What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-10-29 · 109 added, 149 removed, 200 unchanged (56% of the section changed)

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All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, products, prospective products, product approvals, research and development costs, anticipated timing and likelihood of success of clinical trials, expected timing of the release of clinical trial data, the plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

forward-looking statements.

Important factors that could cause such differences include, but are not limited to, statements about:

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● the rate and degree of market acceptance and clinical utility of pitolisant in additional indications, if approved, and any other product candidates we may develop or acquire, if approved;

● our research and development plans, including our plans to explore the therapeutic potential of pitolisant in additional indications, progress developing the new Pitolisant Gastro-resistant ( “ Pitolisant GR ” ) and Pitolisant High Dose ( “ Pitolisant HD ” ) formulations, and the development of ZYN002, EPX100 and other compounds;

● our ongoing and planned clinical trials;

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Company Overview

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

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

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

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

commercial launch was initiated in November 2019.

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

In June 2024, the FDA approved WAKIX for the treatment of excessive daytime sleepiness in pediatric patients, six years and older, with narcolepsy.

WAKIX is the first-and-only approved product for patients with narcolepsy that is not scheduled as a controlled substance by the U.S.

Drug Enforcement Administration (the “DEA”) .

At Harmony, we are cultivating a differentiated neuroscience company, rooted in innovation and driven by a commitment to addressing the unmet needs of patients living with neurological diseases.

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

Sleep/Wake Franchise

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

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

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

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 have applied a mechanism-based approach to managing the life cycle of pitolisant and identified idiopathic hypersomnia (“IH”), another central disorder of hypersomnolence like narcolepsy, as our next potential new indication for WAKIX, which received orphan drug designation by the FDA in September 2023 and Fast Track Designation in November 2023.

In April 2022, we initiated a Phase 3 registrational trial, the INTUNE Study, to evaluate the efficacy and safety of pitolisant in adult patients with IH.

We completed enrollment in the INTUNE study in May 2023 and we announced topline data in October 2023.

While the primary endpoint did not meet statistical significance, we believe the totality of the data showed favorable numerical trends for pitolisant in the treatment of adult patients with IH and we met with the FDA in March 2024 to discuss the path forward for IH.

Following our meeting with the FDA, we plan to submit a supplemental NDA (“sNDA”) for IH in the fourth quarter of 2024 based on the totality of the data obtained from the INTUNE study and from other sources.

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

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

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

commercial launch was initiated in November 2019.

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

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

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

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We aligned with the FDA on the proposed Phase 3 registration study design to support further investigation of pitolisant as a potential treatment to address the unmet medical need for children, adolescents and adults with PWS experiencing EDS, for which there is currently no approved treatment.

In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which we believe will satisfy the requirements for both the registrational trial and one of the two requirements for pediatric exclusivity for pitolisant.

In October 2023, we received FDA alignment regarding the study design for the Phase 3 TEMPO study in patients with PWS, which has the potential to serve as the registrational trial and also support our efforts to seek pediatric exclusivity for pitolisant.

In February 2024, the FDA granted Orphan Drug designation to pitolisant for the treatment of PWS.

The Phase 3 registrational trial, the TEMPO study, was initiated in March 2024.

In June 2021, we initiated a Phase 2 proof-of-concept signal detection clinical trial to evaluate pitolisant for the treatment of EDS, fatigue and cognitive dysfunction in adult patients with DM1 and announced topline results from this trial in the fourth quarter of 2023, in which clinically meaningful improvements were demonstrated in EDS and fatigue.

The safety profile was consistent with the established safety profile of pitolisant.

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

The safety and tolerability profile of pitolisant in adult patients with DM1 was consistent with the established safety and tolerability profile of pitolisant with no new safety signals detected and no serious adverse events reported.

Our partner, Bioprojet completed a Phase 3 trial in pediatric patients with narcolepsy and submitted the trial data to the European Medicines Agency (the “EMA”) seeking approval for a pediatric narcolepsy indication.

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

On June 24, 2024, we announced that the FDA approved our sNDA for WAKIX for the treatment of EDS in pediatric patients six years of age and older with narcolepsy.

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

In addition, in June 2024, the FDA did not approve our sNDA seeking to expand the WAKIX label for the treatment of pediatric patients with cataplexy.

In October 2024, we held a Type A meeting with the FDA to discuss the pediatric cataplexy indication and reached alignment on a path to sNDA resubmission, which is planned for the second quarter of 2025.

We remain committed to obtaining pediatric exclusivity for WAKIX.

The initiation of the PWS Phase 3 registrational trial, the TEMPO study, and the approval for EDS in pediatric narcolepsy are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.

We believe the initiation of the PWS Phase 3 registrational trial, the TEMPO study, and our current data in pediatric narcolepsy, which resulted in the FDA’s approval of WAKIX in its current pediatric indication, are supportive of our efforts in obtaining pediatric exclusivity for WAKIX.

We are expanding 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.

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

We are on-track to initiate a pivotal bioequivalence study and dosing optimization study in the first quarter of 2025.

We initiated the pivotal bioequivalence study in the first quarter of 2025 and anticipate the topline data readout in the third quarter of 2025.

Our anticipated PDUFA date for Pitolisant GR is in 2026.

We received data from the Pitolisant HD pilot pharmacokinetics study in June 2024, which also supports advancing this development program toward pivotal trials.

The formulation optimization and technical operations work is ongoing, with a goal to initiate Phase 3 registrational studies in the second half of 2025.

A Phase 1b study was conducted to evaluate the safety and tolerability of Pitolisant HD and the initial results support advancement of the development program.

Provisional patents have been filed for both of these formulations, with the potential for patent protection to the mid-2040’s.

In October 2023, we completed the acquisition of Zynerba Pharmaceuticals, Inc.

(“Zynerba”), a clinical-stage pharmaceutical company focused on innovative pharmaceutically manufactured transdermal cannabidiol therapies for orphan neurobehavioral disorders.

Zynerba’s drug candidate is ZYN002, the first and only pharmaceutically manufactured synthetic cannabidiol gel, devoid of THC, and formulated as a patent protected, permeation-enhanced gel for transdermal delivery.

Preparations are ongoing to initiate Phase 3 registrational trials in narcolepsy and

idiopathic hypersomnia (“IH”) in the fourth quarter of 2025.

Our anticipated PDUFA date for the Pitolisant HD narcolepsy and IH programs is in 2028.

A phase 1b study was conducted to evaluate the safety and tolerability of pitolisant at repeat doses of up to 180mg and the initial results are consistent with the known safety profile of pitolisant and support advancement of the Pitolisant HD development program.

Utility patents have been filed for Pitolisant GR and Pitolisant HD, with the potential for patent protection to the mid-2040’s.

In April 2024, we entered into a sublicense agreement with Bioprojet for an orexin-2 receptor agonist (OX2R) (“BP1.15205”) to be evaluated for the treatment of narcolepsy and other potential indications (the “Sublicense”).

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

We believe the pre-clinical data from BP1.15205 is promising and we plan to file an investigational medicinal product dossier (“IMPD”) with the EMA in mid-2025 and begin first-in-human studies in the second half of 2025.

In August 2021, we acquired HBS-102, a Melanin-concentrating hormone receptor type 1 (MCHR1) antagonist previously developed as CSTI-100/ALB-127258(a)/ALB-127258 (the “Compound”), along with intellectual property and other assets related to the development, manufacture, and commercialization of the Compound from ConSynance Therapeutics, Inc.

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

We conducted a preclinical PoC study to assess the effect of HBS-102 on hyperphagia, weight gain and other metabolic parameters in a mouse model of PWS.

The final report was received during the third quarter of 2024 and the results are consistent with the expected results.

In addition, a 13-week toxicology study has been completed, and the preliminary results are encouraging.

Neurobehavioral Franchise

In October 2023, we acquired Zynerba Pharmaceuticals, Inc.

(“Zynerba”), adding global rights to develop, manufacture and commercialize ZYN002, which is a pharmaceutically manufactured 100% synthetic, patent protected permeation enhanced cannabidiol gel for transdermal delivery.

Transdermal delivery is thought to provide better gastrointestinal tolerability and minimize the potential for drug interactions or impacts on liver function tests by avoiding first-pass metabolism in the liver.

The most common adverse effect is application site pain, which studies have shown typically occurs in less than 7% of patients.

ZYN002 is currently in a pivotal Phase 3 trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”).

In the Phase 2 CONNECT-FX trial, patients using ZYN002 showed 40% median improvement in social avoidance behavior as compared to the placebo.

The most common adverse effect observed in clinical studies has been application site pain, which has occurred in less than 7% of patients.

ZYN002 is currently in a Phase 3 registrational trial, the RECONNECT study, for the treatment of Fragile X Syndrome (“FXS”), which was designed to confirm the positive findings from the prespecified analysis of the primary outcome in the subgroup of patients with complete methylation from the CONNECT study conducted by Zynerba.

We believe the total addressable market for ZYN002 among patients with FXS is approximately 25,000 people based on an estimated current FXS prevalence of up to 87,000 cases and up to 40,000 diagnosed FXS cases.

Patients with complete methylation demonstrate the most severe symptoms of FXS.

Topline data from our ZYN002 Phase 3 study is anticipated in mid-2025.

We have completed recruitment in our ZYN002 Phase 3 registrational trial and topline data is on track for the third quarter of 2025.

ZYN002 has patent protection for the treatment of FXS until 2038.

Based on the positive proof-of-concept (“PoC”) study in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025.

Under the Sublicense, we have obtained the exclusive right to develop, manufacture and commercialize BP1.15205 in the United States and Latin American territories, which are rights that Bioprojet

originally licensed from Teijin Pharma, the innovator of BP1.15205.

Pre-clinical data from BP1.15205 is promising and we plan to file an IND in mid-2025 and begin first-in-human studies in the second half of 2025.

Additionally, in April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc.

Based on the positive proof-of-concept (“PoC”) study data obtained by Zynerba in 22q deletion syndrome, another rare disorder with prominent neurobehavioral symptoms, we plan to initiate a Phase 3 registrational study in 2025 in 22q deletion syndrome, pending positive data from the REFCONNECT study.

Rare Epilepsy Franchise

In April 2024, we acquired all of the outstanding capital stock of Epygenix Therapeutics, Inc.

(“Epygenix”), pursuant to the terms of a stock purchase agreement (the “Epygenix Agreement”).

As a result, we now have an exclusive license relating to the use of clemizole (“EPX100”), initially for the treatment of Dravet Syndrome (“DS”) and Lennox-Gastaut Syndrome (“LGS”) .

Patients with both conditions often encounter severe refractory epilepsy, which is not controlled even with polypharmacy, and extreme co-morbidities or mortality without effective treatment.

As a result, we now have an exclusive license relating to the use of EPX-100 for the treatment of Dravet Syndrome (“DS”), Lennox-Gastaut Syndrome (“LGS”) and other developmental and epileptic encephalopathies (“DEEs”).

Patients with both conditions often encounter severe refractory epilepsy and extreme co-morbidities or mortality without effective treatments, even with polypharmacy.

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

We believe the total addressable market for EPX100 among patients with DS is approximately 5,000 people based on an estimated current DS prevalence of approximately 8,600 cases and approximately 7,000 diagnosed DS cases.

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

approximately 7,000 diagnosed DS cases.

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

EPX100 is currently in a Phase 3 registrational clinical trial for DS and we plan to initiate a Phase 3 registrational clinical trial in patients with LGS in the fourth quarter of 2024.

In previous clinical trials, EPX100 has shown an improved safety and tolerability profile as compared to other approved therapies.

We are currently developing EPX200, a potent, oral, centrally active and selective 5HT2C agonist and liquid formulation of lorcaserin (“EPX200”), another asset acquired pursuant to the terms of the Epygenix Agreement.

EPX200 is currently in IND-enabling studies to treat Developmental and Epileptic Encephalopathy.

We conducted a preclinical PoC study to assess the effect of HBS-102 on hyperphagia, weight gain and other metabolic parameters in a mouse model of PWS.

The final report was received during the third quarter of 2024 and the results are consistent with the expected results .

We are on track to initiate a juvenile toxicology study in the fourth quarter of 2024.

In addition, a 13-week toxicology study is complete, and the preliminary results are encouraging.

Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Zynerba, which is now known as Harmony Biosciences Management, Inc.

as of July 1, 2024.

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

EPX-100 is currently in a Phase 3 registrational clinical trial for DS and we initiated a Phase 3 registrational clinical trial in patients with LGS in the fourth quarter of 2024.

Additionally, we are currently developing a liquid formulation of lorcaserin for the treatment of DEEs (“EPX-200”), another asset acquired pursuant to the terms of the Epygenix Agreement.

EPX-200 is currently in the pre-IND phase.

Our operations are conducted by our wholly owned subsidiaries, Harmony Biosciences, LLC and Harmony Biosciences Management, Inc.

Commercial Performance Metrics

As of September 30, 2024, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019.

There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies.

The average number of patients on WAKIX for the three months ended September 30, 2024, was approximately 6,800.

Additionally, as of September 30, 2024, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

As of March 31, 2025, we continued to see growth in the number of unique healthcare professional (“HCP”) prescribers of WAKIX since it became available in November 2019.

There are approximately 9,000 HCPs who treat patients living with narcolepsy, with approximately 4,000 enrolled in oxybate risk-evaluation and mitigation strategies (“REMS”) and approximately 5,000 HCPs who do not participate in the oxybate REMS programs.

The average number of patients on WAKIX for the three months ended March 31, 2025, was approximately 7,200, with approximately 7,300 patients on WAKIX as of March 31, 2025.

Additionally, as of March 31, 2025, we have secured formulary access for more than 80% of all insured lives (Commercial, Medicare and Medicaid) in the United States.

Financial Operations Overview

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Net product revenue includes gross product shipments less provisions for sales discounts and allowances, which includes trade allowances, rebates to government and commercial entities, and other discounts.

Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different customer segments and/or changes in our estimates .

Although we expect net sales to increase over time, provisions for sales discounts and allowances may fluctuate based on the mix of sales to different patient segments and/or changes in our estimates .

Cost of Product Sales

Cost of product sales includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs and salaries of employees involved with oversight of production.

Cost of product sales includes manufacturing and distribution costs, the cost of API, FDA program fees, royalties due to third parties on net product sales, freight, shipping, handling, storage costs, depreciation and salaries of employees involved with oversight of production.

We expect the cost of product sales to increase as we continue to ramp up production in order to meet future demand for WAKIX and diversify our supply chain for WAKIX .

The shelf life of WAKIX is four years from date of manufacture, with the earliest expiration of current inventory expected to be October 2025.

The shelf life of WAKIX is four years from the date of manufacture, with the earliest expiration of current inventory expected to be January 2027.

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

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

We currently have adequate supply of WAKIX to cover demand into the first quarter of 2026, with additional API on-hand inventory to support at least 24 months beyond this time frame .

We currently have adequate supply of WAKIX to cover demand into the first quarter of 2027, with additional API on-hand inventory to support at least two years beyond this time frame .

Research and Development Expenses

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with IH, PWS, DM1 and the development of ZYN002 in patients with FXS.

We also incur research and development expenses related to our team of Medical Science Liaisons (“MSLs”) who interact with key opinion leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant.

Research and development expenses primarily include development programs for potential new indications for pitolisant in patients with PWS and DM1 and the development of our product candidates ZYN002, EPX-100, EPX-200 Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102.

We also incur research and development expenses related to our team of Medical Science Liaisons (“MSLs”) who interact with key opinion

leaders, with a focus on the science, the role of histamine in sleep-wake state stability and the novel mechanism of action of pitolisant.

In addition, our MSLs support our market access team with the presentation of clinical data to payors upon request and our clinical development team to identify potential clinical trial sites.

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● employee -related expenses, such as salaries, share-based compensation, benefits and travel expenses for our research and development personnel ;

● direct third-party costs such as expenses incurred under agreements with clinical research organizations (“CROs”), and contract manufacturing organizations (“CMOs”) ;

● direct third-party costs such as expenses incurred under agreements with clinical research organizations (“CROs”), and contract development and manufacturing organizations (“CDMOs”) ;

● manufacturing costs in connection with producing materials for use in conducting clinical trials ;

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● amortization expense for assets used in research and development activities.

A significant portion of our research and development costs are external costs, such as fees paid to CROs and CMOs, central laboratories, contractors, and consultants in connection with our clinical development programs.

A significant portion of our research and development costs are external costs, such as fees paid to CROs and CDMOs, central laboratories, contractors, and consultants in connection with our clinical development programs.

Internal expenses primarily relate to personnel who are deployed across multiple programs .

Product candidates in later stages of clinical development generally have higher development costs in the current period than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, milestone payments, and the cost of submitting an NDA to the FDA (and/or other regulatory authorities).

We expect our research and development expenses to be significant as we advance our current clinical development programs and prepare to seek regulatory approval for additional

indications for pitolisant, complete the Phase 3 clinical trials for ZYN002, EPX100 and advance the development of Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102 toward new indications .

We expect our research and development expenses to be significant as we advance our current clinical development programs and prepare to seek regulatory approval for additional indications for pitolisant, complete the Phase 3 clinical trials for ZYN002, EPX-100 and advance the development of Pitolisant GR, Pitolisant HD, BP1.15205 and HBS-102 toward new indications .

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any additional indications for pitolisant or other product candidates that we move forward for regulatory approval.

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General and administrative expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, benefits and travel expenses for our personnel in executive, legal, finance and accounting, human resources, investor relations, and other administrative departments.

General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting and consulting fees.

General and administrative expenses also consist of office leases, and professional fees, including legal, tax and accounting, insurance and consulting fees.

We anticipate that our general and administrative expenses will increase in the future to support our continued commercialization efforts, ongoing and future potential research and development activities, and increased costs of operating as a public company.

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We are party to a right-of-use agreement with Paragon Biosciences, LLC (“Paragon”) whereby we have access to and the right to use certain office space leased by Paragon in Chicago, Illinois.

For the three and nine months ended September 30, 2024, we paid fees of $0.1 million and $0.2 million, respectively, pursuant to this agreement.

For the three months ended March 31, 2025, we paid fees of $0.1 million pursuant to this agreement.

Interest Expense

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

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

Three Months Ended March 31,

(In thousands)

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Operating income

Loss on debt extinguishment

Other (expense) income, net

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Net Product Revenue

Net product revenue increased by $25.8 million, or 16.1%, for the three months ended September 30, 2024, and increased by $99.9 million, or 24.1%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The increase for the three months ended September 30, 2024, was primarily due to an 11.2% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates and co-pay assistance, which resulted in a decrease in net product revenue of approximately 3%.

The increase for the nine months ended September 30, 2024, was primarily due to a 19.5% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates, which resulted in a decrease to net product revenue of approximately 4%.

Net product revenue increased by $30.1 million, or 19.5%, for the three months ended March 31, 2025, compared to the same period in 2024.

The increase for the three months ended March 31, 2025, was primarily due to a 17% increase in the number of units shipped, and the impact of a 7% price increase partially offset by higher rebates of approximately 4%.

The price increase occurred in January 2025.

Cost of Product Sales

Cost of product sales increased by $10.5 million, or 32.5%, for the three months ended September 30, 2024, and increased by $24.3 million, or 31.1%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

Cost of product sales as a percentage of net product revenue was 23.0% and 19.9% for the three and nine months ended September 30, 2024, respectively, compared to 20.2% and 18.9% for the three and nine months ended September 30, 2023, respectively.

The increase in cost of product sales and cost of product sales as a percentage of net revenue in both comparable periods was due to triggering a higher royalty tier under the 2017 LCA earlier in 2024 compared to 2023.

Cost of product sales increased by $4.5 million, or 16.4%, for the three months ended March 31, 2025, compared to the same period in 2024.

Cost of product sales as a percentage of net product revenue was 17.3% for the three months ended March 31, 2025, compared to 17.8% for the three months ended March 31, 2024.

The increase in cost of product sales was primarily due to the increase in sales of WAKIX.

Research and Development Expenses

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

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

Pitolisant GR and Pitolisant HD

Personnel expenses

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Other research and development

Research and development expenses increased by $7.9 million, or 45.1%, for the three months ended September 30, 2024, and increased by $65.4 million or 142.9%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The increase for the three months ended September 30, 2024 was primarily driven by a combined $6.2 million increase in research and development expenses for ZYN002 and EPX100, neither of which had any expenses in the prior year, a $2.5 million increase in personnel costs associated with higher headcount, a $1.0 million IPR&D charge related to a preclinical milestone achieved for HBS-102 and a $0.9 million increase in stock compensation associated with new awards, partially offset by a $3.0 million decrease in clinical development work associated with pitolisant, driven by declines for IH, DM1 and PWS indications.

The increase for the nine months ended September 30, 2024 was primarily driven by $43.6 million in IPR&D charges related to the Bioprojet Sublicense Agreement and the acquisition of Epygenix and a preclinical milestone achieved for HBS-102, a combined $13.9 million increase in research and development expenses for ZYN002 and EPX100, neither of which had any expenses in the prior year, a $6.3 million increase in personnel costs associated with higher headcount, and a $2.0 million increase in stock compensation associated with new awards, partially offset by a $1.6 million decrease in clinical development work associated with pitolisant, driven by decreases for the IH indication and a $0.8 million IPR&D charge related to preclinical milestones achieved for HBS-102 during the nine months ended September 30, 2023.

Research and development expenses increased by $12.4 million, or 55.7%, for the three months ended March 31, 2025, compared to the same period in 2024.

The increase for the three months ended March 31, 2025 was primarily driven by a $6.5 million increase in research and development expenses for the recently acquired product candidate, EPX-100, a combined $5.8 million increase in research and development expenses for ZYN002 and Pitolisant GR and HD as we ramp up development and manufacturing, a $2.1 million increase in personnel costs associated with higher headcount, a $0.9 million increase in stock compensation associated with new awards, and a $0.6 million increase in other research and development, primarily due to preclinical work related to BP1.1520, partially offset by a $3.7 million decrease in clinical development associated with pitolisant, driven by a decrease for the IH indication.

Sales and Marketing Expenses

Sales and marketing expenses increased by $4.2 million, or 17.8%, for the three months ended September 30, 2024, and increased by $12.8 million, or 18.1%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The increase for the three months ended September 30, 2024, was primarily due to a $3.6 million increase in patient engagement and marketing activities and a $0.6 million increase in stock compensation associated with new awards.

The increase for the nine months ended September 30, 2024, was primarily due to a $8.4 million increase in patient engagement and marketing activities, a $1.9 million increase in personnel costs, and a $2.5 million increase in stock compensation associated with new awards.

The increase in patient engagement and marketing activities for both comparable

periods was driven by our continued growth of WAKIX and the increase in personnel costs for the nine months ended September 30, 2024 was related to increased headcount.

Sales and marketing expenses increased by $3.5 million, or 12.8%, for the three months ended March 31, 2025, compared to the same period in 2024.

The increase for the three months ended March 31, 2025, was primarily due to a $1.9 million increase in patient engagement and marketing activities, a $0.7 million increase in personnel costs and a $0.7 million increase in stock compensation expense.

The increase in patient engagement and marketing activities was driven by our continued growth of WAKIX and the increase in personnel costs and stock compensation for the three months ended March 31, 2025, was related to costs associated with the separation of an executive of the Company.

General and Administrative Expenses

General and administrative expenses increased by $6.0 million, or 26.8%, for the three months ended September 30, 2024, and increased by $14.1 million, or 20.9%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The increase in the three months ended September 30, 2024, was primarily due to a $4.0 million increase in legal and professional fees, primarily associated with patent lawsuits, a $2.0 million increase in stock compensation associated with new awards, and a $0.5 million increase in personnel costs.

The increase in the nine months ended September 30, 2024, was primarily due to a $7.5 million increase in legal and professional fees, primarily associated with patent lawsuits, a $6.1 million increase in stock compensation associated with new awards, and a $2.0 million increase in personnel costs, partially offset by a $1.3 million decrease in insurance and a $0.5 million decrease in travel expenses.

General and administrative expenses increased by $5.6 million, or 21.7%, for the three months ended March 31, 2025, compared to the same period in 2024.

The increase in the three months ended March 31, 2025, was primarily due to a $4.5 million increase in legal and professional fees, primarily associated with patent lawsuits, a $0.4 million increase in stock compensation associated with new awards, and a $0.7 million increase in personnel costs associated with higher headcount.

Interest Expense

Interest expense decreased by $2.7 million, or 38.0%, for the three months ended September 30, 2024, and decreased by $5.7 million, or 29.9%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The decrease for the three and nine months ended September 30, 2024, was primarily due to lower interest rates as a result of refinancing into the TLA Credit Agreement (defined below).

Interest expense decreased by $0.7 million, or 15.4%, for the three months ended March 31, 2025, compared to the same period in 2024.

The decrease for the three months ended March 31, 2025, was primarily due to lower interest rates as a result of the reduction of the Term SOFR.

Interest Income

Interest income increased by $0.8 million, or 20.1%, for the three months ended September 30, 2024, and increased by $3.4 million, or 32.2%, for the nine months ended September 30, 2024, compared to the same periods in 2023.

The increase for the three and nine months ended September 30, 2024, was primarily a result of having higher invested balances, and higher investment yields on those balances, compared to the prior year periods.

Income tax expense was $16.1 million, representing a 25.9% effective tax rate, for the three months ended September 30, 2024, compared to $13.4 million, representing a 25.8% effective tax rate, for the three months ended September 30, 2023.

Income tax expense was $39.6 million, representing a 29.2% effective tax rate, for the nine months ended September 30, 2024, compared to $31.5 million, representing a 23.5% effective tax rate, for the nine months ended September 30, 2023.

The increase in our effective tax rate for the nine months ended September 30, 2024, was primarily driven by the $17.1M IPR&D charge related to the Epygenix acquisition, which was nondeductible for tax purposes.

The effective tax rate of 25.9% for the three months ended September 30, 2024, included 5.1% in state income taxes, partially offset by a 0.9% benefit from credits.

The effective tax rate of 29.2% for the nine months ended September 30, 2024, included 2.5% for nondeductible IPR&D charges and 6.3% in state income taxes, partially offset by a 1.2% benefit from credits.

Interest income increased by $0.6 million, or 13.9%, for the three months ended March 31, 2025, compared to the same period in 2024.

The increase for the three months ended March 31, 2025, was primarily a result of having higher invested balances compared to the prior year.

Income tax expense was $11.6 million, representing a 20.3% effective tax rate, for the three months ended March 31, 2025, compared to $13.5 million, representing a 26.0% effective tax rate, for the three months ended March 31, 2024.

The decrease in our effective tax rate for the three months ended March 31, 2025, was primarily driven by an increase in the benefits from research and development and orphan drug credits and a decrease in state taxes.

The effective tax rate of 20.3% for the three months ended March 31, 2025, included 1.1% in state income taxes, partially offset by a 2.4% benefit from credits.

Liquidity, Sources of Funding and Capital Resources

As of September 30, 2024, we had cash, cash equivalents, and investments of $504.7 million, outstanding debt of $185.0 million and an accumulated deficit of $47.3 million.

As of March 31, 2025, we had cash, cash equivalents, and investments of $610.2 million, outstanding debt of $177.5 million and retained earnings of $47.8 million.

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

We believe that our existing cash, cash equivalents and investments on hand as of September 30, 2024, will enable us to meet our operational liquidity needs and fund our potential investing activities for the next 12 months.

We believe that our existing cash, cash equivalents and investments on hand as of March 31, 2025, will enable us to meet our operational liquidity needs and fund our potential investing activities for the next 12 months.

We have based our liquidity and cash flow projections on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.

Term Loan A Credit Agreement

In July 2023, we 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 $185.0 million.

In September 2023, we 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 $15.0 million.

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 $3.8 million quarterly principal payments, which commence on December 31, 2023, increasing to $5.0 million quarterly principal payments beginning on December 31, 2025, with a $115.0 million payment due on the maturity date of July 26, 2028.

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

In July 2023, we 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 $200.0 million.

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

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

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

We were in compliance with all covenants as of September 30, 2024.

Blackstone Credit Agreement

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

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

In August 2022, we entered into an agreement to extend the expiration date of the DDTL to August 9, 2023, for which we would pay 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 $191.8 million, net of debt issuance costs of $8.2 million.

In addition, we paid $1.0 million 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, we extinguished the Blackstone Credit Agreement, which required a payoff amount of $207.3 million consisting of principal repayment, interest, exit fees, payment of the Ticking Fee and a prepayment premium.

We recognized a loss on extinguishment of debt of $9.8 million relating to the Blackstone Credit Agreement within our unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2023.

In addition, we recognized $2.0 million 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.

We were in compliance with all covenants as of March 31, 2025.

Share Repurchases

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

During the three and nine months ended September 30, 2024, 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 $150.0 million.

Zynerba Acquisition

In October 2023, we completed a tender offer (the “Tender Offer”) to acquire all of the outstanding shares of common stock of Zynerba (“Zynerba Common Stock”).

Under the terms of the Tender Offer, we paid (i) $1.1059 per share of Zynerba Common Stock (the “Common Cash Amount”), the aggregate amount of which was $60.0 million 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 consideration we paid to acquire the Zynerba Common Stock upon completion of the Tender Offer was $60.0 million, exclusive of transaction-related fees.

We financed the acquisition with cash on hand.

On July 1, 2024, we announced the change of the name of our wholly owned subsidiary from “Zynerba Pharmaceuticals, Inc.” to “Harmony Biosciences Management, Inc.” As of July 1, 2024, Zynerba Pharmaceuticals, Inc.

is now known as Harmony Biosciences Management, Inc.

During the three months ended March 31, 2025, 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 $150.0 million.

Epygenix Acquisition

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

In March 2023, we achieved a preclinical milestone, which triggered a $0.8 million payment under the provisions of the APA, which we recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive income for the nine months ended September 30, 2023.

In September 2024, we achieved a milestone for preclinical proof-of concept, which triggered a $1.0 million payment under the provisions of the APA, which we recognized as an IPR&D charge recorded in research and development within the unaudited condensed consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2024.

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

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

There are additional payments due upon the achievement of certain milestones, including $19.0 million for development milestones, $44.0 million for regulatory milestones and $110.0 million for sales milestones.

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Recent Milestones

In September 2024, we achieved a preclinical milestone that triggered a $1.0 million payment under the provisions of the APA, which is unpaid and recorded in accrued expenses in our unaudited condensed consolidated balance sheet as of September 30, 2024.

The following table sets forth a summary of our cash flows for the nine months ended September 30, 2024, and 2023:

Nine Months Ended September 30,

In September 2024, we achieved a preclinical milestone, which triggered a $1.0 million payment under the provisions of the APA, which was paid in October 2024 .

The following table sets forth a summary of our cash flows for the three months ended March 31, 2025, and 2024:

Three Months Ended March 31,

Selected cash flow data

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Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2024, primarily consisted of net income of $96.0 million adjusted for non-cash items of $42.6 million related to acquired IPR&D, $32.9 million related to stock-based compensation expense, and $18.1 million related to intangible amortization and depreciation, offset by $22.6 million related to deferred tax assets.

Net working capital excluding cash increased by $23.1 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and decreases in accounts payable due to the timing of payments.

Net cash provided by operating activities for the nine months ended September 30, 2023, consisted of net income of $102.2 million adjusted for non-cash items of $14.5 million related to deferred tax assets, $18.2 million related to intangible amortization and depreciation, $22.3 million related to stock-based compensation

expense and $9.8 million related to loss on extinguishment of debt.

Net working capital excluding cash increased by $3.4 million .

Net cash provided by operating activities for the three ended March 31, 2025, primarily consisted of net income of $45.6 million adjusted for non-cash items of $12.5 million related to stock-based compensation expense, and $6.0 million related to intangible amortization and depreciation, offset by $4.3 million related to deferred tax assets.

Net working capital excluding cash increased by $25.9 million, primarily driven by increases in accounts receivable due to higher net product revenue in the current period and increases in accounts payable due to the timing of payments.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2024, was $60.3 million, which was primarily attributable to $69.6 million in purchases of debt securities, a $25.5 million license fee paid to Bioprojet, $33.1 million net cash consideration paid for the acquisition of Epygenix, and $0.6 million in purchases of property and equipment, partially offset by $68.5 million from maturities of investments.

Net cash used in investing activities for the nine months ended September 30, 2023, was $10.4 million, which was primarily attributable to $105.9 million in purchases of debt securities, partially offset by $95.7 million in proceeds from sales and maturities of investments and $0.2 million in purchases of property and equipment .

Net cash provided by investing activities for the three months ended March 31, 2025, was $2.4 million, which was primarily attributable to $19.1 million in purchases of debt securities and $0.1 million in purchases of property and equipment, partially offset by $21.6 million from maturities of investments.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2024, was $8.3 million, which primarily consisted of $11.3 million in principal payments associated with the TLA Credit Agreement, partially offset by $3.2 million in proceeds from the exercise of stock options, and $0.3 million of employee withholding tax payments related to stock-based awards.

Net cash provided by financing activities for the nine months ended September 30, 2023, was $52.0 million, which primarily consisted of $202.3 million in payments of principal and exit fees associated with the extinguishment of the Blackstone Credit Agreement, $50.0 million in share repurchases and $1.0 million in principal payments associated with the Blackstone Credit Agreement, partially offset by $197.0 million in proceeds associated with the TLA Credit Agreement, net of issuance costs, and $4.8 million in proceeds from exercised options .

Net cash used in financing activities for the three months ended March 31, 2025, was $0.4 million, which primarily consisted of $3.8 million in principal payments associated with the TLA Credit Agreement and $1.3 million of employee withholding tax payments related to stock-based awards, partially offset by $4.7 million in proceeds from the exercise of stock options.

Critical Accounting Estimates

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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