What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-06 compared with 2024-10-29 · 209 added, 226 removed, 451 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

CURRENT ASSETS:

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Common stock—$ 0.00001 par value;

500,000,000 shares authorized at September 30, 2024 and December 31, 2023, respectively;

57,030,897 and 56,769,081 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

500,000,000 shares authorized at March 31, 2025 and December 31, 2024, respectively;

57,393,673 and 57,144,887 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid in capital

Accumulated other comprehensive (loss) income

Accumulated deficit

Accumulated other comprehensive income

Retained earnings

TOTAL STOCKHOLDERS’ EQUITY

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(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 revenue

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Operating income

Loss on debt extinguishment

Other (expense) income, net

Other expense, net

Interest expense

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Income tax expense

Unrealized (loss) income on investments

Unrealized income (loss) on investments

Comprehensive income

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AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)

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stockholders’

(loss) income

Balance as of December 31, 2024

Unrealized loss on investments

Unrealized gain on investments

Exercise of options and restricted stock units

Stock-based compensation

Balance as of September 30, 2024

comprehensive

stockholders’

(loss) income

Balance as of June 30, 2024

Unrealized loss on investments

Exercise of options

Stock-based compensation

Balance as of September 30, 2024

Balance as of March 31, 2025

comprehensive

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Unrealized loss on investments

Repurchase of common stock

( 1,439,792 )

Exercise of stock options

Stock-based compensation

Balance as of September 30, 2023

comprehensive

stockholders’

(loss) income

Balance as of June 30, 2023

Unrealized loss on investments

Repurchase of common stock

( 1,439,792 )

Exercise of options

Exercise of stock options and restricted stock units

Stock-based compensation

Balance as of September 30, 2023

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

Balance as of March 31, 2024

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

HARMONY BIOSCIENCES HOLDINGS, INC.

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(In thousands, except share and per share data)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

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Intangible amortization

Acquired in-process research & development (IPR&D) expense

Stock-based and employee stock purchase compensation expense

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Amortization of premiums and accretion of discounts on Investment securities

Loss on debt extinguishment

Other non-cash expenses

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Purchase of property and equipment

Acquisition of Epygenix Therapeutics, Inc., net of cash acquired

Payment of license fee

Net cash used in investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term debt

Debt issuance costs

Extinguishment of debt

Extinguishment of debt exit fees

Principal repayment of long-term debt

Repurchase of common stock

Payments of employee withholding taxes related to stock-based awards

Proceeds from exercised options

Net cash (used in) provided by financing activities

Net cash used in financing activities

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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The Company’s operations are conducted in its wholly owned subsidiaries, Harmony Biosciences, LLC (“Harmony”), and Harmony Biosciences Management, Inc.

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

The Company is headquartered in Plymouth Meeting, Pennsylvania.

On October 10, 2023, the Company completed a tender offer to acquire all of the outstanding shares of common stock of Zynerba Pharmaceuticals, Inc.

The Company is cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.

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

Our lead product, WAKIX® (pitolisant) (“WAKIX”), is a first-in-class therapy with a novel mechanism of action designed to enhance histamine signaling in the brain by binding to H 3 receptors.

Since its initial FDA approval in 2019 for excessive daytime sleepiness (“EDS”) in adult patients with narcolepsy, WAKIX has subsequently been approved for cataplexy in adult patients in 2020 and EDS in pediatric patients six years and older in 2024.

Beyond narcolepsy, we are also advancing late-stage clinical programs exploring pitolisant in Prader-Willi syndrome (“PWS”) and continue to grow our impact in other rare neurological diseases.

In July 2022, we entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby we obtained exclusive rights to manufacture, develop and commercialize one or more next generation pitolisant based products in the United States and Latin America.

Two of the next generations formulations, Pitolisant Gastro-Resistant (“Pitolisant GR”) and Pitolisant High-Dose (“Pitolisant HD”) are currently in clinical development.

Along with nurturing the growth of our original pipeline, our innovation strategy includes targeted business development that strengthens our foundation and strategically extends our patient reach as we look to expand our portfolio to new diseases beyond histaminergic science.

In October 2023, the Company completed a tender offer to acquire all of the outstanding shares of common stock of Zynerba Pharmaceuticals, Inc.

(together with its subsidiary, Zynerba Pharmaceutical Pty, Ltd., “Zynerba”).

Zynerba was a clinical-stage pharmaceutical company focused on innovative pharmaceutically produced transdermal cannabidiol therapies for orphan neurobehavioral disorders, including Fragile X Syndrome.

As of July 1, 2024, Zynerba was renamed and is known as Harmony Biosciences Management, Inc.

On April 30, 2024, the Company acquired all of the issued and outstanding capital stock of Epygenix Therapeutics, Inc., a Wyoming corporation (“Epygenix”).

As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of Dravet Syndrome and Lennox-Gastaut Syndrome.

Zynerba was a clinical-stage pharmaceutical company focused on innovative, pharmaceutically produced transdermal cannabidiol therapies for orphan neurobehavioral disorders, including Fragile X Syndrome and 22q deletion syndrome.

As of July 1, 2024, Zynerba Pharmaceuticals, Inc.

was renamed and is known as Harmony Biosciences Management, Inc.

In April 2024, we expanded into orexin science through a sublicense agreement with Bioprojet for an orexin 2 receptor agonist (“BP1.15205”) in preclinical development for narcolepsy and other potential indications.

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

We further broadened our portfolio into rare epilepsy when the Company acquired all of the issued and outstanding capital stock of Epygenix Therapeutics, Inc.

(“Epygenix”) in April 2024.

As a result, the Company now has an exclusive license relating to the use of clemizole hydrochloride, initially for the treatment of Dravet Syndrome (“DS”) and Lennox-Gastaut Syndrome (“LGS”), and a liquid formulation of lorcaserin for the treatment of developmental and epileptic encephalopathies.

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 had an accumulated deficit of $ 47,259 and $ 143,277 , as of September 30, 2024, and December 31, 2023, respectively.

As of September 30, 2024, the Company had cash, cash equivalents and investments of $ 504,698 .

The Company believes that its existing cash, cash equivalents and investments on hand as of September 30, 2024, as well as additional cash generated from operating and financing activities will meet its operational liquidity needs and fund potential investing activities for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

The Company had retained earnings of $ 47,776 and $ 2,216 , as of March 31, 2025, and December 31, 2024, respectively.

As of March 31, 2025, the Company had cash, cash equivalents and investments of $ 610,198 .

The Company believes that its existing cash, cash equivalents and investments on hand as of March 31, 2025, as well as additional cash generated from operating and financing activities will meet its operational liquidity needs and fund potential investing activities for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All intercompany accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated balance sheet as of September 30, 2024, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2024, and 2023, and the unaudited condensed consolidated statements of operations and comprehensive income and the unaudited condensed consolidated statements of shareholders’ equity for the three and nine months ended September 30, 2024, and 2023, are

The unaudited condensed consolidated balance sheet as of March 31, 2025, the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2025, and 2024, 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, 2025, and 2024, are unaudited.

The balance sheet as of December 31, 2024, was derived from audited financial statements as of and for the year ended December 31, 2024.

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, 2023, 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, 2024, and the results of its operations and its cash flows for the three and nine months ended September 30, 2024, and 2023.

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, 2024, 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, 2025, and the results of its operations and its cash flows for the three months ended March 31, 2025, and 2024.

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

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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, 2024.

Reclassifications

Certain prior period amounts within the unaudited condensed consolidated statements of operations and comprehensive income have been reclassified to conform to current period presentation.

In particular, interest expense and interest income were previously classified together as interest expense, net and are now separately classified as interest expense and interest income, respectively.

The reclassification of these items had no impact on net income, earnings per share or accumulated deficit in current or prior periods.

Significant Risks and Uncertainties

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the unaudited condensed consolidated financial statements, including the notes thereto, and elsewhere in this report.

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts and disclosures in the unaudited condensed consolidated financial statements, including the notes thereto, and elsewhere in this report.

Actual results may differ significantly from estimates, which include rebates due pursuant to commercial and government contracts, accrued research and development expenses, stock-based compensation expense and income taxes.

Operating Segments

Operating segments are defined as comp one nts of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Makers in deciding how to allocate resources to an individual segment and in assessing performance.

The Company has determined it operates in a single operating segment and has one reportable segment.

Operating segments are defined as comp one nts of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.

The Company has determined it operates in a single operating segment, rare neurological diseases and, therefore, has one reportable segment.

The Company holds all its tangible assets, conducts its operations, and generates its revenue in the United States.

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We validate valuations obtained from third-party services by obtaining market values from other pricing sources.

The Company did not classify any assets or liabilities as Level 3 as of September 30, 2024, or December 31, 2023.

The Company did not classify any assets or liabilities as Level 3 as of March 31, 2025, or December 31, 2024.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents and restricted cash consist of cash and, if applicable, highly liquid investments with an original maturity of three months or less when purchased, including investments in Money Market Funds and debt securities that approximate fair value.

market funds and debt securities that approximate fair value.

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

September 30,

Cash and cash equivalents

3 unchanged sentences

The Company’s investments consist of debt securities that are classified as available-for-sale.

Short-term and long-term investments are carried at fair value and unrealized gains and losses are recorded as a

component of accumulated comprehensive income in stockholders’ equity.

Short-term and long-term investments are carried at fair value and unrealized gains and losses are recorded as a component of accumulated comprehensive income in stockholders’ equity.

Interest income earned on cash and investment balances, accretion of the discount on investments in debt securities, amortization of premiums and realized gains and losses, if any, are recorded in interest income on the unaudited condensed consolidated statement of operations and comprehensive income.

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institutions.

The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company believes that it is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

The Company is subject to credit risk from its trade receivables related to its product sales.

The Company is subject to credit risk from its trade receivables related to product sales.

The Company extends credit to specialty pharmaceutical distribution companies within the United States.

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

The Company monitors its exposure within accounts receivable and would record a reserve against uncollectible accounts receivable if necessary.

As of September 30, 2024, three customers accounted for 100 % of gross accounts receivable;

The Company monitors its exposure within accounts receivable and would record a reserve for uncollectible amounts, if necessary.

As of March 31, 2025, three customers accounted for 100 % of gross accounts receivable;

Caremark LLC (“CVS Caremark”), which accounted for 40 % of gross accounts receivable;

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As of December 31, 2024, three customers accounted for 100 % of gross accounts receivable;

Accredo, which accounted for 39 % of gross accounts receivable, CVS Caremark, which accounted for 32 % of gross accounts receivable;

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

For the nine months ended September 30, 2024, three customers accounted for 100 % of gross product revenue;

CVS Caremark, which accounted for 39 % of gross accounts receivable, Pantherx, which accounted for 31 % of gross accounts receivable;

and Accredo, which accounted for 30 % of gross accounts receivable.

For the three months ended March 31, 2025, three customers accounted for 100 % of gross product revenue;

CVS Caremark accounted for 40 % of gross product revenue;

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and Pantherx accounted for 25 % of gross product revenue.

For the nine months ended September 30, 2023, three customers accounted for 100 % of gross product revenue;

CVS Caremark accounted for 37 % of gross product revenue;

For the three months ended March 31, 2024, three customers accounted for 100 % of gross product revenue;

CVS Caremark accounted for

42 % of gross product revenue;

Accredo accounted for 33 % of gross product revenue;

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Business combinations and asset acquisitions are accounted for in accordance with FASB ASC 805 Business Combinations.

Refer to Note 4, Acquisitions , for a more detailed discussion of the Company’s acquisitions of Zynerba and Epygenix.

Recently Issued Accounting Pronouncements

Refer to Note 4, Acquisitions , for a more detailed discussion of the Company’s acquisition of Epygenix.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

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ASU 2023-07 is intended to improve reportable segment disclosures primarily through enhanced disclosure of reportable segment expenses and requires that a public entity that has a single reportable segment provide all the disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280.

This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements.

The Company has one reportable segment and is currently evaluating the impact that ASU 2023-07 will have on its condensed consolidated financial statements.

This ASU was effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption was permitted.

ASU 2023-07 was required to be applied retrospectively to all prior periods presented in the financial statements.

The Company adopted this guidance in the fourth quarter of 2024.

This pronouncement addresses disclosures only and had no impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No 2023-09, “Income Taxes (Topic 740):

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The Company is currently evaluating the impact that ASU 2023-09 will have on its condensed consolidated financial statements.

Acquisition of Zynerba

In October 2023, the Company completed a tender offer to purchase the outstanding common stock of Zynerba (“Zynerba Common Stock”) for (i) $ 1.1059 per share of Zynerba Common Stock (the “Common Cash Amount”), the aggregate amount of which was $ 60,000 and was paid at closing, plus (ii) one contingent value right (each, a “CVR”) per share of Zynerba Common Stock (the “Common CVR Amount”), which represents the right to receive up to approximately $ 2.5444 per share of Zynerba Common Stock, subject to the achievement of certain clinical, regulatory and sales-based milestones.

The Common CVR Amounts are to be paid in cash, subject to any applicable withholding of taxes and without interest.

The aggregate amount of consideration to acquire Zynerba Common Stock was $ 60,000 , excluding transaction related fees of $ 2,645 and was paid by the Company using cash on hand.

The Zynerba Acquisition was accounted for as an asset acquisition under ASC Topic 805, Business Combinations, because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable IPR&D asset, ZYN002, Zynerba’s lead asset.

ZYN002 is the first and only pharmaceutically manufactured, synthetic cannabidiol, devoid of THC, formulated as a patent-protected permeation-enhanced gel for transdermal delivery through the skin and into the circulatory system and is currently in Phase III clinical trial for the potential treatment of Fragile X Syndrome.

The Company recognized the acquired assets and assumed liabilities based on the consideration paid, including transaction costs, on a relative fair value basis, and after first allocating the preliminary excess of the fair value of net assets acquired over the purchase price consideration to certain qualifying assets, principally, the IPR&D asset.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) .

ASU 2024-03 requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption, as well as a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

ASU 2024-03 also requires disclosure of the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The guidance may be applied prospectively or retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impact that ASU 2024-03 will have on the Company’s consolidated financial statements.

Acquisition of Epygenix

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The Company paid the former stockholders of Epygenix up front consideration of $ 35,000 less a working capital adjustment.

In addition, the Company will be obligated

to pay up to $ 130,000 upon the achievement of development and regulatory milestones and up to $ 515,000 upon the achievement of certain sales-based milestones, in each case to Epygenix’s former stockholders.

As a result, the Company now has an exclusive license relating to the use of clemizole, initially for the treatment of Dravet Syndrome and Lennox-Gastaut Syndrome.

The total purchase consideration for Epygenix was as follows:

Cash consideration paid to selling shareholders and to settle restricted stock units ("RSUs")

Transaction costs

Total purchase consideration

In addition, the Company will be obligated to pay up to $ 130,000 upon the achievement of development and regulatory milestones and up to $ 515,000 upon the achievement of certain sales-based milestones, in each case to Epygenix’s former stockholders.

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

The acquisition of Epygenix was accounted for as an asset acquisition under ASC Topic 805, Business Combinations.

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In accordance with the accounting for asset acquisitions, an entity that acquires IPR&D assets in an asset acquisition follows the guidance in ASC Topic 730, Research and Development, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be allocated a portion of the consideration transferred and recorded as research and development expense at the acquisition date.

As a result, the Company recorded a charge of $ 17,095 related to acquired in-process research and development expense during the nine months ended September 30, 2024.

The following table shows the allocation of the purchase consideration based on the relative fair value of assets acquired and liabilities assumed by the Company, after reducing the excess fair value of the IPR&D asset as described above:

Assets acquired

Acquired in-process research and development

Deferred tax asset

Total assets acquired

Total liabilities assumed

Net assets acquired

As a result, the Company recorded a charge of $ 17,095 related to acquired in-process research and development expense during the year ended December 31, 2024.

The carrying value and amortized cost of the Company’s available-for-sale debt securities, summarized by type of security, consisted of the following:

September 30, 2024

March 31, 2025

Commercial paper

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Total short-term investments

Commercial paper

Corporate debt securities

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Corporate debt securities

government securities

Total short-term investments

Commercial paper

Corporate debt securities

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Total long-term investments

The Company classifies investments with an original maturity of less than one year as current and investments with an original maturity date of greater than one year as noncurrent on its unaudited condensed consolidated balance sheet.

The Company classifies investments with an original maturity of less than one year as current and investments with an original maturity date of greater than one year as noncurrent in its unaudited condensed consolidated balance sheet.

The investments classified as noncurrent have original maturity dates ranging from 1 - 2 years .

The Company did not have any available-for-sale debt security investments in a continuous unrealized loss position of greater than 12 months as of September 30, 2024, and December 31, 2023, respectively.

The Company did not have any available-for-sale debt security investments in a continuous unrealized loss position of greater than 12 months as of March 31, 2025, and December 31, 2024, respectively.

FAIR VALUE MEASUREMENTS

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We validate valuations obtained from third-party services by obtaining market values from other pricing sources.

The Company did not classify any assets or liabilities as Level 3 as of September 30, 2024, or December 31, 2023.

The Company did not classify any assets or liabilities as Level 3 as of March 31, 2025, or December 31, 2024.

The Company’s assets measured at fair value consisted of the following:

September 30, 2024

March 31, 2025

December 31, 2024

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Inventory, net consisted of the following:

September 30,

Raw materials

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Finished goods

Inventory, gross

Reserve for excess inventory

Total inventory, net

INTANGIBLE ASSETS

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 2017 LCA (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 September 30, 2024, the remaining useful life was 5.0 years.

In August 2019, the Company received FDA approval of WAKIX for the treatment of EDS in adult patients with narcolepsy.

This event triggered a milestone payment of $ 75,000 under the provisions of the 2017 LCA which the Company capitalized as an intangible asset.

The Company determined a useful life of 10 years for the intangible asset, and, as of March 31, 2025, the remaining useful life was 4.5 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 2017 LCA 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 September 30, 2024, the remaining useful life was 5.0 years.

The Company determined a useful life of 9 years for the intangible asset, and, as of March 31, 2025, the remaining useful life was 4.5 years.

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

This event triggered a final $ 40,000 payment under the provisions of the 2017 LCA 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 September 30, 2024, the remaining useful life was 5.0 years.

Amortization expense was $ 5,961 and $ 5,962 for the three months ended September 30, 2024, and 2023, respectively, and $ 17,883 and $ 17,884 for the nine months ended September 30, 2024, and 2023, respectively, and is recorded in general and administrative on the unaudited condensed consolidated statements of operations and comprehensive income.

The Company determined a useful life of 7.6 years for the intangible asset, and, as of March 31, 2025, the remaining useful life was 4.5 years.

Amortization expense was $ 5,961 for each of the three months ended March 31, 2025, and 2024, respectively, and is recorded in general and administrative on the unaudited condensed consolidated statements of operations and comprehensive income.

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

Years ending December 31,

2024 (excluding the nine months ended September 30, 2024)

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

September 30,

2025 (excluding the three months ended March 31, 2025)

The gross carrying amount and net book value of the intangible asset was as follows:

Gross Carrying Amount

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Bioprojet Agreements

In July 2017, Harmony entered into a License Agreement (the “2017 LCA”) 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.

In July 2017, Harmony entered into the 2017 LCA with 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.

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The 2017 LCA 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 $ 40,295 and $ 29,665 for the three months ended September 30, 2024, and 2023, respectively, and $ 95,232 and $ 71,267 for the nine months ended September 30, 2024, and 2023, respectively, for sales-based, trademark and tiered royalties recognized as cost of product sold.

As of September 30, 2024, and December 31, 2023, the Company had accrued $ 40,295 and $ 40,419 , respectively, for sales-based, trademark and tiered royalties.

In July 2022, Harmony entered into a License and Commercialization Agreement (the “2022 LCA”) with Bioprojet whereby Harmony 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.

The Company incurred $ 29,557 and $ 24,738 for the three months ended March 31, 2025, and 2024, respectively, for sales-based, trademark and tiered royalties recognized as cost of product sold.

As of March 31, 2025, and December 31, 2024, the Company had accrued $ 29,557 and $ 51,746 , respectively, for sales-based, trademark and tiered royalties.

In July 2022, Harmony entered into the 2022 LCA with Bioprojet whereby Harmony 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.

Harmony paid an initial, non-refundable $ 30,000 licensing fee in October 2022 and additional payments of up to $ 155,000 are potentially due under the 2022 LCA upon the achievement of certain future development and sales-based milestones.

In addition, there are other payments due upon achievement of development milestones for new indications and formulations as

agreed upon by both parties.

In addition, there are other payments due upon achievement of development milestones for new indications and formulations as 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.

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

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

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

The Licensed Compound is currently in pre-clinical development with a Clinical Trial Application currently anticipated in mid-2025.

Under the Sublicense, the Company paid Bioprojet an upfront license fee of $ 25,500 , which the Company recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2024, and will also be obligated to pay up to $ 127,500 upon achievement of development and regulatory milestones and up to $ 240,000 upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using the Licensed Compound in the Licensed Territories.

The Licensed Compound is currently in pre-clinical development with an Investigational Medicinal Product Dossier (“IMPD”) Application currently anticipated in mid-2025.

Under the Sublicense, the Company paid Bioprojet an upfront license fee of $ 25,500 , which the Company recognized as an IPR&D charge recorded in research and development within the consolidated statements of operations and comprehensive income for the year ended December 31, 2024, and will also be obligated to pay up to $ 127,500 upon achievement of development and regulatory milestones and up to $ 240,000 upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using the Licensed Compound in the Licensed Territories.

ConSynance Agreement

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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.

In March 2023, the Company achieved a preclinical milestone, which triggered a $ 750 payment under the provisions of the APA, which the Company recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive income for the nine months ended September 30, 2023.

In September 2024, the Company achieved a milestone for preclinical proof-of-concept, which triggered a $ 1,000 payment under the provisions of the APA, which the Company recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2024.

In March 2023, the Company achieved a preclinical milestone, which triggered a $ 750 payment under the provisions of the APA, which the Company recognized as an IPR&D charge recorded in research and development within the consolidated statement of operations and comprehensive income for the year ended December 31, 2023.

In September 2024, the Company achieved a milestone for preclinical proof-of-concept, which triggered a $ 1,000 payment under the provisions of the APA, which the Company recognized as an IPR&D charge recorded in research and development within the consolidated statement of operations and comprehensive income for the year ended December 31, 2024.

There are additional payments due under the APA upon the achievement of certain milestones including $ 19,000 for development milestones, $ 44,000 for regulatory milestones and $ 110,000 for sales milestones.

ACCRUED EXPENSES

Accrued expenses consist of the following:

September 30,

Accrued expenses consisted of the following:

Royalties due to Bioprojet

2 unchanged sentences

Research and development

Milestone payments

Professional fees, consulting, and other services

1 unchanged sentence

Term Loan A Credit Agreement

In July 2023, the Company entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders.

The TLA Credit Agreement provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $ 185,000 .

In September 2023, the Company entered into the First Incremental Amendment (the “First Incremental Amendment”) with the Administrative Agent and Bank of America, N.A., as incremental lender.

The First Incremental Amendment provides for an incremental senior secured term loan (the “Incremental Term Loan”) in an aggregate principal amount of $ 15,000 .

The First Incremental Amendment amends the TLA Credit Agreement and provides that the Incremental Term Loan will have identical terms as the TLA Term Loan.

The repayment schedule for both the TLA Term Loan and the Incremental Term Loan (together, the “Term Loans”) consists of quarterly $ 3,750 principal payments, which commenced on December 31, 2023, increasing to quarterly $ 5,000 principal payments beginning on December 31, 2025, with a $ 115,000 payment due on the maturity date of July 26, 2028.

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

The net cash received related to the Term Loans as a result of the transactions, less debt issuance costs of $ 2,997 , was $ 197,003 .

The debt issuance costs related to the Term Loans will be amortized as additional interest expense over the loan term of the TLA Credit Agreement.

The fair value of the Term Loans as of September 30, 2024, was $ 188,356 .

Blackstone Credit Agreement

In August 2021, the Company entered into the Blackstone Credit Agreement, which provided 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”).

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 paid a ticking fee at a rate of 1 % per annum on the undrawn portion of the DDTL (the “Ticking Fee”), commencing on August 10, 2022.

Net cash received from the Initial Term Loan was $ 191,849 , net of debt issuance costs of $ 8,151 .

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

In connection with the TLA Credit Agreement, the Company extinguished the Blackstone Credit Agreement, which required a payoff amount of $ 207,308 , consisting of principal repayment, interest, exit fees, payment of the Ticking Fee and a prepayment premium.

The Company recognized a loss on extinguishment of debt of $ 9,766 relating to the Blackstone Credit Agreement within the Company’s unaudited condensed consolidated statements of operation and comprehensive income for the three and nine months ended September 30, 2023.

In addition, the Company recognized $ 1,972 relating to unamortized debt issuance costs relating to the DDTL and the Ticking Fee, which was recorded in interest expense, net within the unaudited condensed consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2023.

Long-term debt, net consists of the following:

September 30,

In July 2023, the Company entered into a Credit Agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as “Administrative Agent”, and certain lenders, which was subsequently amended

in September 2023.

The TLA Credit Agreement, as amended, provides for a five-year senior secured term loan (the “TLA Term Loan”) in an aggregate principal amount of $ 200,000 .

The repayment schedule for the TLA Term Loan consists of quarterly $ 3,750 principal payments, which commenced on December 31, 2023, increasing to quarterly $ 5,000 principal payments beginning on December 31, 2025, with a $ 115,000 payment due on the maturity date of July 26, 2028.

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

The net cash received related to the TLA Term Loan as a result of the transactions, less debt issuance costs of $ 2,997 , was $ 197,003 .

The debt issuance costs related to the TLA Term Loan will be amortized as additional interest expense over the loan term of the TLA Credit Agreement.

The fair value of the TLA Term Loan as of March 31, 2025, was $ 174,593 .

Long-term debt, net consisted of the following:

Principal amount

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Long-term debt, net

Future minimum payments relating to total debt, net as of September 30, 2024, for the periods indicated below consists of the following:

Future minimum payments relating to long-term debt, net as of March 31, 2025, for the periods indicated below consisted of the following:

Years ending December 31,

2024 (excluding the nine months ended September 30, 2024)

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

2025 (excluding the three months ended March 31, 2025)

Three Months Ended

Nine Months Ended

September 30,

Interest on principal balance

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

The Company subsequently entered into two separate operating leases for additional office space in Plymouth Meeting, PA, which include approximately thirteen thousand square feet and seven thousand square feet of additional office space, respectively, and were set to expire in May 2024.

In March 2024, the Company amended its existing operating leases for office space in Plymouth Meeting to extend their terms through June 2025.

The Company subsequently entered into two separate operating leases for additional office space in Plymouth Meeting, PA, which include

approximately thirteen thousand square feet and seven thousand square feet of additional office space, respectively, and were extended through June 2025.

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

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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 $ 491 and $ 473 for the three months ended September 30, 2024, and 2023, respectively and $ 1,622 and $ 1,295 for the nine months ended September 30, 2024, and 2023, respectively.

As of September 30, 2024, the weighted-average remaining lease term for operating leases was 1.7 years and the weighted-average discount rate for operating leases was 7.66 %.

The Company recorded operating lease costs of $ 467 and $ 509 for the three months ended March 31, 2025, and 2024, respectively.

As of March 31, 2025, the weighted-average remaining lease term for operating leases was 1.6 years and the weighted-average discount rate for operating leases was 7.72 %.

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

Classification

September 30, 2024

March 31, 2025

December 31, 2024

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

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Operating cash flows from operating leases

Right of use assets obtained in exchange for operating lease obligations

Future payments under noncancelable operating leases with initial terms of one year or more as of September 30, 2024, consisted of the following:

Future payments under non-cancelable operating leases with initial terms of one year or more as of March 31, 2025, consisted of the following:

Years ending December 31,

2024 (excluding the nine months ended September 30, 2024)

2025 (excluding the three months ended March 31, 2025)

Total lease payments

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Any expenses, fines, fees, penalties, judgments or settlements that might be incurred by the Company in connection with proceedings could have a material adverse effect on the Company’s results of operations and financial condition.

As of September 30, 2024, there were no material claims or suits outstanding.

As of March 31, 2025, there were no material claims or lawsuits outstanding other than the ANDA litigation discussed below .

Abbreviated New Drug Application (“ANDA”) Litigation

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§ 314.95 et seq.

(the “Lupin Notice Letter”) that

Lupin has submitted ANDA No.

(the “Lupin Notice Letter”) that Lupin has submitted ANDA No.

218846 (the “Lupin ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of U.S.

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The Novitium Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent, ’947 patent and the ‘197 patent are invalid or unenforceable.

The Zenara Notice Letter asserts that its generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent, ’947 patent and the ‘197 patent are invalid or unenforceable.

The Zenara Notice Letter asserts that its

generic product will not infringe the ‘430 patent, ’947 patent and the ‘197 patent and/or that the ‘430 patent, ’947 patent and the ‘197 patent are invalid or unenforceable.

On November 21, 2023, the Company, Bioprojet and Bioprojet Pharma filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against AET, Annora, Novitium and Zenara and certain of their affiliates and agents and for patent infringement of the ’430 patent against Annora, Novitium and Zenara and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to their filing of their respective ANDAs with the FDA.

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On December 8, 2023, MSN Laboratories Private Limited (“MSN”) filed a declaratory judgment action in the United States District Court for the Eastern District of Virginia against Bioprojet claiming that the ‘430 patent, the ’947 patent and the ‘197 patent will not be infringed by MSN’s generic version of WAKIX ® and that the ‘947 patent is invalid.

On December 11, 2023, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ‘430 patent, the ’947 patent and the ‘197 patent against MSN and MSN

On January 12, 2024, the declaratory judgment action was transferred from the United States District Court for the Eastern District of Virginia to the United States District Court for the District of Delaware.

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The Scheduling Order set March 27, 2025, as the date for the hearing on claim construction and scheduled a four-day bench trial beginning on February 17, 2026.

On August 7, 2024, the Company and Bioprojet received further notice from AET pursuant to 21 U.S.C.

§ 355(j) et seq.

and 21 C.F.R.

§ 314.95 et seq .

(the “Second AET Notice Letter”) that AET has submitted the AET ANDA to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ‘947 patent and the ‘197 patent.

The Second AET Notice Letter asserts that its generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable.

On August 13, 2024, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ’947 patent and the ‘197 patent against AET.

On October 31, 2024, the Company reached an agreement with Novugen Pharma to resolve the dispute over Novugen’s ANDA for a generic pitolisant hydrochloride product.

Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware was ended on November 4, 2024, and Novugen will have a license to sell its generic product beginning January 2030, or earlier under certain circumstances.

On December 12, 2024, the Company and Bioprojet received further notice from Lupin pursuant to 21 U.S.C.

§ 355(j) et seq.

and 21 C.F.R.

§ 314.95 et seq .

(the “Second Lupin Notice Letter”) that Lupin has submitted the Lupin ANDA to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ‘947 patent and the ‘197 patent.

The Second Lupin Notice Letter asserts that its generic product will not infringe the ’947 patent and the ‘197 patent and/or that the ’947 patent and the ‘197 patent are invalid or unenforceable.

On January 24, 2025, we, Bioprojet and Bioprojet Pharma filed a complaint in the United States District Court for the District of Delaware for patent infringement of the ’947 patent and the ‘197 patent against Lupin.

On March 24, 2025, the Company reached an agreement with Annora to resolve the dispute over Annora’s ANDA for a generic pitolisant hydrochloride product.

Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware was ended on March 31, 2025, and Annora will have a license to sell its generic product beginning January 2030, or earlier under certain circumstances.

The resolution of one or more of these matters against the Company could have a significant negative effect on the Company’s results of operations.

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Share Repurchase Program

In August 2023, the Company’s Board of Directors approved a program providing for the repurchase of shares of common stock in an aggregate amount of up to $ 125,000 , excluding commissions and transaction fees (the “August 2023 Repurchase Program”).

During the three and nine months ended September 30, 2023, the Company repurchased and cancelled 1,439,792 shares of common stock at an aggregate cost of $ 50,000 , exclusive of commissions and transaction fees.

In October 2023, the Company’s Board of Directors terminated the August 2023 Repurchase Program and any remaining amount authorized for the repurchase of shares and simultaneously approved a new share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $ 200,000 , excluding commissions and transaction fees.

In October 2023, the Company’s Board of Directors approved a share repurchase program (the “October 2023 Repurchase Program”) providing for the repurchase of shares of common stock in an aggregate amount of up to $ 200,000 , excluding commissions and transaction fees.

The October 2023 Repurchase Program may be suspended, terminated, or modified at any time for any reason.

During the three and nine months ended September 30, 2024, and 2023, no shares of common stock were repurchased and cancelled by the Company under the October 2023 Repurchase Program.

As of September 30, 2024, the remaining amount of common stock authorized for repurchases was $ 150,000 .

During the three months ended March 31, 2025, and 2024, no shares of common stock were repurchased and cancelled by the Company under the October 2023 Repurchase Program.

As of March 31, 2025, the remaining amount of common stock authorized for repurchases was $ 150,000 .

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

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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 September 30, 2024, there were 6,836,036 shares of common stock available for issuance under the 2020 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, 2025, there were 8,777,657 shares of common stock available for issuance under the 2020 Plan.

The number of shares that may be issued under the 2020 Plan automatically increases 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.

5 unchanged sentences

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2024:

The following table summarizes stock option activity for the three months ended March 31, 2025:

Value ($000's)

3 unchanged sentences

Awards forfeited

Awards outstanding—September 30, 2024

Awards exercisable—September 30, 2024

Awards outstanding—March 31, 2025

Awards exercisable—March 31, 2025

Awards unvested—March 31, 2025

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2025, was $ 25.50 .

The total intrinsic value of stock options exercised for the three months ended March 31, 2025, was $ 2,157 .

Stock Appreciation Rights

The following table summarizes SARs activity for the nine months ended September 30, 2024:

The following table summarizes SARs activity for the three months ended March 31, 2025:

Value ($000's)

3 unchanged sentences

Awards forfeited

Awards outstanding—September 30, 2024

Awards exercisable—September 30, 2024

Awards outstanding—March 31, 2025

Awards exercisable—March 31, 2025

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2024:

The following table summarizes RSU activity for the three months ended March 31, 2025:

Awards outstanding—December 31, 2024

2 unchanged sentences

Awards forfeited

Awards outstanding—September 30, 2024

Awards outstanding—March 31, 2025

Value of RSUs

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 2020 Plan during the three months ended March 31, 2025, and 2024 was $ 38.25 and $ 30.69 , respectively.

Value of Stock Options and SARs

8 unchanged sentences

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

September 30,

March 31, 2025

December 31, 2024

Dividend yield

5 unchanged sentences

Expected term (years)

Value of RSUs

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 $ 21.25 and $ 20.64 on September 30, 2024, and December 31, 2023, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense for the three and nine months ended September 30, 2024, and 2023, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income in the following line items:

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense for the three months ended March 31, 2025, and 2024, 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

2 unchanged sentences

Stock-based compensation expense related to options and RSUs issued under the 2017 Plan and 2020 Plan is included in stockholder’s equity, and a liability for SARs is included in other non-current liabilities, in the Company’s unaudited condensed consolidated balance sheet.

As of September 30, 2024, the total unrecognized stock-based compensation expense was $ 59,799 and $ 17,533 for stock options and RSUs, respectively.

This amount will be recognized in the Company’s consolidated statement of operations over a weighted average period of 2.4 years.

As of March 31, 2025, the total unrecognized stock-based compensation expense was $ 66,056 and $ 29,617 for stock options and RSUs,

respectively.

These amounts will be recognized in the Company’s consolidated statement of operations over a weighted average period of 2.69 years and 3.17 years for stock options and RSUs, respectively.

Employee Stock Purchase Plan

4 unchanged sentences

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

There were 1,206 and 0 shares issued under the ESPP for the three months ended September 30, 2024, and 2023, respectively.

There were 11,913 and 14,043 shares issued under the ESPP for the nine months ended September 30, 2024, and 2023, respectively.

The discount on the ESPP was $ 72 and $ 100 for the three months ended September 30, 2024, and 2023, respectively, and $ 230 and $ 308 for the nine months ended September 30, 2024, and 2023, respectively, and is recorded within stock-based compensation expense.

There were no shares issued under the ESPP for the three months ended March 31, 2025, and 2024, respectively.

The discount on the ESPP was $ 60 and $ 80 for the three months ended March 31, 2025, and 2024, respectively, and is recorded within stock-based compensation expense.

SEGMENT INFORMATION

The Company has one reportable segment:

rare neurological diseases.

The rare neurological diseases segment consists of the Company’s commercial product, WAKIX, and its potential product candidates, that focus on patients living with rare neurological diseases who have unmet needs.

The Company currently derives all of its revenue from sales of WAKIX, which is used in the treatment of EDS and cataplexy in adult patients with narcolepsy and the treatment of EDS in pediatric patients six years and older with narcolepsy and manages its business activities on a consolidated basis.

The accounting policies of the rare neurological diseases segment are consistent with those described in Note 3, Summary of Significant Accounting Policies , and the measure of segment assets is reported on the consolidated balance sheets as total assets.

The Company’s CODM is the chief executive officer.

The CODM assesses performance of the rare neurological diseases segment using net income as reported in the consolidated statements of operations and comprehensive income.

Net income is assessed by the CODM to make decisions on how to allocate resources, such as reinvesting profits into the rare neurological diseases segment or pursuing potential investing activities.

The following table summarizes segment revenue and significant segment expenses for the three months ended March 31, 2025, and 2024:

Rare Neurological Diseases Segment

Three Months Ended March 31,

Net product revenue

Cost of product sold (excluding depreciation)

Research and development (excluding stock compensation)

Sales and marketing (excluding stock compensation)

General and administrative (excluding stock compensation and amortization)

Depreciation and amortization

Stock-based compensation

Interest expense

Interest income

Income tax expense (benefit)

Other segment items (a)

Consolidated net income

(a) Other segment items includes other expense, net.

EARNINGS PER SHARE

2 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income per share of common stock - basic

2 unchanged sentences

Weighted average number of shares of common stock - diluted

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

Three Months Ended September 30,

Nine Months Ended September 30,

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

Three Months Ended March 31,

Stock options, SARs, and RSUs to purchase common stock

Potential shares of common stock issuable that were excluded from the computation of diluted weighted-average shares outstanding excluded from the numerator, are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Potential shares of common stock that were excluded from the computation of diluted weighted-average shares outstanding excluded from the numerator, are as follows:

Three Months Ended March 31,

Stock options, SARs, and RSUs to purchase common stock

A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate for the three and nine months ended September 30, 2024, and 2023 is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2025, and 2024 is as follows:

Three Months Ended March 31,

Federal income tax rate

Stock-based compensation

Nondeductible IPR&D

Valuation allowance

RELATED-PARTY TRANSACTIONS

The Company was party to a management agreement for professional services provided by a related party, Paragon Biosciences, LLC (“Paragon”).

The Company is a party to a right of use agreement with Paragon Biosciences, LLC (“Paragon”) whereby it has access to and the right to use certain office space leased by Paragon in Chicago, IL.

Paragon is an entity that shares common ownership with the Company.

In addition, the Chairman of the Company’s board of directors is the Founder, Chairman and CEO

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

The Company incurred $ 73 for each of the three months ended September 30, 2024, and 2023, and incurred $ 218 for each of the nine months ended September 30, 2024, and 2023 in expenses to Paragon, which are included in general and administrative in the unaudited condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2024, and December 31, 2023, there were no amounts due to or due from related parties included in the unaudited condensed consolidated balance sheets.

In addition, the Chairman of the Company’s board of directors is the Founder, Chairman and CEO of Paragon.

The Company incurred $ 73 for each of the three months ended March 31, 2025, and 2024, in expenses to Paragon, which are included in general and administrative in the unaudited condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2025, and December 31, 2024, 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