What changed in this filing

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Item 1. Financial Statements

2025-08-05 compared with 2025-05-06 · 145 added, 97 removed, 563 unchanged (30% of the section changed)

36 unchanged sentences

Common stock—$ 0.00001 par value;

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

500,000,000 shares authorized at June 30, 2025 and December 31, 2024, respectively;

57,537,869 and 57,144,887 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid in capital

9 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net product revenue

24 unchanged sentences

stockholders’

(loss) income

Balance as of March 31, 2025

Unrealized loss on investments

Exercise of options

Stock-based compensation

Balance as of June 30, 2025

comprehensive

stockholders’

Balance as of December 31, 2024

2 unchanged sentences

Stock-based compensation

Balance as of June 30, 2025

comprehensive

stockholders’

(loss) income

Balance as of March 31, 2024

Unrealized loss on investments

Exercise of options

Stock-based compensation

Balance as of June 30, 2024

comprehensive

5 unchanged sentences

Stock-based compensation

Balance as of March 31, 2024

Balance as of June 30, 2024

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

3 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Intangible amortization

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

Stock-based and employee stock purchase compensation expense

14 unchanged sentences

Purchase of property and equipment

Net cash provided by (used in) investing activities

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

Payment of upfront fee related to research collaboration, option and license agreement

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

41 unchanged sentences

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 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.

The Company had retained earnings of $ 87,552 and $ 2,216 , as of June 30, 2025, and December 31, 2024, respectively.

As of June 30, 2025, the Company had cash, cash equivalents and investments of $ 672,282 .

The Company believes that its existing cash, cash equivalents and investments on hand as of June 30, 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

2 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

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 unaudited condensed consolidated balance sheet as of June 30, 2025, the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 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 and six months ended June 30, 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, 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 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 June 30, 2025, and the results of its operations and its cash flows for the six months ended June 30, 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.

20 unchanged sentences

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

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

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

These non-financial assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (such as evidence of impairment), which, if material, are disclosed in the accompanying footnotes.

7 unchanged sentences

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 March 31, 2025, or December 31, 2024.

The Company did not classify any assets or liabilities as Level 3 as of June 30, 2025, or December 31, 2024.

Cash, Cash Equivalents and Restricted Cash

23 unchanged sentences

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;

As of June 30, 2025, three customers accounted for 100 % of gross accounts receivable;

Caremark LLC (“CVS Caremark”), which accounted for 35 % of gross accounts receivable;

5 unchanged sentences

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;

For the six months ended June 30, 2025, three customers accounted for 100 % of gross product revenue;

CVS Caremark accounted for 38 % of gross product revenue;

1 unchanged sentence

and Pantherx accounted for 26 % of gross product revenue.

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

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

CVS Caremark accounted for 40 %

43 unchanged sentences

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

March 31, 2025

June 30, 2025

Commercial paper

14 unchanged sentences

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 March 31, 2025, and December 31, 2024, 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 June 30, 2025, and December 31, 2024, respectively.

FAIR VALUE MEASUREMENTS

3 unchanged sentences

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 March 31, 2025, or December 31, 2024.

The Company did not classify any assets or liabilities as Level 3 as of June 30, 2025, or December 31, 2024.

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

March 31, 2025

June 30, 2025

December 31, 2024

13 unchanged sentences

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.

The Company determined a useful life of 10 years for the intangible asset, and, as of June 30, 2025, the remaining useful life was 4.3 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 the intangible asset, and, as of March 31, 2025, the remaining useful life was 4.5 years.

The Company determined a useful life of 9 years for the intangible asset, and, as of June 30, 2025, the remaining useful life was 4.3 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 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 determined a useful life of 7.6 years for the intangible asset, and, as of June 30, 2025, the remaining useful life was 4.3 years.

Amortization expense was $ 5,961 for each of the three months ended June 30, 2025, and 2024, respectively, and $ 11,922 for each of the six months ended June 30, 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,

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

2025 (excluding the six months ended June 30, 2025)

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

12 unchanged sentences

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 $ 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.

The Company incurred $ 35,783 and $ 30,199 for the three months ended June 30, 2025, and 2024, respectively, and $ 65,340 and $ 54,937 for the six months ended June 30, 2025, and 2024, respectively for sales-based, trademark and tiered royalties recognized as cost of product sold.

As of June 30, 2025, and December 31, 2024, the Company had accrued $ 35,783 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.

1 unchanged sentence

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.

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 (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 an Investigational Medicinal Product Dossier (“IMPD”) Application currently anticipated in mid-2025.

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

7 unchanged sentences

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.

CiRC Agreement

In June 2025, the Company entered into a research collaboration, option and license agreement (the “CiRC Agreement”) with a related party, CiRC Biosciences, Inc.

Under this agreement, the Company and CiRC will collaborate on the research and development of two discovery-stage candidates (together the “Candidates”) using cell replacement therapy for treatment of refractory epilepsies and treatment-resistant narcolepsy.

In connection with the CiRC Agreement, the Company paid CiRC an upfront fee of $ 15,000 , 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 three and six months ended June 30, 2025.

The Company will also be obligated to pay $ 2,000 to CiRC upon the achievement of certain research milestones for each of the Candidates.

In addition, the Company has an option to obtain an exclusive license for each of the Candidates that would grant the Company global rights to develop, manufacture and commercialize each Candidate.

Upon exercise of each option, the Company would be obligated to pay an option exercise fee of $ 8,000 , or $ 16,000 in the aggregate if the options related to both Candidates were to be exercised, and the Company would be obligated upon achievement to pay future development, regulatory and sales-based milestones, as well as royalties on sales of any product derived from the Candidates.

Refer to Note 19, Related-Party Transactions , for further discussion of related party considerations for the CiRC Agreement.

ACCRUED EXPENSES

7 unchanged sentences

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, 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 .

3 unchanged sentences

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 .

The fair value of the TLA Term Loan as of June 30, 2025, was $ 171,485 .

Long-term debt, net consisted of the following:

4 unchanged sentences

Long-term debt, net

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

Future minimum payments relating to long-term debt, net as of June 30, 2025, for the periods indicated below consisted of the following:

Years ending December 31,

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

2025 (excluding the six months ended June 30, 2025)

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 consisted of the following:

Three Months Ended

Six Months Ended

Interest on principal balance

2 unchanged sentences

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 extended 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 August 2025.

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

3 unchanged sentences

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 $ 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 %.

The Company recorded operating lease costs of $ 598 and $ 622 for the three months ended June 30, 2025, and 2024, respectively, and $ 1,065 and $ 1,131 for the six months ended June 30, 2025, and 2024, respectively.

As of June 30, 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

March 31, 2025

June 30, 2025

December 31, 2024

7 unchanged sentences

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

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Operating cash flows from operating leases

Right of use assets obtained in exchange for operating lease obligations

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

Future payments under non-cancelable operating leases with initial terms of one year or more as of June 30, 2025, consisted of the following:

Years ending December 31,

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

2025 (excluding the six months ended June 30, 2025)

Total lease payments

8 unchanged sentences

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

Abbreviated New Drug Application (“ANDA”) Litigation

On September 27, 2023, the Company and its licensor, Bioprojet, received notice from Lupin Limited (“Lupin”) pursuant to 21 U.S.C.

As of June 30, 2025, there were no material claims or lawsuits outstanding other than the Abbreviated New Drug Application (“ANDA”) litigation discussed below .

ANDA Litigation

In September 2023, the Company and its licensor, Bioprojet, received notice from Lupin Limited (“Lupin”) pursuant to 21 U.S.C.

§ 355(j) et seq.

9 unchanged sentences

§ 314.95 et seq.

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

“Novugen Notice Letter”) that Novugen has submitted ANDA No.

218834 (the “Novugen ANDA”) to the FDA and is seeking regulatory approval to market a generic version of WAKIX ® before the expiration of the ’947 patent and ’197 patent.

2 unchanged sentences

On November 9, 2023, we, Bioprojet and Bioprojet’s wholly owned subsidiary, Bioprojet Pharma SAS (“Bioprojet Pharma”), filed a complaint for patent infringement of the ’947 patent and the ‘197 patent against Lupin, Novugen and certain of their affiliates and agents in the United States District Court for the District of Delaware in response to the filing of their respective ANDAs with the FDA.

On October 12, 2023, the Company and Bioprojet received notice from Novitium Pharma LLC (“Novitium”), pursuant to 21 U.S.C.

In October 2023, the Company and Bioprojet received notice from Novitium Pharma LLC (“Novitium”), pursuant to 21 U.S.C.

§ 355(j) et seq.

27 unchanged sentences

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.

5 unchanged sentences

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.

On April 15, 2024, the United States District Court for the District of Delaware issued a scheduling order consolidating the cases described above for all purposes up to and including trial (the “Scheduling Order”).

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.

In April 2024, the United States District Court for the District of Delaware issued a scheduling order consolidating the cases described above for all purposes up to and including trial (the “Scheduling Order”).

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.

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

§ 355(j) et seq.

4 unchanged sentences

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.

In October 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.

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

§ 355(j) et seq.

4 unchanged sentences

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.

In March 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.

In June 2025, the Company reached an agreement with Lupin to resolve the dispute over Lupin’s ANDA to market a generic version of WAKIX.

Under the terms of the settlement agreement, the litigation between the parties in the United States District Court for the District of Delaware will be dismissed, and Lupin will have a license to sell its generic product beginning January 2030, or earlier under certain circumstances.

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

STOCKHOLDERS’ EQUITY

6 unchanged sentences

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

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 .

During the three and six months ended June 30, 2025, and 2024, no shares of common stock were repurchased by the Company under the October 2023 Repurchase Program.

As of June 30, 2025, the remaining amount of common stock authorized for repurchases was $ 150,000 .

STOCK INCENTIVE PLAN AND STOCK-BASED COMPENSATION

1 unchanged sentence

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

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

Stock options and stock appreciation rights under the 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).

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

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

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

As of March 31, 2025, there were 8,777,657 shares of common stock available for issuance under the 2020 Plan.

As of June 30, 2025, there were 8,620,499 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.

1 unchanged sentence

In August 2017, the Company adopted an equity incentive plan (the “2017 Plan”).

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

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

1 unchanged sentence

Stock Options

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

The following table summarizes stock option activity for the six months ended June 30, 2025:

Value ($000's)

3 unchanged sentences

Awards forfeited

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 .

Awards outstanding—June 30, 2025

Awards exercisable—June 30, 2025

Awards unvested—June 30, 2025

The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2025, was $ 24.24 .

The total intrinsic value of stock options exercised for the six months ended June 30, 2025, was $ 3,400 .

Stock Appreciation Rights

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

The following table summarizes SARs activity for the six months ended June 30, 2025:

Value ($000's)

3 unchanged sentences

Awards forfeited

Awards outstanding—March 31, 2025

Awards exercisable—March 31, 2025

Awards outstanding—June 30, 2025

Awards exercisable—June 30, 2025

Restricted Stock Units

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

The following table summarizes RSU activity for the six months ended June 30, 2025:

Awards outstanding—December 31, 2024

2 unchanged sentences

Awards forfeited

Awards outstanding—March 31, 2025

Awards outstanding—June 30, 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.

The weighted-average per share fair value of awards issued under the 2020 Plan during the six months ended June 30, 2025, and 2024 was $ 37.61 and $ 30.62 , respectively.

Value of Stock Options and SARs

8 unchanged sentences

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

March 31, 2025

June 30, 2025

December 31, 2024

7 unchanged sentences

Stock-Based Compensation Expense

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,

Stock-based compensation expense for the three and six months ended June 30, 2025, and 2024, was recorded in the unaudited condensed consolidated statements of operations and comprehensive income in the following line items:

Three Months Ended June 30,

Six Months Ended June 30,

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

As of June 30, 2025, the total unrecognized stock-based compensation expense was $ 59,155 and $ 25,038 for stock options and RSUs,

respectively.

6 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 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.

There were 11,772 and 10,707 shares issued under the ESPP for each of the three and six months ended June 30, 2025, and 2024, respectively.

The discount on the ESPP was $ 65 and $ 78 for the three months ended June 30, 2025, and 2024, respectively, and $ 125 and $ 158 for the six months ended June 30, 2025, and 2024, respectively, and is recorded within stock-based compensation expense.

SEGMENT INFORMATION

7 unchanged sentences

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:

The following table summarizes segment revenue and significant segment expenses for the three and six months ended June 30, 2025, and 2024:

Rare Neurological Diseases Segment

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

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)

Cost of product sold (a)

Research and development (b)

Sales and marketing (c)

General and administrative (d)

Depreciation and amortization

2 unchanged sentences

Interest income

Income tax expense (benefit)

Other segment items (a)

Income tax expense

Other segment items (e)

Consolidated net income

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

(a) Cost of product sold excluding depreciation.

(b) Research and development excluding stock-based compensation and IPR&D.

(d) General and administrative excluding stock-based compensation, depreciation and amortization.

(e) Other segment items include other expense, net and IPR&D charges .

EARNINGS PER SHARE

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income per share of common stock - basic

3 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Stock options, SARs, and RSUs to purchase common stock

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,

Three Months Ended June 30,

Six Months Ended June 30,

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 months ended March 31, 2025, and 2024 is as follows:

Three Months Ended March 31,

A reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate for the three and six months ended June 30, 2025, and 2024 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Federal income tax rate

Stock-based compensation

Nondeductible IPR&D

Valuation allowance

1 unchanged sentence

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.

In addition, the Company received consulting services from Paragon during the three and six months ended June 30, 2025.

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 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.

The Company incurred $ 255 and $ 72 for each of the three months ended June 30, 2025, and 2024, respectively, and incurred $ 328 and $ 145 for the six months ended June 30, 2025, and 2024, respectively, in expenses to Paragon, which are included in general and administrative in the unaudited condensed consolidated statements of operations and comprehensive loss.

As of June 30, 2025, and December 31, 2024, there were no amounts due to or due from Paragon included in the unaudited condensed consolidated balance sheets.

In June 2025, the Company entered into the CiRC Agreement with CiRC, an entity controlled by Paragon.

The Company paid a $ 15,000 upfront payment to CiRC pursuant to the CiRC Agreement which was recorded as an IPR&D charge in research and development in the unaudited condensed consolidated statements of operations and comprehensive income.

As of June 30, 2025, there were no amounts due to or due from CiRC under the CiRC agreement.

Refer to Note 9, License Agreements , for further discussion regarding the CiRC Agreement.

SUBSEQUENT EVENT

On July 4, 2025, the "One Big Beautiful Bill Act" (the "OBBBA") was enacted into law.

The OBBBA contains several changes to corporate taxation, including the allowance of immediate expensing of domestic research and development expenses.

The Company is in the process of evaluating the impact of the OBBBA to our condensed consolidated financial statements.

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