commercial Performance Metrics

As of June 30 2022, we continue to see growth in unique healthcare professional (“HCP”) prescribers of WAKIX.

The average number of patients on WAKIX for the three months ended June 30, 2022 was approximately 4,300.

Additionally, as of June 30, 2022, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

As of September, 30 2022, we continue to see growth in unique healthcare professional (“HCP”) prescribers of WAKIX.

The average number of patients on WAKIX for the three months ended September 30, 2022 was approximately 4,600.

Additionally, as of September 30, 2022, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Within these covered lives, we have observed favorable access to WAKIX subsequent to the expanded approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020.

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As offices, clinics and institutions have increased in-person interactions pursuant to health authority and local government guidelines, our field teams are re-initiating in-person interactions with HCPs and customers, but the timing and level of engagement may vary by account and region and may be adversely impacted in the future where reemergence or future outbreaks of COVID-19, including the rise of variants, may occur.

Access to HCPs for our sales team is still limited and despite the opening up of the economy, we are still in a transition phase and expect continued, but decreasing, pressure on top line demand in future quarters as the challenges presented by COVID-19 begin to subside.

During the pandemic, elevated unemployment and the corresponding loss of health insurance caused some eligible patients to shift from commercial insurance to free drug and patient assistance programs, which

impacted our ability to convert demand into revenue.

Access to HCPs for our sales team is still limited and despite the opening up of the economy, we are still in a transition

phase and expect continued, but decreasing, pressure on top line demand in future quarters as the challenges presented by COVID-19 begin to subside.

Given the high unemployment rates and resulting loss of employer-sponsored insurance coverage, some patients also shifted from commercial payor coverage to government payor coverage, which may have impacted, and may continue to impact, our net revenue.

We currently expect to have adequate supply of WAKIX into the fourth quarter of 2023, with additional API on-hand inventory to support at least 36 months beyond this time frame.

We currently expect to have adequate supply of WAKIX into the first quarter of 2024, with additional API on-hand inventory to support at least 36 months beyond this time frame.

We continue to work closely with our third-party manufacturers, distributors and other partners to manage our supply chain activities and mitigate potential disruptions to our product supplies as a result of the COVID-19 pandemic.

We believe that our access to the required production lines to produce additional API and WAKIX finished product throughout the next 12 to 18 months may not be directly impacted should there be a need to reprioritize manufacturing resources for the production of materials utilized for COVID-19 vaccines.

We believe that our access to the required production lines to produce additional API and WAKIX finished product throughout the next 12 to 18 months would not be significantly impacted should there be a need to reprioritize manufacturing resources for the production of materials utilized for COVID-19 vaccines.

Our manufacturing partners in France and the United States continue to be operational.

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The COVID-19 pandemic evolved rapidly and caused a significant disruption of domestic and global financial markets.

In addition, the pandemic limited our ability to conduct in-person due diligence and other interactions to identify new opportunities.

In addition, the pandemic limited our ability to conduct in-person due diligence and other

interactions to identify new opportunities.

If there is a subsequent outbreak of COVID-19 or any variant thereof or if it reemerges for an extended period of time, we may be unable to access additional capital, which could negatively affect our ability to execute on certain corporate development transactions or other important investment opportunities.

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We also made no furloughs, layoffs, or adjustments to salaries as a result of the pandemic.

As pandemic-related restrictions began to and cases began to decline, all of our have returned to in-person operations with flexibility as needed, which we feel is critical to collaboration, innovation, productivity, employee well-being and engagement, and enhances our culture.

As pandemic-related restrictions and cases began to decline, all of our employees returned to in-person operations, with flexibility as needed, which we believe is critical to collaboration, innovation, productivity, employee well-being and engagement, and enhances our culture.

We continually look for ways to support our employees in all roles across the organization in balancing their work and personal lives.

Our commitment extends beyond ensuring our that our employees are supported to supporting the communities where we live and work.

Our commitment extends beyond ensuring that our employees are supported to supporting the communities where we live and work.

We have contributed to relief efforts in our local communities, to patient-focused organizations and other charitable organizations during the COVID-19 pandemic, including corporate donations, food and medical supplies and other resources.

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The shelf life of WAKIX is three years from date of manufacture, with the earliest expiration of current inventory expected to be May 2023.

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

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

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

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● the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;

be impacted by future shelter-in-place orders and needs of the health care system to focus on managing patients affected by COVID-19;

● the impact of the COVID-19 pandemic, including any future resurgence or new variants, on the ability to initiate new clinical trials and/or maintain the continuity of ongoing clinical trials that could be impacted by future shelter-in-place orders and needs of the health care system to focus on managing patients affected by COVID-19;

● receiving Bioprojet ’ s consent to pursue additional indications for pitolisant;

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● market access expenses, including payor education, specialty pharmacy programs and services to support the continued commercialization of WAKIX;

● secondary data purchases (i.e.

patient claims and prescription data), data warehouse development and data management.

● secondary data purchases (i.e., patient claims and prescription data), data warehouse development and data management.

In addition, sales and marketing expenses include external costs such as website development, media placement fees, agency fees for patient, medical education and promotional expenses, market research, analysis of secondary data, conference fees and consulting fees.

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We are also 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.

For the three and six months ended June 30, 2022, we paid $0.1 million and $0.2 million, respectively, pursuant to this agreement.

For the three and nine months ended September 30, 2022, we paid $0.1 million and $0.2 million, respectively, pursuant to this agreement.

Interest Expense, Net

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Operating income

Other expense, net

Loss on debt extinguishment

Other expense (income), net

Interest expense, net

Net income before provision for income taxes

Income tax expense

Income tax benefit (expense)

Net Product Revenue

Net product revenue increased by $33.2 million, or 45.0%, for the three months ended June 30, 2022 and increased by $58.8 million, or 44.1%, for the six months ended June 30, 2022, compared to the same periods in 2021.

Net product revenue increased by $36.5 million, or 45.2%, for the three months ended September 30, 2022 and increased by $95.3 million, or 44.5%, for the nine months ended September 30, 2022, compared to the same periods in 2021.

The increase in both comparable periods was due to the growth in the average number of patients on WAKIX and price increases.

Cost of Product Sales

Cost of product sales increased by $6.3 million, or 49.1%, for the three months ended June 30, 2022 and increased by $10.5 million, or 45.6%, for the six months ended June 30, 2022, compared to the same periods in 2021.

Cost of product sales increased by $8.4 million, or 57.2%, for the three months ended September 30, 2022 and increased by $18.9 million, or 50.1%, for the nine months ended September 30, 2022, compared to the same periods in 2021.

The increase in both comparable periods was due to higher sales of WAKIX.

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Research and Development Expenses

Research and development expenses increased by $6.2 million, or 95.0%, for the three months ended June 30, 2022, and increased by $9.1 million, or 81.1%, for the six months ended June 30, 2022, compared to the same periods in 2021.

The increase in both comparable periods was due to clinical development work associated with PWS, DM and IH and increased personnel costs.

Research and development expenses increased by $28.8 million, or 245.4%, for the three months ended September 30, 2022, and increased by $37.9 million, or 165.3%, for the nine months ended September 30, 2022, compared to the same periods in 2021.

The increase for the three months ended September 30, 2022 is primarily related to the $30 million licensing fee incurred upon entering the 2022 LCA with Bioprojet.

The increase for the nine months ended September 30, 2022 is primarily driven by the $30 million licensing fee as well as increased clinical development work associated with IH, PWS and DM and increased personnel costs.

Sales and Marketing Expenses

Sales and marketing expenses increased by $3.1 million, or 18.4%, for the three months ended June 30, 2022, and increased by $5.2 million, or 16.0%, for the six months ended June 30, 2022, compared to the same periods in 2021.

Sales and marketing expenses increased by $4.0 million, or 24.2%, for the three months ended September 30, 2022, and increased by $9.2 million, or 18.8%, for the nine months ended September 30, 2022,

compared to the same periods in 2021.

The increase in both comparable periods was primarily due to patient engagement and marketing activities driven by our commercialization of WAKIX and increased personnel costs related to sales force expansion.

General and Administrative Expenses

General and administrative expenses increased by $7.9 million, or 55.0%, for the three months ended June 30, 2022 and increased by $11.2 million, or 38.8%, for the six months ended June 30, 2022, as compared to the same periods in 2021.

General and administrative expenses increased by $4.5 million, or 26.5%, for the three months ended September 30, 2022 and increased by $15.7 million, or 34.3%, for the nine months ended September 30, 2022, as compared to the same periods in 2021.

The increase in both comparable periods was primarily due to an increase to stock compensation associated with new awards, an increase in intangible asset amortization as a result of the $40.0 million milestone payment upon attaining $500.0 million in life-to-date aggregate net sales of WAKIX in the United States and an increase in personnel costs.

Loss on Debt Extinguishment

There were no extinguishments of debt for the three and nine months ended September 30, 2022.

Loss on debt extinguishment was $26.1 million for the three and nine months ended September 30, 2021, due to the prepayment of the Credit Agreement with OrbiMed.

Interest Expense, Net

Interest expense decreased by $3.3 million, or 45.7%, for the three months ended June 30, 2022 and decreased by $6.3 million, or 43.6%, for the six months ended June 30, 2022, compared to the same periods in 2021 primarily due to lower interest rates as a result of entering into the Blackstone Credit Agreement in August 2021, partially offset by an increase in amortization of deferred financing costs.

For interim periods, we estimate the annual effective income tax rate and apply the estimated rate to the year-to-date income or loss before income taxes.

The effective income tax rate was 19.5% and 12.3% for the three months ended June 30, 2022 and 2021, respectively, and 14.4% and 8.4% for the six months ended June 30, 2022 and 2021, respectively.

The increase in the effective income tax rate for both comparable periods was primarily driven by an increase in taxable income.

Currently, we have recorded a full valuation allowance against our net deferred tax assets, primarily related to federal and state net operating losses.

Interest expense, net decreased by $1.4 million, or 26.5%, for the three months ended September 30, 2022 and decreased by $7.7 million, or 38.9%, for the nine months ended September 30, 2022, compared to the same periods in 2021 primarily due to lower interest rates as a result of entering into the Blackstone Credit Agreement in August 2021 as compared to our previous Credit Agreement with OrbiMed, partially offset by interest income generated from our investments and an increase to the LIBOR.

Income tax benefit increased $79.1 million for the three months ended September 30 2022, and increased $73.4 million for the nine months ended September 30, 2022, as compared to the same periods in 2021.

The increase in both comparable periods was primarily driven by the release of our valuation allowance against our net deferred tax assets.

Liquidity, Sources of Funding and Capital Resources

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The shares were sold at a price of $24.00 per share for net proceeds of approximately $135.4 million.

As of June 30, 2022, we had cash, cash equivalents, restricted cash and investments of $259.7 million and accumulated deficit of $408.6 million.

As of June 30, 2022, we had outstanding debt of $198.5 million.

As of September 30, 2022, we had cash, cash equivalents, restricted cash and investments of $316.8 million and accumulated deficit of $320.6 million.

As of September 30, 2022, we had outstanding debt of $198.0 million.

We have invested a portion of our available cash in money market funds, U.S.

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Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of our investments to preserve principal and maintain liquidity.

All investment securities have a credit rating of at least A-2/P-2/F2 from at least two National Recognized Statistical Rating Organizations.

All investment securities have a credit

rating of at least A-2/P-2/F2 from at least two National Recognized Statistical Rating Organizations.

Our investment portfolio may be adversely impacted by future disruptions in the credit markets.

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 anticipated cash from operating and financing activities, including as a result of potential availability under the DDTL (defined below), existing cash and cash equivalents and investments will enable us to meet our operational liquidity needs and fund our planned investing activities for the next

We have based this estimate on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.

Blackstone Credit Agreement

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 $200.0 million (the “Initial Term Loan”) and (ii) a senior secured delayed draw term loan facility in an aggregate principal amount up to $100.0 million (the “DDTL” and, together with the Initial Term Loans, the “Loans”).

In August 2021, we entered into the Blackstone Credit Agreement that provides for (i) a senior secured term loan facility in an aggregate original principal amount of $200.0 million (the “Initial Term Loan”) and (ii) a senior secured delayed draw term loan facility in an aggregate principal amount up to $100.0 million (the “DDTL” and, together with the Initial Term Loans, the “Loans”).

The DDTL was initially available to draw down through August 9, 2022.

In August 2022, the Company entered into an agreement to extend the expiration date of the DDTL to August 9, 2023, for which the Company will pay a ticking fee at a rate of 1% per annun on the undrawn portion of the DDTL, commencing on August 10, 2022.

In August 2022, we entered into an agreement to extend the expiration date of the DDTL to August 9, 2023, for which we will pay a ticking fee at a rate of 1% per annum on the undrawn portion of the DDTL, which commenced on August 10, 2022.

We used substantially all of the proceeds from the Blackstone Credit Agreement, and the related sale of our common stock, to repay the balance of the OrbiMed Credit Agreement.

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In addition, the Blackstone Credit Agreement contains a financial covenant that requires us to maintain at all times cash and cash equivalents in certain deposit accounts in an amount at least equal to $10.0 million.

The Company is in compliance with all covenants as of June 30 2022.

We are in compliance with all covenants as of September 30, 2022.

Agreement Related to Intellectual Property

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

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

to acquire HBS-102 (formerly “CSTI-100”), a potential first-in-class molecule with a novel mechanism of action.

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

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

Additionally, there are payments due upon the achievement of certain milestones including $1.8 million for preclinical milestones, $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.

License Agreement

On July 31, 2022, we entered into the 2022 LCA with Bioprojet whereby we obtained exclusive rights to manufacture, use 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 agreement of both parties.

We will pay an initial, non-refundable $30 million licensing fee and additional payments of up to $155 million are potentially due under the 2022 LCA upon the achievement of certain future development and sales-based milestones.

In addition, there are certain payments due upon achievement of development milestones for new indications and formulations agreed upon by both parties.

The 2022 LCA also requires a fixed trademark royalty and a tiered royalty based on net sales upon commercialization, which will be payable to Bioprojet on a quarterly basis.

Upon closing of the 2022 LCA on September 28, 2022, the $30 million licensing fee 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, 2022.

Recent Milestone Payment

Upon FDA approval of WAKIX for the treatment of cataplexy in adult patients with narcolepsy in October 2020 (the “Cataplexy Milestone Trigger Date”), we became obligated to make the $100.0 million milestone payment (the “Cataplexy Milestone Payment”) to Bioprojet under the provisions of the Bioprojet License Agreement.

Subsequently, in October 2020, we made a payment to Bioprojet of $2.0 million to extend the Cataplexy Milestone Payment due date to within 90 days of the Cataplexy Milestone Trigger Date.

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In addition, we made a final $40.0 million milestone payment to Bioprojet in March 2022 upon WAKIX attaining $500.0 million in life-to-date aggregate net sales in the United States.

The following table sets forth a summary of our cash flows for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

The following table sets forth a summary of our cash flows for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

Selected cash flow data

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Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2022 consisted of our net income of $45.0 million adjusted for non-cash items of $11.3 million related to intangible amortization and depreciation and $12.3 million related to stock-based compensation expense.

Net working capital excluding cash decreased by $7.5 million.

Net cash provided by operating activities for the six months ended June 30, 2021 consisted of our net income of $21.5 million adjusted for non-cash items of $9.4 million related to intangible amortization and depreciation and $7.2 million related to stock-based compensation expense.

Net cash provided by operating activities for the nine months ended September 30, 2022 consisted of our net income of $133.0 million adjusted for non-cash items of $81.7 million related to deferred tax assets, $17.3 million related to intangible amortization and depreciation and $19.2 million related to stock-based compensation expense.

Net working capital excluding cash increased by $27.9 million, which was partially due to the accrual of the $30.0 million licensing fee associated with the 2022 LCA.

Net cash provided by operating activities for the nine months ended September 30, 2021 consisted of our net income of $11.8 million adjusted for non-cash items of $26.1 million related to loss on extinguishment of debt, $14.0 million related to intangible amortization and depreciation and $11.7 million related to stock-based compensation expense.

Net working capital excluding cash decreased by $4.6 million.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2022 was $62.5 million, which was primarily attributable to a final $40.0 million milestone payment associated with the Bioprojet License Agreement and $22.4 million in purchases of debt securities.

Net cash used in investing activities for the six months ended June 30, 2021 was $100.2 million, which was primarily attributable to the $100.0 million milestone payment associated with the Bioprojet License Agreement.

Net cash used in investing activities for the nine months ended September 30, 2022 was $94.9 million, which was primarily attributable to a final $40.0 million milestone payment associated with the 2017 LCA and $55.6 million in purchases of debt securities, partially offset by $0.9 million in proceeds from sales and maturities of investments.

Net cash used in investing activities for the nine months ended September 30, 2021 was $100.3 million, which was primarily attributable to the $100.0 million milestone payment associated with the 2017 LCA.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2022 was $2.1 million, which primarily consisted of $3.1 million in proceeds from exercised options offset by $1.0 million in principal payments associated with the Blackstone Credit Agreement.

Net cash provided by financing activities for the six months ended June, 2021 was $0.7 million related to proceeds from exercised options.

Net cash provided by financing activities for the nine months ended September 30, 2022 was $4.2 million, which primarily consisted of $5.3 million in proceeds from exercised options offset by $1.5 million in principal payments associated with the Blackstone Credit Agreement.

Net cash provided by financing activities for the nine months ended September 30, 2021 was $0.3 million, which primarily consisted of $190.9 million in proceeds associated with the Blackstone Credit Agreement, net of issuance costs, and $29.7 million in proceeds associated with issuance of common stock to Blackstone, net of issuance costs.

These proceeds were partially offset by $222.0 million in payments of principal and exit fees associated with the extinguishment of the OrbiMed Credit Agreement.

Critical Accounting Estimates

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Significant estimates include assumptions used in the determination of some of our costs incurred under our services type agreements and which costs are charged to research and development and general and administrative expense.

We base our estimates on historical experience and on 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.

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

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

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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